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Anti-Money Laundering and Countering the Financing of Terrorism Act

September 10, 2018

How does this affect you?

Ever tried to open a new bank account – particularly if you’re a Trustee of a Trust or a Director of a Company? Then you’ll be aware of the rigmarole and hoops you must jump through to provide evidence you, your fellow Trustees and Directors, let alone the Beneficiaries and other-directed officers are who you say they are as well as ‘where that money came from’.

Well it’s not the Banks that are necessarily causing the long-windedness in terms of the process to simply open an account – they are just applying the necessary policies and procedures required to meet their obligations under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.

So, what’s that – well it’s an enactment of Parliament that was required to safeguard our reputation as being one of the least corrupt countries and a good place to do business. You see each year it is estimated that about $1.35 billion of proceeds from fraud and illegal drugs is laundered through New Zealand businesses.

So, to tackle this the Government made this law change making certain processes related to finance and business more robust, requiring more validation of who you are as well as monitoring activities and reporting to the relevant authorities.

This Act is wide ranging and when enacted applied in the first instance to what are known as “Phase 1” businesses – mainly Financial Institutions.

However, in the next 12 months, due to an amendment to that Act, there are a lot more businesses that are being affected by these rules – known as “Phase 2 businesses”. Lawyers are already having to apply the Act and you may have well had some dealings with your solicitors already that you may have thought, “why do they need that bit of information”. Others like Real Estate agents and Betting agencies will become part of this roll out next year.

But from 01 October 2018, “Accountants” will fall within the rules of the Act.

So, what does this mean for our clients or potential clients going forward:

In the background we have been working hard on addressing the administration required to meet our obligations through establishing clear policies and procedures around activities we carry out that force us to comply with the Act.

But where does this impact on our clients – well in short predominantly in relation to Companies and Trusts. Specifically, where we are forming companies, changes to company structures or shareholdings, acting as nominee directors/shareholders or Professional Trustees. Also, in relation to Companies where we are acting as the Registered Office.

There are several other activities which we need monitor but the above are a predominant activity which will impact greatly on our clients.

How

The cornerstone requirements of the Act centers around identification and verification of our clients – specifically around the activities as noted previously. It’s what the Act calls “Customer Due Diligence (CDD)”. It’s about identifying not only the client but beneficial owners and those acting on behalf of the client. In short, its information gathering about our clients – ensuring we have identity information, that it is up to date or obtaining new documents to verify any changes. The sort of things you may well have been subject to already in dealings with your bank or solicitor.

However trivial this may seem it’s something which unfortunately we cannot avoid. It is however driven by good business principles and practices– and of course part of a world-wide initiative to ensure jurisdictional measures are in place to combat proceeds from crime.

What next?

We will be communicating during the course of this month around changes we are making in terms of processes which will impact on many of the engagements we undertake with our clients. This will mean that there are implications in relation to the costs of certain services such as Company and Trust Administration specifically going forward. As we progress through the plethora of information and policy making exercise we will formalise these changes and communicate this back to you.

However, in the interim should you have any queries about the AML/CFT rules and how these may impact on you or your business please let us know.