Refreshed AML Regulations? 'Tis the Season

Paula Milne, Director of Paula Milne Consulting Limited

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"Helping businesses prevent and deter financial crime through detection, prevention, and compliance. Specialising in AML/CFT (audit and advisory), fraud, anti-bribery, anti-corruption and sanctions advisory."

The Spirit of the Act

Over the holidays if your mind starts to turn to 2021 it must surely turn to the much-

anticipated refresh of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 and supporting regulations. This presents an opportunity to right some of the wrongs,

get some needed clarity, and to further enhance our legislation based on our learnings.

However, in order to improve regulations, we must first remind ourselves of the purposes of

the Act and we must keep these purposes front of mind:

(a) To detect and deter money laundering and financial of terrorism;

(b) To maintain and enhance NZ's international reputation;

(c) To contribute to public confidence in the financial system.

The Wish List

So here is what am I putting on my Christmas wish list for 2021 regulatory change:

  1. Clear and plain language

  2. Public education campaign

  3. Impact assessment of changes

  4. NZ entity public register

  5. Licensing of remitters

  6. Code of practice update

1. Clear and Plain Language

There is a lot of ambiguity in certain sections of the AML/CFT Act. In section 31 of the Act, as shown below, there is ambiguity in the language used - what is meant by 'regularly'? What is meant by 'review'? This applies to section 14 as well - how does one distinguish 'material change' from an immaterial change? How does a reporting entity identify when they have 'insufficient information' about their customer? This ambiguity must be removed in order for reporting entities to understand and effectively comply with the Act.

Ongoing customer due diligence and account monitoring

When conducting ongoing customer due diligence and undertaking account monitoring, a reporting entity must do at least the following:

(a) regulatory review the customer’s account activity and transaction behaviour; and

(b) regularly review any customer information obtained under the CDD sections, or, in relation to an existing customer, any customer information the reporting entity holds about the customer; and