Your obligations under the AML/CFT Act
Money laundering and similar crimes are often completed with the unwitting assistance of legitimate financial institutions. That’s why recent updates to the NZ 2009 Anti-Money Laundering and Counter-Financing of Terrorism Act (AML/CFT) include compliance requirements for accountants and other financial service organisations.
Accounting firms, bookkeepers and individual accountants who provide specific accounting services are covered by the Act, which means they must meet a range of compliance obligations – including risk management, reporting and ‘know your customer’ (KYC) verification.
Does the Act apply to you?
The AML/CFT Act can apply to any business or individual working in the accounting field – from chartered accountants to bookkeepers to tax agents.
If your business offers any of these services, you’re likely to be covered by the Act:
- Working as a formation agent for legal persons or arrangements
- Acting as a nominee director, shareholder or trustee
- Managing client funds, accounts and securities
- Providing a registered office or correspondence address
- Handling conveyancing or transfers of beneficial interest in real estate
- Making transactions on behalf of a client to buy, sell or transfer a business
- Engaging in or offering instructions for creating, operating or managing a business, legal person or legal arrangement
Your AML obligations
If your business does provide any of the services covered by the Act, you’re considered a ‘Reporting Entity’. This means you need to meet compliance requirements and report to the Department of Internal Affairs (DIA).
- Assessing your level of risk
- Appointing an AML/CFT compliance officer
- Establishing a written AML/CFT compliance plan
- Carrying out KYC verification on clients
- Looking for suspicious activity and reporting it to the DIA
- Keeping compliance records and making them available for audits
The KYC aspect of the Act, sometimes called customer due diligence, should be carried out for any new customers and for existing customers if the business relationship changes. If your business is handling a cash transaction of NZ$10,000 or more for a non-client, KYC also applies.
There are three levels of KYC. Each level starts with talking to customers about their needs, their financial circumstances and the nature of the proposed business relationship.
This applies to the majority of low-to-medium-risk customers. At this level, your firm needs to collect documents showing:
- Full name
- Date of birth
- Address or registered office
- Company identification or registration number
Lower-level verification can be completed if your customer is a business or organisation listed in the AML/CFT Act. This includes government departments, local authorities and registered banks.
At this level, you only need to collect information about the person representing the entity – full name, date of birth and relationship to the organisation.
This type of KYC applies to customers with higher levels of risk.
- Trusts or other personal asset holdings
- New Zealand non-residents from countries that lack AML/CFT legislation
- A company with nominee shareholders or bearer shares
- Any customer with a particularly large, complex or unusual situation or transaction, or a heightened level of risk under the AML/CFT Act
If new or existing clients fall under these criteria, you will need to collect all the standard identity documentation as well as information about their sources of funding or wealth. This could be bank statements, company accounts or other records. As with all KYC information, you must do your best to verify this information through an independent source.
Building KYC into your systems
Managing a KYC programme on top of your regular work may sound complex and time-consuming – but it doesn’t have to be. With First AML, you can automate many aspects of the process, making it simpler for your business and your customers. Rather than going back and forth asking for documents and double-checking details, our software helps you collect and verify the right information from the start.
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.