Risky business: who pays?

 The Ministry of Justice is seeking feedback on a proposed levy framework designed to part‑fund New Zealand’s anti‑money laundering and countering financing of terrorism (AML/CFT) system. The proposals represent a significant structural shift in how the regime will be resourced and follow feedback in the Financial Action Task Force’s 2021 Mutual Evaluation Report. The proposals are expected to impact sectors assessed as high risk and medium‑high risk in the 2024 National Risk Assessment (NRA) and related Sector Risk Assessments (SRAs).

If adopted, levy regulations are expected to take effect in the second half of 2026, with levy collection commencing from 1 July 2027.

 

What will the levy pay for?

The proposed levies will fund:

• statutory functions performed by the Department of Internal Affairs (DIA) (as the incoming single supervisor), the Financial Intelligence Unit (FIU), and the Ministry of Justice;
• activities required to implement the AML/CFT Strategy and work programme, including enhanced intelligence, new supervisory models, targeted financial sanctions, and sector‑specific guidance; and
• the administrative costs required to collect the levies.

Annual levy funding requirements are estimated at approximately NZD27.3 million (average over 2027/28–2029/30).

 

Who will be required to pay?

The Ministry of Justice proposes applying the levy only to high‑risk and medium‑high‑risk sectors, based on the SRAs and the NRA.

The sectors proposed to contribute (by risk rating as per the SRA and NRA) include:

High risk

• Banks
• Virtual asset service providers (VASPs)
• Money remitters
• Trust or company service providers
• Derivatives issuers

Medium‑high risk

• Casinos and the TAB
• Real estate agents
• Accountants
• Law firms (excluding barristers sole)
• Conveyancers
• Payment providers
• Currency exchanges
• Providers of client money or property services

 

How much will the affected reporting entities pay?

The consultation proposes to split the levy burden across sectors according to risk and then apportion the burden within the sectors. We summarise the key proposed terms below.

Banks

Under the proposals, banks would contribute 85% of total levy revenue, representing approximately NZD23.2 million per year (based on the estimated total levy) in aggregate. Banks are considered the highest-risk sector, with over 90% of all financial transactions passing through the banking system. Banks are also central to almost all money-laundering and terrorism financing typologies.

The levy would be an asset‑based charge, with an indicative rate of 0.00322% of total reported assets over 2026/27 to 2029/30. ANZ is projected to pay the largest amount (approximately NZD6.8 million), with the other three “big four” banks each projected to pay over NZD4 million.

Banks with less than NZD1.5 billion in reported assets would be exempt from the levy.

Casinos and the TAB

Casinos and the TAB would fund 9% of total levy revenue.  

Casinos and the TAB would collectively contribute around NZD2.48 million per year, charged as 0.125%–0.5% of annual expenditure/player‑loss data. The indicative rate is 0.258%.

Other financial institutions and designated non-financial businesses and professions (DNFBPs)

The Ministry of Justice proposes that the other high and medium-high risk financial institutions (Other FIs) and DNFBPs would contribute the remaining 6% of total levy revenue. Approximately NZD1.62 million would be recovered from these Other FIs and DNFBPs. Three options are presented for the construction of the levy, with option three identified as the Ministry’s preferred model:

• Option one: a flat rate levy of approximately NZD404 per reporting entity (excluding banks, casinos and the TAB) required to submit an annual report to the DIA.
• Option two: a flat rate levy based on the number of compliance assessments a supervisor has made on a sector.
• Option three (preferred): a tiered levy model based on:
  • the value of transactions; or
  • the number of customers reported in annual AML/CFT reports.

Small operators (low transaction values or fewer customers) would be exempt, with larger entities paying higher levies.

 

Managing the 2026/27 funding gap

Because levies would not be collected until 1 July 2027, the first year of levy‑funded activity (2026/27) would create an initial deficit. Two recovery options are proposed for feedback:

• Spread recovery across five years (approximately NZD4.51 million per year) – the Ministry of Justice’s preferred approach, as it gives levy-paying reporting entities sufficient time to repay the deficit.
• Recover the entire deficit in 2027/28, requiring a total levy of NZD45 million that year – this is considered too financially burdensome for some levy-paying reporting entities.

 

What this means for reporting entities

Reporting entities should consider:

• whether they fall within a levy‑paying sector;
• how customer volumes, transaction values or balance sheet size may place them within particular levy bands;
• whether the proposals may affect pricing, service models, or compliance resourcing; and
• whether they wish to engage with the consultation process (closing 10 April 2026).

 

Next steps

Final policy recommendations will follow the consultation process. If adopted, reporting entities can expect regulations later in 2026, and invoices for the 2027/28 levy in mid‑2027.

Businesses operating in high‑risk or medium‑high‑risk AML/CFT sectors should begin planning for the introduction of levy obligations and consider engaging with the Ministry on the structure and calculation methodology.

Submissions on this consultation close at 5.00pm on Friday 10 April 2026. The consultation document can be accessed here.

In addition, the Ministry of Justice, the DIA and the FIU hosted a joint online Introduction to Levy Proposals session on 18 March 2026. This session will be followed by a Final Q&A session on 8 April 2026 (register here).

 

Our view

The proposed levies will increase costs for affected reporting entities.

While we support the risk-based apportionment of the levy burden under option three of the “Other FI and DNFBP” levy proposal, this option does not appear to recognise differences in relative risk presented between sectors within the two categories (high and medium-high). Recognising or clarifying those differences would be essential to support the Ministry of Justice’s stated equitable approach to the cost recovery principles underpinning the proposal.

If you have any questions about this consultation or would like to discuss AML/CFT more generally, please contact one of our team.