New Zealand is a major target for money launderers and terrorist financiers. In fact, authorities conservatively estimate that overseas criminals, seeking to mask their illicit funds, launder 1.3 billion dollars through our economy every year.
This is a real threat to both our economy and our reputation as a good place to do business.
And that’s exactly why, in 2013, our Government fully implemented the Anti-Money Laundering and Countering Financing Terrorism Act (AML/CFT Act).
This Act is specifically designed to keep our money clean and protect New Zealand from the dangers that money laundering and terrorist financing can bring.
Broadly speaking, it requires various New Zealand businesses, known as “Reporting Entities” (including law firms, accountants, real estate agents, high-value dealers, money remitters, banks, life insurers and non-bank deposit takers, issuers of securities, trustee companies, futures dealers, collective investment schemes, brokers and financial advisers financial institutions, accountants and lawyers), to identify and assess their risks of money laundering and terrorist financing.
Subsequently, these Reporting Entities must develop a Risk Assessment and Compliance Programmes, that stop criminals from concealing the ownership and control of illegally obtained assets, within their business.
That’s why banks, lawyers, accountants, and many other businesses often require identity verification before engaging with customers. Things like staff vetting and training, transaction monitoring, and reporting of suspicious activities also fall under these programmes.
In addition, these Reporting Entities also have a series of on-going reporting requirements they must fulfil so that their Supervisor can keep their eye on all things AML/CFT.
One of these requirements is to submit an annual report to the Supervisor, highlighting the policies, procedures and controls the Reporting Entity has in place, to guard against financial crime.
These annual reports, which are due at the end of August each year, are a great opportunity for Reporting Entities to critically evaluate their AML Framework, and ensure they are up to scratch, to safeguard themselves against financial crime. But, they also allow the Supervisor to obtain a big-picture understanding of all of the threats and risks that Reporting Entities nationwide face.
This then enables them to consciously direct their resources and attention to high-risk areas, to ensure that, as a nation, we can effectively avoid exploitation of our financial systems, and protect our economy and reputation, both now, and in the future.
Overall, these processes can be frustrating, tedious and costly for everyone involved.
In particular, many Reporting Entities struggle to find the time and resources to effectively meet these obligations, amidst other daily happenings and responsibilities. A 2014 KPMG report found that the demands on management are “significant”, especially given that a complete overhaul of policies and procedures is often required, to fulfil obligations.
But the benefits are significant. In fact, it is estimated that $1.7 billion of illegal drugs and fraud crime, and $5 billion of border criminal activity will be disrupted over a ten year period, thanks to this Act.
And of course, these processes play a critical, and irreplaceable, role in preserving New Zealand’s strong international reputation – something we cannot put a price tag on.
Here at One AML, we are honoured to play a role in enlivening these benefits, by helping Reporting Entities understand and fulfil their obligations.
If you are a Reporting Entity and would like expert guidance on your AML/CFT requirements and responsibilities, get in touch with us today.