This Act means that New Zealand financial entities and designated non-financial businesses and professionals must put in place, measures to detect and deter money laundering and terrorism financing to ensure we’re a safe country and reputable country to do business with.

Banks, financial service companies and casinos (Phase 1) and now lawyers, accountants and real estate agents (phase 2) all have to comply with the AML/CFT Act.

All phase 2 entities like the phase 1 entities are required to develop AML/CFT processes within their business.

Compliance Officer – designate an employee as the AML/CFT compliance officer to administer and maintain both the risk assessment and the programme.

Risk Assessment – develop a risk assessment, which considers:

• The nature and size complexity of your business

• Products and services you offer

• Delivery channels (e.g. face-to-face or online)

• Your businesses’ customers

• The countries where you do business

• Institutions your business works alongside

AML/CFT Programme – develop risk-based policies, procedures and controls for all the AML/CFT obligations (e.g. a policy on how the business will identify and verify the identity of customers). The programme should be based on the findings in the risk assessment.

Employee vetting and training – ensure that employees involved in AML/CFT duties and senior management are vetted (e.g. a criminal records check for new employees) and undergo training in AML/CFT processes employed by the entity and the relevant regulations.

Customer due diligence (CDD)

• Identify and verify the identity of new customers and existing customers when appropriate

• The level of CDD that is carried out will vary according to the risk of money laundering or terrorist financing – where the risk is higher the entity will need to do more due diligence such as checking the customer’s source of wealth and/or funds

• Ongoing customer due diligence

• Screening for politically exposed persons (e.g. foreign government officials that may pose a corruption risk)

• Identify parties involved in a wire transfer

• In certain conditions, the entity may rely on third parties for CDD

Transaction & account monitoring – monitor customer accounts and transactions to identify any suspicious transactions (e.g. unusual transactions that don’t fit the customer profile and do not appear to have an economic or lawful purpose).

Prescribed Transaction Reporting such as :

• cash transactions of $10,000 and over

• and wire transfers of $1,000 and over

Record keeping – keep records of customers and their transactions and other related information.

Monitoring compliance – monitor the supervisors and other regulators as it relates to compliance with AML/CFT obligations.

Review & audit – regularly review the risk assessment and programme and have an audit carried out by an independent person every 3 years.

Annual report – file an annual report with the relevant AML/CFT supervisor.