If you are a lawyer, accountant, real estate agent, conveyancer,
high-value goods dealer, or gambling service provider
(Phase 2 Entities), it is important that you have
an implementation plan for Phase 2 of the Anti-Money Laundering and
Counter Financing of Terrorism Act 2009 (AML/CFT
Following the Panama Papers scandal, there has been strong
public support for the introduction of more stringent anti-money
laundering rules. According to a Ministry of Justice, of criminal
funds being laundered in New Zealand, 56% involves the purchase of
real estate and 25% involves the work of lawyers and
Phase 2 of the AML/CFT Act is currently being considered by the
Ministry of Justice. An exposure Bill was expected to be introduced
at the end of this year, but has been postponed to early 2017 due
to the expected significant high compliance costs for Phase 2
Entities (an estimated $1.6 billion over 10 years). The target
implementation date is July 2017, and indications from government
are that the transition period will be very short.
It remains to be seen how the government will balance public
interest in curbing the laundering of criminal funds in New
Zealand, with rising compliance costs for businesses.
Currently, Phase 2 Entities need only verify the identity of
persons paying $10,000 or more in cash, or when the transaction
appears suspicious, whereas Phase 2 will propose additional
obligations for Phase 2 Entities, such as a requirement to:
carry out and maintain a detailed AML/CFT risk assessment and
appoint a Compliance Officer to administer and maintain the
conduct customer due diligence (asking for, and verifying
customers' identification) in a wider range of
conduct enhanced customer due diligence (verifying source of
funds) when conducting high-risk transactions
retain records of documents associated with transactions
(including the nature, amount, currency, date, and parties
involved) for not less than 5 years
proactively report transactions or proposed transactions to the
Financial Intelligence Unit if there is a reasonable suspicion they
involve money laundering or the proceeds of crime
meet audit and annual reporting requirements
be supervised by an appropriate authority
We will continue to monitor the AML/CFT Act for legislative
progress. If you have any questions regarding Phase 2 of the
AML/CFT Act, please contact our Financial Services team.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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