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 ("AML/CFT") Act 2009, the Minister of Justice hereby gives notice that she intends to make recommendations
to the Governor-General that Regulations are made to prescribe the matters described below:
Annual reporting
A form will be prescribed for reporting entities to use to meet annual reporting obligations.
The form requires information about a reporting entity’s:
- risk assessment, including information on the types
of customers a reporting entity has, and the types of products and services it provides;
- AML/CFT programme, including whether a reporting entity complies with the requirements of section 57 of the AML/CFT Act;
- most recent audit of its risk assessment and programme.
The annual reporting requirements in the Anti-Money Laundering and Countering Financing of Terrorism (Requirements and Compliance) Regulations 2011 will be revoked, to be replaced by the prescribed form.
Suspicious transaction report requirements
Details that suspicious transaction reports must contain will be prescribed.
The proposed Regulations recognise that in some instances information may not be applicable, depending on a reporting entity’s obligations in the AML/CFT Act.
Formal warning form
A form will be prescribed, to be used by AML/CFT supervisor agencies to issue formal warnings pursuant to section 80 of the AML/CFT Act.
Technical amendments to clarify AML/CFT Regulations
The following technical amendments will be made to the AML/CFT Regulations made in 2011, to:
- Clarify the beneficial ownership threshold as being more than 25%.
- Prescribe the occasional transaction threshold for wire transfers as over $1,000.00.
- Clarify wording in the Regulation that includes trust and company service providers in the definition of reporting entity, so that it does not include a person who provides physical premises or housing for a company or trust as a landlord.
- Exempt record keeping obligations for transactions that are purchase of chips at a gaming table in a casino below $6,000.00.
- Clarify that the exemption for record keeping obligations for transactions below $6,000.00 for the exchange of notes for notes does not relate to currency exchange.
- Clarify the scope of the exemption for consumer credit finance by removing the reference to "consumer".
- Clarify the provision references in the exemptions from customer due diligence so that relevant reporting entities are clearly exempt from customer due diligence obligations.
- Clarify the exemption for loyalty schemes so that the exemption also applies if the purpose of a scheme is to promote the acquisition of goods from one or more
non-finance businesses, and if a member of a scheme is allocated credits under the facility as a result of the acquisition of goods from the non-finance business or businesses.
Circumstances when customer due diligence must be
carried out
Reporting entities will be required to conduct enhanced customer due diligence where there is a suspicion of money laundering or terrorist financing.
This obligation will:
- apply to transactions below occasional transaction thresholds;
- apply to existing customers (within the meaning of the term in section 5 of the Act);
- not apply where reporting entities have an exemption from customer due diligence requirements;
- not apply where the reporting entity has previously conducted CDD on the customer, unless there are reasonable grounds for the reporting entity to doubt the adequacy or veracity of the documents, data or information previously obtained.
Identity requirements for international wire transfers
Institutions sending international wire transfers (originating institutions) will be required to obtain (but not verify) identity information on the recipient of an international wire transfer over the applicable threshold.
Institutions receiving international wire transfers (beneficiary institutions) will be required to obtain identity information and verify the identity of a recipient of an international wire transfer above the applicable threshold.
Exemption for stored value instruments
The exemption for stored value instruments in the AML/CFT (Exemptions) Regulations 2011 will be amended. The amendment will clarify that a person is not a financial institution just because they manage the means of payment through the provision of stored value instruments that have a maximum potential value at any one time of less than $1,000.00 (if the stored value instrument is redeemable for cash), or $5,000.00 (if the stored value instrument is
not redeemable for cash) regardless of whether there is a business relationship, as defined in section 5 of the AML/CFT Act, between the seller of the instrument and
the customer.
The exemption will exclude instruments that can be:
- reloaded with $10,000.00 or more in any consecutive
12- month period;
- reloaded directly through transfer from an account held at a financial institution that is either unregulated for AML/CFT purposes, or located in a country with insufficient money laundering and countering financing of terrorist systems and measures.
Simplified due diligence
The list of customers whom simplified due diligence may be applied to will include the following:
- Foreign publicly-listed companies whose equity securities are listed on a recognised overseas stock exchange that has sufficient disclosure requirements and that are listed in a country with sufficient anti-money laundering and countering financing of terrorism systems and measures in place.
- Entities that are licensed or registered by the Reserve Bank of New Zealand in accordance with the Insurance (Prudential Supervision) Act 2010, the Reserve Bank of New Zealand Act 1989, or the Non-bank Deposit Takers regime, upon enactment.
Exemption from beneficial ownership obligations for certain custodial accounts
Regulation 24 of the AML/CFT (Exemptions) Regulations 2011 will be amended so that reporting entities will be exempt from beneficial ownership requirements related to custodial accounts held by another reporting entity or person subject to the FTRA on the following conditions:
- 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.
- 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.
Other exemptions
Exemptions will be provided for as described below.
- Persons that provide auctions, including internet based auction providers, and other retail non-finance businesses that transfer funds on behalf of their customers, will be exempt from all obligations.
- Reporting entities that are members of a designated business group will be able to appoint one person to act as AML/CFT compliance officer for each member.
Submissions to the Cabinet Social 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:
Tsara Hawij
Criminal Law Team
Ministry of Justice
SX10088
Wellington
Telephone: (04) 494 9838.
Email: tsara.hawij@justice.govt.nz
Note:
All monetary values are described in New Zealand dollars.