Notice Type
Departmental
Notice Title

Proposed Regulations Under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009

In accordance with section 154(3) of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 ("AML/CFT"), the Minister of Justice hereby gives notice that he intends to make recommendations to the Governor-General that regulations are made to prescribe the matters described below:
Definition of reporting entity
1. The definition of reporting entity will include:
1.1 persons required to be authorised financial advisers (including persons who provide financial adviser services to wholesale clients in respect of category one products) under the Financial Advisers Act 2008 when they arrange for another reporting entity to provide financial services (being those activities listed in the definition of financial institution) to a customer
1.2 Trust and Company Service Providers (who are not otherwise captured by the Financial Transactions Reporting Act 1996 or exempted from the AML/CFT Act).
Definition of bearer negotiable instrument
2. The definition of bearer negotiable instrument will include stored value instruments.
Identity requirements for enhanced due diligence
3. Identity requirements for enhanced due diligence will include the collection of name and date of birth information about any beneficiary of a trust (where the trust is a customer) with the following exception:
3.1 Where the trust is a discretionary trust; or there are more than ten beneficiaries of the trust, reporting entities will be required to collect information about the type(s) or class(es) of beneficiaries and where practicable the numbers of beneficiaries within each class or type.
Anonymous accounts
4. When a reporting entity is aware, or at the time a reporting entity becomes aware of an existing anonymous account, standard customer due diligence (at a minimum) will be required in accordance with the Act.
Designated Business Groups
5. Eligibility for Designated Business Groups (DBGs) will be extended to:
5.1 include network agents and sub-agents within the money remittance industry
5.2 clarify that DBGs may also include related companies incorporated in overseas jurisdictions with sufficient AML/CFT systems where those entities are supervised and regulated for AML/CFT purposes.
6. An election to be a member of a DBG will be in accordance with regulations if it is made in writing in the approved form and provided to an AML/CFT supervisor, containing the following information:
6.1 Name of each entity electing to join the DBG
6.2 name and contact details for a contact person for the DBG
6.3 name and contact details of each entity’s AML/CFT compliance officer.
7. An election will come into force no less than 30 days after the approved form is received by the AML/CFT supervisor, or on such later date as is specified on that form, unless the AML/CFT supervisor requests further information from the contact person.
8. If an AML/CFT supervisor does request further information, the election will come into force no less than 30 days after the requested information is received.
9. A condition of DBG membership will be that the members of a DBG must notify the relevant AML/CFT supervisor, in writing within 30 days, of any of the following:
9.1 A withdrawal of a member from the DBG; or
9.2 an election of a new member; or
9.3 the termination of the DBG; or
9.4 any other change in the details previously notified to any AML/CFT supervisor in respect of the DBG.
Annual reports
10. The following information will be required to be contained in an annual report:
10.1 General information relating to the types of financial activities that the reporting entity engages in, or the sector in which the reporting entity operates.
10.2 Information regarding:
10.2.1 compliance with any conditions of partial exemption and/or enforceable undertakings
10.2.2 branches/subsidiaries in another country
10.2.3 membership of a DBG for the purposes of the AML/CFT Act
10.2.4 correspondent banking relationships.
10.3 Information on the reporting entity’s risk assessment.
10.4 Information relating to the following:
10.4.1 Appointment of AML/CFT compliance officer (including details of internal reporting, and senior management oversight arrangements).
10.4.2 Vetting/risk screening of employees and senior managers with AML/CFT responsibilities.
10.4.3 AML/CFT training for employees and senior managers with AML/CFT responsibilities.
10.4.4 Record keeping procedures.
10.4.5 Procedures for regular internal review and biennial independent audit of the risk assessment and AML/CFT programme.
10.4.6 Incorporation of supervisory and FIU feedback (including for example, guidance and codes through to conditions of partial exemptions) into the risk assessment and elements of the programme as is relevant.
10.5 Information regarding different types/levels of customer due diligence applied in different circumstances based on consideration of:
10.5.1 products/services offered and delivery mechanisms (including for example, new technologies)
10.5.2 relevant business relationship arrangements (including for example, correspondent banking arrangements)
10.5.3 customer characteristics, including, but not limited to customer type and country of domicile (including for example, politically exposed persons)
10.5.4 interactions of different customer, business relationship and product categories
10.5.5 information concerning the management of discrepancies arising during the course of an inability to complete customer due diligence
10.5.6 information regarding reliance on other reporting entities agents, third parties or persons in another country, for conducting and providing CDD.
10.6 Information concerning:
10.6.1 transaction and account activity monitoring to detect suspicious activity
10.6.2 procedures for reporting to the FIU suspicious transactions.
Applicable threshold values
11. Applicable thresholds for the purposes of the occasional transaction definition will be:
11.1 For cash transactions in a casino, $6,0001 and above.
11.2 For the sale of stored value instruments where no part of the monetary value stored on (or in relation to) the instrument can be withdrawn in cash, $5,000 and above.
11.3 For the sale of stored value instruments where all or part of the monetary value stored on (or in relation to) the instrument can be withdrawn in cash, $1,000 and above.
11.4 For the sale and encashment of traveller’s cheques, $5,000 and above.
11.5 For the sale and encashment of money and postal orders, $1,000 and above.
11.6 Currency exchange transactions, $1,000 and above.
11.7 All other occasional transactions, $10,000 and above.
12. The applicable threshold for the purpose of the definition of beneficial ownership will be 25%.
Simplified due diligence
13. Simplified due diligence may be applied to:
13.1 trustees and statutory supervisors as defined by section 48 of the Securities Act 1978 when acting in their own corporate capacity (not in respect of any trust they may be acting for)
13.2 trustee companies as defined by the Trustee Companies Act 1967, when they are acting in their own corporate capacity (not in respect of any trust they may be acting for)
13.3 Crown entities as defined by section 7(1) of the Crown Entities Act 2004, with the exception of the Public Trust (which will be treated equivalently to Trustee Companies, see above)
13.4 organisations named in Schedule 4 of the Public Finance Act 1989
13.5 government bodies (equivalent to those defined in the NZ State Sector Act 1988) located in overseas jurisdictions with broadly equivalent AML/CFT regimes.
Exemptions
14. Exemptions will be provided for as described below.
14.1 Lawyers (or incorporated law firms), conveyancing practitioners (or incorporated conveyancing firms), accountants or real estate agents to the extent that they are captured by the Financial Transactions Reporting Act 1996 (FTRA), will be exempt from all obligations.
14.2 Retail businesses (including pawnbrokers) will be exempt from all obligations.
14.3 Government departments (listed in Schedule 1 of the State Sector Act 1988) will be exempt from all obligations.
14.4 The Reserve Bank of New Zealand will be exempt from all obligations.
14.5 Currency exchange services in hotels (and other providers of accommodation) will be exempt from all obligations except suspicious transaction report (STR) obligations and associated record keeping on the condition that transaction limits of $1,000 are in place.
14.6 The provision of safety deposit boxes in traveller accommodation will be exempt from all obligations on the condition that the facility is located either:
14.6.1 in the room of the registered guest and controlled by the registered guest; or
14.6.2 outside the room of the registered guest but within the place of the traveller accommodation and controlled by the provider of the traveller accommodation, and holds funds of registered guests.
14.7 Low-value life insurance products will be exempt from customer due diligence (CDD) obligations on the condition that identity verification is conducted on pay-out of the policy.
14.8 Pure risk-based life insurance products (including funeral policies) will be exempt from all obligations.
14.9 Insurance products closed to new customers or premiums (other than those contractually agreed) will be exempt from all obligations.
14.10 Securities registries will be exempt from all obligations except STR reporting and associated record keeping on the condition that in respect of off-market or paper-based share transfers, another reporting entity
(or person subject to the requirements of the FTRA) must have certified that customer due diligence has taken place in accordance with the AML/CFT Act on the transferor before the transfer takes place.
14.11 Eligible workplace based superannuation schemes from verification of CDD information at the establishment of a business relationship, on the following conditions:
14.11.1 The customer’s identity and address has been verified by his or her employer or the Inland Revenue Department.
14.11.2 The relevant information is passed on to the provider of the scheme, as soon as practicable.
14.11.3 The provider undertakes CDD in accordance with the AML/CFT Act prior to the payment of any benefit.
14.12 Low-value superannuation schemes will be exempt from all obligations.
14.13 Overseas pension bank accounts that are opened, administered and operated under the Social Security (Alternative Arrangement for Overseas Pensions) Regulations 1996, will be exempt from CDD requirements.
14.14 Corporate treasury functions (where financial activity is undertaken within a corporate group but not extended to members of the public or persons outside the corporate group) will be exempt from all obligations.
14.15 Financial institutions in liquidation, receivership, or which have entered into moratorium agreements with their creditors and are unable to issue new debt securities to the public will be exempt from all obligations.
14.16 Reporting entities will be exempt from vetting of staff that are already subject to statutory requirements to be vetted elsewhere, on the condition that the reporting entity is satisfied that the vetting already undertaken is appropriate for the purposes of managing the risks of money laundering and terrorist financing.
14.17 Reporting entities will be exempt from the requirement to collect full originator information for domestic wire transfers and regulations will specify that the transaction itself will constitute identifying information for the purposes of a domestic wire transfer.
14.18 Reporting entities will be exempt from identity and identity verification requirements in respect of wire transfers below $1,000.
14.19 All reporting entities will be exempt from the address verification requirement in respect of occasional transactions.
14.20 All reporting entities will be exempt from CDD obligations related to regulated trust accounts held by another reporting entity or person subject to the FTRA from beneficial ownership requirements on the following conditions:
14.20.1 The reporting entity has taken reasonable steps to satisfy itself that the account is being operated for legitimate and professional purposes and not to obscure beneficial ownership.
14.20.2 That the facility holder has a written agreement with the reporting entity that information relating to the identity of those clients will be produced upon request without delay.
14.21 Debt collection will be exempt from all obligations except STR obligations and associated record keeping.
14.22 Premium funding (including, but not limited to, fees for advice or services provided in connection with such a policy and taxes payable in connection with such a policy) related to insurance products will be exempt from CDD obligations.
14.23 Premium funding (including, but not limited to, fees for advice or services provided in connection with such a policy and taxes payable in connection with such a policy) related to insurance products not captured by the AML/CFT regime, where those agreements are provided by insurance companies and associated with
the provision of an insurance policy, will be exempt from all obligations.
14.24 An exemption for a special remittance card facility consistent with the existing exemption for a special remittance card facility under the FTRA.
14.25 General risk-based insurance (those products or policies that are not life insurance and contain no investment component) will be exempt from all obligations.
14.26 The underwriting of general risk-based insurance will be exempt from all obligations.
14.27 All reporting entities will be exempt from the requirement to maintain records of the parties to the transaction, for transactions under applicable thresholds.
14.28 Casinos will be exempt from the section 49 requirements of the AML/CFT Act in respect of the following transactions:
14.28.1 Purchase of chips at the casino cage below applicable threshold.
14.28.2 Redemption of chips at the casino cage below applicable threshold.
14.28.3 Purchase of coin and tokens at the casino cage below applicable threshold.
14.28.4 Redemption of coin and tokens at the casino cage below applicable threshold.
14.28.5 Exchange of notes for notes at the casino cage below applicable threshold.
15. In addition, it is intended to clarify in regulations that a person is not a financial institution just because they manage the means of payment through the provision of:
15.1 stored value instruments (including gift certificates and vouchers) underneath the applicable thresholds
15.2 any other bearer negotiable instruments underneath the applicable thresholds.
Submissions to the Cabinet Domestic Policy Committee describing these matters in more detail are available on the Ministry of Justice website
www.justice.govt.nz
Any person wishing to provide comment on these proposals should contact
Leeanne McAviney
International Criminal Law Team
Ministry of Justice
SX10088
Wellington.
Telephone: (04) 498 4285.
Email: leeanne.mcaviney@justice.govt.nz
Key to Annotation
1All monetary values are described in New Zealand dollars.