Any business entity that is supervised under section 5 of the AML & CFT Act 2009 is considered a reporting entity. They are also from the industries who are most vulnerable to financial crime. These include accountants, real estate, law and investment firms. As such, whenever a company from within the aforementioned industries has a financial transaction, they are required to conduct CDD. By verifying their potential customers at the beginning of their relationship with the company, the reporting entity is mitigating the risk of becoming a victim to financial crime.
Reporting entities have a number of obligations under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009, not just conducting CDD. According to the New Zealand Police Financial Intelligence website, these obligations include:
- Undertaking Prescribed Transaction Reporting
- Undertaking Suspicious Activity Reporting
- Carrying out an assessment of the money laundering and terrorism financing risk they may reasonably expect to face
- Establishing, implementing and maintaining an AML/CFT compliance programme that includes internal procedures, policies and controls that will detect, manage and mitigate the risk(s) assessed above
- Carrying out customer due diligence (CDD), which includes customer identification and verification and ongoing CDD
- Record keeping
What are Reporting Entities
The list of what is classified as a reporting entity is constantly growing. Currently some examples of reporting entities include:
- Law firms
- Real Estate
- A designated non-financial business or profession
- A financial institution
These supervisors are the individuals that entities can confirm their reporting obligations i.e. can tell the company what they are required to do under the legislation. There are three agencies currently that actively monitor and supervise reporting entities in New Zealand.
- Reserve Bank of New Zealand (RBNZ)
- Financial Markets Authority (FMA)
- Department of Internal Affairs (DIA)
In order to confirm their reporting obligations, all reporting entities should reach out to their sector supervisor to ensure they are fulfilling their compliance requirements.
Staying Compliant in an Everchanging Environment
Arguably the most difficult task of any reporting entity is staying on top of the legislation changes and ensuring they are maintaining compliance. First AML can help with this as we are dedicated to being up to date with every single amendment made to the legislation.
About First AML
First AML is an AML technology provider, and the maker of Source, an all-in-one AML platform. Source powers thousands of compliance experts around the globe to reduce the time and cost burden of complex and international entity KYC. Its enterprise-wide, long term approach to the KYC / CDD data lifecycle addresses time and cost challenges while minimising compliance, reputational and security risks.