"Get serious about dirty money." by Dawn Alexander
New Zealand has fallen behind the rest of the world in terms of the level of regulation around AML/CTF, becoming an easy target for global criminals.
More than $1.35 billion-worth of illicit funds from fraud, tax offending and drug trafficking is ending up in New Zealand every year to be laundered, according to a new report from a recent NZ Police Financial Intelligence Unit, which has brought heavy publicity and tarnishing of reputations.
The supervisors of AML/CTF, have received significant additional funding to not only scrutinise more closely those organisations that are currently regulated by AML/CTF, such as banks, financial institutions and casinos, but to also encompass an additional Tranche of entities. The supervisors being the Financial Markets Authority, Reserve Bank of New Zealand and for Tranche 2 the Department of Internal Affairs.
Tranche 2 is to be implemented in stages, and suddenly whole new sectors will have obligations under the AML/CTF Act 2009, including lawyers (date Act applies is 1 July 2018), accountants (1 October 2018) and the real estate industry (1 January 2019), who are seen as the “gatekeepers” to New Zealand business. In addition Tranche 2 applies to dealers in certain high-value goods and the NZ Racing Board (1 August 2019).
Current Reporting Entities
Not only are the supervisors raising their level of surveillance, but the repercussions for non-compliance are becoming greater, not only in monetary terms but also the adverse impact on brand. There is also the time and cost associated with the investigations and remediation processes. The NZ Police launched its first dedicated money laundering investigations team in April 2017.
We recommend that Reporting Entities be on the front foot and be proactive. Those affected need to internally assess their compliance with all aspects of the AML/CTF Act and regulations. They should also ensure they have sufficient systems and appropriately qualified resources in place and provide ongoing education and training. A robust independent review or use of external experts would also challenge and improve standards.
Tranche 2 Entities
The rolling out of AML/CTF regulations to Designated Non-Financial Businesses and Professions (DNFBP’s) will impact an estimated 6,000 entities in the accounting, law, trust service, and real estate professions.
We recommend initially gaining an understanding of the potential impact of the AML/CTF rules and regulations on your business, and the proposed compliance and reporting procedures. Consideration should then be made on how an AML/CTF programme would be established and maintained.
The key areas to consider and focus on are your customer due diligence processes, transaction monitoring and reporting, along with the vetting of staff involved in your AML process. Also, those staff and the appointed AML compliance officer must receive ongoing training.
Early planning will ensure that implementation is smooth and effective.
Adopting the AML/CTF regulations should not be seen as a compliance headache, but as a chance to mitigate the risk of doing business with inappropriate parties, and to protect your organisation’s reputation.
In response to the escalation of AML/CTF obligations, PKF New Zealand has developed a “one-stop shop” service offering for its network, called PKF AML. This covers all potential AML/CTF requirements of Current Reporting and Tranche 2 entities – from setting up new systems, provision of templates and training, through to Independent Reviews, Risk Assessments and Remediation work. Please contact your PKF office if we can assist.
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