Another step in New Zealand’s AML/CFT reform programme

New Zealand’s Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act) continues to undergo material reform as part of the Government’s overhaul of the AML/CFT regime. 

On 18 May 2026, two new AML/CFT related Acts received Royal Assent:

• the Anti-Money Laundering and Counter Financing of Terrorism Amendment Act (AML/CFT Amendment Act); and
• the Anti-Money Laundering and Countering Financing of Terrorism (Supervisor, Levy, and Other Matters) Amendment Act (Supervisor, Levy, and Other Matters Amendment Act).

These Acts were introduced as Bills in December 2024 and July 2025 respectively but rapidly progressed from second reading to Royal Assent in just four weeks.

Associate Justice Minister Nicole McKee stated that the current AML/CFT regime has drifted into costly box-ticking that frustrates businesses and everyday New Zealanders, without doing enough to stop serious criminals. These Acts are intended to "refocus the system on genuine risk – reducing pointless paperwork for low-risk customers while improving the detection and disruption of real financial crime.”

The Acts follow on from the passing of the Statutes Amendment Act in November 2025, which made a number of minor technical changes to a wide range of legislation, including the AML/CFT Act. Read more in our insights article on the Statutes Amendment Act here.

 

AML/CFT AMENDMENT ACT

The AML/CFT Amendment Act comes into effect on 19 May 2026.

The amendments made by this Act are aimed at providing regulatory relief for reporting entities, as well as clarifying existing obligations. The majority of the Act's amendments stem from recommendations following a Ministry of Justice statutory review of the AML/CFT Act, which concluded in 2022.

Key changes include:

• Key definitions: The Act creates new definitions and clarifies existing ones to improve certainty and coverage. This includes amending the definitions of beneficial owner to focus on effective control or prescribed ownership thresholds, refining the definition of trust and company service provider to exclude certain professionals, and introducing definitions for money or value transfer service and life insurer.
• Application of obligations: Reporting entities that carry out activities of another type of reporting entity in the ordinary course of business are treated as performing those activities for AML/CFT purposes, closing structural gaps in coverage.
• Updated verification procedures: The Act specifies that a reporting entity is not required to verify information relating to the source of funds or source of wealth of a trust under enhanced customer due diligence (CDD) requirements on trusts, if the reporting entity is satisfied that doing so would not mitigate risks identified from conducting standard CDD.
• Politically exposed persons (PEP): The PEP provisions are amended to enable a risk-based approach for reporting entities when determining whether a customer or beneficial owner is a foreign politically exposed person.

The Act also makes further changes to strengthen record-keeping obligations and risk assessment requirements, expand cross‑border reporting beyond cash to include stored value instruments, and give the AML/CFT supervisor greater authority to assist overseas counterparts and recover costs and penalties.

 

SUPERVISOR, LEVY, AND OTHER MATTERS AMENDMENT ACT

The Supervisor, Levy, and Other Matters Amendment Act will take effect on 1 July 2026.

The Act aims to improve the efficiency and effectiveness of New Zealand’s AML/CFT system by introducing a more flexible, agile, and risk-based approach to supervision. It establishes the Department of Internal Affairs (DIA) as the sole supervisor and introduces an industry levy to support a hybrid funding model for the AML/CFT system.

Key changes include:

• Single supervisor: A single-supervisor model will replace the current three-supervisor model and will establish the Department of Internal Affairs as the sole supervisor of the AML/CFT system. Currently, supervision of different parts of the AML/CFT system is overseen by the Reserve Bank of New Zealand (RBNZ), the Financial Markets Authority (FMA), and the Department of Internal Affairs.
• Levies on reporting entities: The Act establishes a new levy regime by requiring reporting entities to pay levies set by regulations, allowing levies to fund supervisory, policy, intelligence and regulatory work, including the national strategy and work programme. The levy is intended to ensure costs are equitable and reasonable for the sector and do not place undue burden on small businesses.
• National AML/CFT strategy: The Act inserts new statutory requirements for a national AML/CFT strategy, adopted by the Minister to guide the supervisor, Commissioner, Ministry, and other public service agencies, and a related work programme setting out how the strategy will be implemented. Any amendments to the levy must be informed by the national strategy and work programme.
• Expanded secondary legislation powers: The Act significantly reshapes how AML/CFT requirements are made by introducing new powers to make rules and notices covering CDD, reporting, thresholds, exemptions, and the categorisation of entities and activities. This is designed to allow AML/CFT obligations to be prescribed in more flexible instruments rather than only through regulations.
• Enhanced supervisory powers: The supervisor's powers are expanded to require information, compel attendance at meetings, and conduct inspections. Statutory timelines for supplying information are introduced, including urgent production requirements.
• Expanded civil liability and enforcement framework: The Act introduces new civil liability acts, including failures to undertake risk assessments, provide annual reports, or meet cross‑border reporting duties. References to formal warnings are replaced with censures, and a new formal censure process is introduced, including a right of appeal to the District Court. Courts are required to apply pecuniary penalties first to cover the actual costs of AML/CFT supervisors bringing proceedings.

The Act expands the suspicious activity reporting regime by updating the definition of suspicious activity, broadening the scope of persons able to submit suspicious activity reports, and providing for the transfer of supervisory functions, information and records from the FMA and RBNZ to the DIA.

 

OUR VIEW

As the latest in a series of ongoing AML/CFT Act reforms, the passing of these two Acts into law marks a significant next phase in the Government’s long-term approach to improving New Zealand's AML/CFT regime. Taken together, they continue the shift towards a risk‑based, proportionate framework, reshaping how the regime is overseen and funded.

Many of the amendments address long‑standing areas of uncertainty in the AML/CFT Act and are likely to be welcomed by reporting entities and their compliance teams. In particular, the move toward greater risk‑based flexibility in CDD and the strengthening of record‑keeping and enforcement provisions should improve consistency and workability across the regime.

The move to a single‑supervisor model has the potential to deliver greater consistency in supervision and guidance over time, alongside the creation of a national AML/CFT strategy and work programme to provide clearer direction for the sector. While these tools are intended to support a more agile and responsive system, it remains to be seen how they are implemented in practice.

 

NEXT STEPS

Reporting entities should expect continued change over the medium term and should begin considering how these reforms will affect their compliance frameworks.

With the AML/CFT Amendment Act now passed into law, the DIA will update guidance to reflect changes that are effective immediately. Updated guidance will be published on the DIA’s website.

Planning for the transition to the DIA as the single AML/CFT supervisor is on track to take effect on 1 July 2026. The DIA is working in partnership with the FMA and RBNZ to ensure a "coordinated and seamless transition and minimal disruption for the sector."

A final ‘omnibus’ Bill, which is expected to provide further regulatory relief for businesses, is expected to be introduced to the House in the current term of Government.

Please reach out if you would like to discuss the implications of these changes for your business.