The Anti-Money Laundering and Countering Financing of Terrorism Amendment Act 2017 (Amendment Act) received Royal assent on 10 August 2017. The Amendment Act makes a number of changes to the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act). These are planned to come into effect from August 2017 to October 2018.
The AML/CFT Act aims to detect and deter money laundering and terrorism financing by requiring 'reporting entities' such as banks and other financial institutions to take measures such as developing a risk assessment and compliance programme, undertaking customer due diligence (CDD), monitoring accounts and submitting suspicious transaction reports to the Police.
It is well known that the Amendment Act implements 'Phase 2' of the AML/CFT reforms by adding a number of businesses and professions to the list of reporting entities. These include high-value dealers (e.g. of art, bullion, jewellery, cars and boats), the New Zealand Racing Board, lawyers, conveyancers, accountants and real estate agents. However, the Amendment Act also includes a number of lesser known changes with implications for pre-existing reporting entities. We summarise these below.
Changes to customer due diligence
The Amendment Act introduces a requirement for 'standard' CDD to be carried out when a reporting entity becomes aware of an existing account that is anonymous. It also introduces that to carry out its CDD, a reporting entity relying on a third party (that is not an agent) is not responsible for ensuring that CDD is carried out in accordance with the AML/CFT Act (if certain conditions are met). These conditions include that the third party falls within an approved class of entity, and that the reporting entity is acting in good faith and has a reasonable cause to believe that the third party has conducted CDD to the standard required by the AML/CFT Act.
The existing AML/CFT regulations, which prescribe detail for the CDD requirements, will also be repealed and replaced. While some of the repealed provisions will be incorporated into the Act, there is still some uncertainty about what will be prescribed in the replacement regulations.
New reporting obligations
The Amendment Act expands the scope of reporting requirements from an obligation to report 'suspicious transactions' to an obligation to report 'suspicious activities'. This means the reporting requirements now apply not only where a person seeks to conduct a transaction through a reporting entity, but also to 'suspicious activities' i.e. where a reporting entity provides or proposes to provide a service to a person, a person requests a reporting entity to provide a service, or a person makes an inquiry to the reporting entity in relation to a service.
Expanded information sharing
Currently, the AML/CFT Act empowers the Commissioner of Police, New Zealand Customs Service and each of the AML/CFT supervisors (the Financial Markets Authority, the Department of Internal Affairs and the Reserve Bank) to disclose information obtained under the AML/CFT Act to any government agency for law enforcement purposes. The Amendment Act extends the scope of these information sharing powers by allowing information sharing with the regulators of the new classes of reporting entity (e.g. the New Zealand Law Society for lawyers) and, where permitted by regulations, private sector reporting entities. It also expands the extent to which information obtained for non-AML/CFT purposes (e.g. under the Non-bank Deposit Takers Act 2013) can be used and shared for AML/CFT purposes and vice versa.