Bartercard Explains How AML Legislation Will Affect Your Business

On 30 June 2013, the Anti-Money Laundering (AML) and Countering Financing of Terrorism (CFT) Act 2009 came into effect in New Zealand, imposing a number of obligations on banks, fund managers, financial advisers, debt collectors, safe deposit box vaults and numerous other entities, and was designed to ensure such businesses and financial instructions were able to detect and report potentially criminal origins or purposes of money.

These legislative requirements are now being extended to the legal, real estate, sports betting and high value goods industries (jewellery, precious metals, precious stones, watches, motor vehicles, boats, art or antiques where they take cash payments of $15,000 or more) and will come into effect from mid-2018 to mid-2019.

Under the legislation, each reporting entity needs a Risk Assessment of the potential for your business to be exposed to money laundering and financing of terrorism activities, an AML/CFT Programme with procedures to detect, deter, manage and mitigate the possibility of money laundering taking place and a Compliance Officer appointed to administer and maintain your AML/CFT programme.

You also need Customer Due Diligence processes, including customer identification and identity verification, Suspicious Transaction Reporting, Auditing and Annual Reporting processes and to file an annual report with their supervisor (the Reserve Bank of New Zealand, the Financial Markets Authority or the Department of Internal Affairs).

An employee must be designated to administer and maintain a business’ AML/CFT programme, who must report to a senior manager of the reporting entity with access to any board of directors or relevant management committee. Most importantly for the Compliance Officer themselves, they are personally liable for breaches of the Act, the penalties for which can be up to $200,000 per breach.

A major component of the AML/CFT system is Customer Due Diligence which must be performed on new customers. It is also expected that it will be necessary to carry out customer due diligence on all existing business relationships in the future. Under the Act, reporting entities are required to undertake Customer Due Diligence on a customer, any beneficial owner (an individual who owns 25% or more of the customer or has effective control of that customer), and any person acting on behalf of a customer.

The most important aspect is understanding when a transaction or a customer’s activity is suspicious. This comes down to knowing your customer so you are able to tell when their activity is unusual or out of step with what you would normally expect for that type of customer. International wire transfers of $1,000 or more and any physical cash transaction of $10,000 or more must be reported to the Police Financial Intelligence Unit. For high value goods dealers, they will have to file reports on any cash transaction of $15,000 or greater, and may file a report on suspicious activity that does not result in a transaction.

For more information on increased sales, excess stock and increased profit please go to www.bartercard.co.nz .