The AML/CFT Act introduces new obligations on some companies and these changes came into effect from 30 June 2013.
This legislation requires those affected (described as reporting entities) to take measures to detect, deter and report money laundering and counter the financing of terrorism. For context, recent figures indicate $1.5B is laundered in New Zealand each year.
New obligations include being required to perform customer due diligence and verify identity. What needs to be done in each case depends on the level of risk and each business must make their own independent risk assessment.
The legislation sets up a regime with three supervising bodies (the Reserve Bank, the Financial Markets Authority and the Department of Internal Affairs). Each body has information on their website relating to the requirements which apply to those they supervise.
These three bodies jointly issued a code of practice called the Identity Verification Code of Practice 2011 (the IV Code) - click here for more information. The IV Code outlines a safe harbour for reporting entities in complying with their AML/CFT Act obligations.
The IV Code outlines what the safe harbour is and what the alternatives to this are.
PART 3 of the IV Code provides a suggested best practice for all reporting entities conducting name, address and date of birth identity verification on customers. In order to conduct electronic identity verification of a customer's name, address and date of birth a reporting entity must;
a) verify the customer's name from at least two reliable and independent electronic sources;
b) verify the customer's date of birth from at least one reliable and independent electronic source; and
c) verify the customer's address from at least one reliable and independent electronic source.
Note: Reporting entities must check the individual's details against their customer records to ensure that no other person has presented the same identity information or documents.
What does this mean for Companies?
The AML/CFT Act 2009 defines those effected (reporting entities such as financial insitutions) in Section 5 and in Section 6 it states how the legislation applies to them.
There are many aspects of AML/CFT compliance to consider. AML could mean the following for businesses:
- A Risk Assessment of the money laundering and financing of terrorism that you could expect in the course of running your business
- An AML/CFT Programme that includes procedures to detect, deter, manage and mitigate money laundering and the financing of terrorism
- A new Compliance Officer appointed to administer and maintain your AML/CFT programme
- New Customer Due Diligence processes including customer identification and verification of identity
- New Suspicious Transaction Reporting, Auditing and Annual Reporting obligations, systems and processes.
Please note we would always recommend our customers take independent legal advice in relation to their compliance requirements.
What does this mean for Consumers?
As a consumer you may come across more robust identity processes when dealing with companies such as banks and finance companies. The types of identification and documents you may be asked to provide may vary between companies. These extra measures of security are for your benefit and the benefit of New Zealand as we try and protect our businesses from criminal activity.
If you would like to read more, visit one of the following sites: