New Zealand: Will you qualify for an exemption under the new Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) regime?

Brief Counsel
Last Updated: 5 August 2012
Article by Penny Sheerin, Bradley Kidd, Alan Lester and Fiona Bennett

Compliance with the new Anti-Money Laundering and Countering Financing of Terrorism Act (AML/CFT Act) will be made easier through a series of exemptions proposed in a recent consultation document.

We suggest you explore whether your business would benefit from an exemption. Submissions close on 17 August.

Proposals

  • Auctioneers and internet based auction providers to be exempt from the broad definition of financial institution in the Act. This reflects the decision to deal with the retail sector in the second phase of reform.
  • The simplified due diligence procedure for reporting entities to be extended to two further customer groups:
    • foreign companies that are listed on a recognised overseas public stock exchange with adequate disclosure requirements within a jurisdiction with a sufficient AML/CFT regime, and
    • entities that are supervised or regulated under the Act and that are licensed or regulated in accordance with the Insurance (Prudential Supervision) Act 2010, the Reserve Bank of New Zealand Act 1989 or the Non-bank Deposit Takers Bill.
  • Banks to be exempted from the requirement to collect and hold information about all of a customer's clients where the customer has a custodial holding-type bank account through which multiple client funds flow frequently. The proposal is to simply expand to custodial accounts, the exemption applying to trust accounts.
  • Introduction of a suspicion "trigger" for customer due diligence. Customer due diligence should be conducted regardless of exemptions or thresholds if there is a suspicion of money-laundering or terrorist financing. An exception to this is where the reporting entity believes that to do so would disclose or would be reasonably likely to disclose the existence of a suspicious transaction report. The purpose of the exception is to remove any potential conflict between the due diligence requirements under the Act and the prohibition against "tipping off" suspect customers. Similar provisions are available in Australia, the UK and Canada.
  • Specific reporting requirements applying to wire transfers of more than $1000.

Forms

The consultation document provides proposed documentation for:

  • an annual reporting form, and
  • a suspicious transaction report.

The annual reporting form is prescriptive and extensive. Reporting entities will need to consider whether their reporting systems are appropriately configured to allow it to report all of the information required by the form.

Stored value instruments

The regulations propose amending the definition of "stored value instrument" to make it clear that AML/CFT obligations will apply where a reporting entity clearly has an ongoing business relationship with a customer.

This proposal is based on the distinction between instruments where value is stored on the device itself (including any account associated with the value stored on the device) and instruments that provide access to an account or arrangement where funds are held and the account or arrangement is managed by a financial institution (such as credit and debit cards) – the latter being indicative of a "business relationship".

Existing exemptions for "stored value instruments" would be narrowed to ensure that higher risk instruments are always subject to the requirements of the AML/CFT Act.

This narrowing would be achieved by excluding instruments which have international remittance capability and introducing maximums on withdrawals from, and the reloading of, the instrument. Changes of this kind have the potential to limit the flexibility of stored value instruments, particularly the exclusion of instruments with international remittance capability.

Feedback is also sought on whether a definition of "debit card" would be useful.

Related to this, it is proposed that the exemptions in the AML/CFT Act relating to low value "stored value instruments" (e.g. Snapper cards) be extended to cover the current scheme in the Financial Transactions Reporting Act 1996, meaning that these exemptions would come into force earlier.

Technical amendments

A range of technical amendments to the AML/CFT (Definitions) Regulations and the AML/CFT (Exemptions) Regulations are proposed. These include changes to the existing exemptions regarding:

  • record keeping in casinos, and
  • non-finance businesses in respect of certain types of consumer credit.

New guidelines

Three new guidelines on the Act have also been released: the Countries Assessment Guideline, the Designated Business Group – Scope Guideline, and the Designated Business Group – Formation Guideline.

The Countries Assessment Guideline outlines the process for assessing aspects of another country's regulatory environment for the purposes of the AML/CFT Act. Such an assessment may be necessary where you deal with a customer or institution resident or supervised from another country. The guideline covers:

  • when an assessment is likely to be required
  • the different types of assessment and the sorts of factors that should be considered for each type, and
  • resources that may be useful in such an assessment.

The Designated Business Group – Scope Guideline explains which obligations may be shared by members of a Designated Business Group (DBG). An entity that joins a DBG may rely on another member of the DBG to carry out some of its obligations under the AML/CFT Act. These include:

  • customer due diligence
  • record keeping and account monitoring
  • annual reporting
  • risk assessments, and
  • suspicious transaction reporting.

The Designated Business Group – Formation Guideline provides guidance around the eligibility requirements, the form of an election to become a member of a DBG, the notification required, and the process around withdrawal from or the dissolution of a DBG.

Further guidelines are to be issued on the AML/CFT Obligations of Issuers of Securities, Audit and Beneficial Ownership. These guidelines will no doubt be welcomed by industry.

Next steps

Submissions are sought on any minor or technical amendments that may be required to reduce ambiguity or to ensure that the regulations can be properly implemented.

If you would like assistance with making a submission or advice on the new guidelines or on how the AML/CFT regime will affect you and your business, please contact one of the lawyers featured.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Penny Sheerin
Bradley Kidd
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions