Most Read Contributor in New Zealand, September 2016
Agencies affected by the Anti Money Laundering and
Countering Financing of Terrorism Act
(AML/CFTA) will be given new powers for the
performance of customer due diligence in the Identity Information
Confirmation Bill now before Parliament.
This Brief Counsel provides a commentary on the Bill.
What the Bill will do
The Bill will allow agencies affected by the AML/CFT
requirements, when confirming the identity of new or existing
clients, to check information received against that held by the
Department of Internal Affairs under the Passport Act
1992, the Citizenship Act 1977 and the Births,
Deaths, Marriages and Relationships Registration Act 1995.
The checking mechanism will be through electronic applications
to a central database to validate name, gender, date and place of
birth and any other recorded data relating to the individual, e.g.
passport number or photo. Information submitted will be confirmed
as "consistent" with the database, "not
consistent" or "exception" (meaning that the
individual is dead and/or has had a name change and the agency can
seek further details on the matter). This is designed to address
privacy concerns by ensuring that applicant agencies are not
provided with personal information which they do not already
The Bill is expected to reduce the compliance costs identified
with the AML/CFTA. Exact costings are not available as they were
considered too difficult given the many possible variations in
agency size and need. But it is estimated that each application
will cost around 50 cents, less if volumes are high.
This compares to $26 for a birth certificate from the Births,
Deaths and Marriages registry office. The 50 cent rate is also low
by international standards. Applications to a similar data
valuation service in the UK currently cost Ł1.77 for high
volume users (more for others) and costs in Australia vary between
$A70 cents and $A3 per transaction (depending on volumes).
Chapman Tripp comment
The Bill is short, comprising only 20 clauses, but will be
important to the smooth running of the AML/CFT regime.
A possible flaw in the legislation as drafted is that it appears
a data search could yield a "not consistent" response for
as small a matter as the difference between "Philip" and
"Phillip". Given the potential for legitimate mistakes, a
"not consistent" result with no further information as to
where the inconsistency exists seems somewhat unhelpful.
The Bill is still in its early stages, however (it has not yet
had its first reading), and this concern could readily be addressed
at select committee.
The information in this article is for informative purposes
only and should not be relied on as legal advice. Please contact
Chapman Tripp for advice tailored to your situation.
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