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On Wednesday 18 December 2024, a new Amendment Bill was introduced to Parliament, aimed at making New Zealand’s AML/CFT system more risk-based, effective, and efficient.
Key proposed amendments to the Anti-Money Laundering and Countering Financing of Terrorism 2009 (Act) include:
- Requiring reporting entities to undertake their risk assessments in accordance with any applicable guidance material – ‘having regard to’ regulator guidance is no longer sufficient.
- Clarifying certain circumstances in which a reporting entity must conduct enhanced customer due diligence and in which the requirement to verify ‘source of funds’ or ‘source of wealth’ information for trusts does not apply.
- Updates to the definitions of ‘designated non-financial business or profession’ and ‘trust and company service provider’.
- Expanding the application of the rules for cross-border transportation of cash to extend to stored value instruments (SVIs), and providing for circumstances in which a person may be deemed to have moved cash or SVIs out of New Zealand.
- Explicitly prohibiting reporting entities from conducting international wire transfers that are not accompanied by the required information.
- Changing the requirements for determining a politically exposed person – reporting entities must have an “appropriate risk management system” in place.
- Amending the ‘beneficial owner’ definition in the Act for alignment with previous regulatory changes.
- Clarifying the requirements around who can be appointed as a compliance officer.
- Allowing AML supervisors to conduct inquiries in accordance with the Act on behalf of overseas counterparts.
Read the full text of the Bill here.
We anticipate that the Bill will have its First Reading and be referred to Select Committee after Parliament reconvenes on 28 January 2025, with submissions on the Bill sought in the first half of 2025.
While mostly technical in nature, the proposed changes will generally be welcomed by reporting entities for greater clarity in existing obligations and rules, and certainty in their application. Some of these proposed changes were sign-posted in a Cabinet Paper released earlier this year (discussed in our previous insight here).
However, we remain of the view that the proposed change that “a reporting entity must undertake its risk assessment in accordance with any applicable guidance material relating to risk assessments that AML/CFT supervisors or the Commissioner produces” should be reconsidered. As drafted, it would mean guidance could become a mechanism for imposing further obligations when that should be left to legislation and regulation.
Please contact our experts if you would like to discuss the impact of the changes on your AML/CFT obligations.
