Living with the new AML/CFT regime
For accountants, like many other phase 2 reporting entities, being included in New Zealand’s AML/CFT regime was initially received as warmly as a compulsory visit to your Nana’s – a little bit of kicking and screaming, searching for excuses, and reluctantly realising you have no choice but to smile sweetly and grin and bear it.
It would be fair to say that there was a degree of inertia, or burying of heads in the sand, with some phase 2 reporting entities reluctant to be part of a regime that they saw little need for, or benefit in.
A number of bodies played their part in addressing this initial reaction, including:
- The Ministry of Justice (charged with overseeing New Zealand’s AML regime), who ran a public awareness campaign ‘Keeping our Money Clean’;
- The Financial Investigation Unit of the New Zealand Police who have started producing monthly ‘Suspicious Activity Reports’ to keep us all up-to-date on ML/FT activity in New Zealand and further afield;
- The DIA (charged with supervising the phase 2 reporting entities as well as a selection of phase 1 entities) ran roadshows and produced guidance documents and sector risk assessments; and
- The professional bodies, including Chartered Accountants Australia and New Zealand and the Law Society, who ran training sessions and developed illustrative documents and information sheets.
What we are seeing now, after two years of being in the AML/CFT regime, is a growing level of maturity – greater awareness that family time is something to be treasured and that our grandparents have some fascinating stories we could learn from.
More than just compliance
In terms of AML, accountants are now realising the value that can be gained from obtaining a deeper understanding of our clients, what services they are asking for (and why), and what their expectations and long-term goals are.
We have seen a shift from a compliance focus (ensuring we ticked all the boxes required by the AML/CFT Act in documenting our Risk Assessments and Compliance Programmes, appointing a Compliance Officer and AML auditor, developing systems and processes for undertaking Customer Due Diligence (CDD), and training staff to detect any ‘red flags’) to focusing more on the why – why we are doing these things, the broader benefits that can be obtained from having a better, richer understanding of our clients, their related entities, beneficial owners, and business relationships. and
The Panama papers, illustrated beautifully by the recent Laundromat movie, highlighted the role that phase 2 reporting entities have historically played in aiding and abetting criminals. A number of high-profile cases, including the recent Comanchero case, made us realise that, as with the Panama papers, New Zealand is not immune to money laundering activity.
New Zealand has a strong reputation for the quality of its AML/CFT framework. This makes us an attractive place for money launders to enter the global economy.
All aboard the AML bus
Phase 2 reporting entities are commonly referred to as ‘gatekeepers’, given the key role we play in protecting the ML/FT ‘gates’ by setting up companies, providing directorships, enabling the transfer of property and other high-value assets, and through the operation of trust accounts amongst other things. Criminal entities seek us out as highly-regarded professional service providers, such as accountants and lawyers, who can provide the air of credibility they are seeking.
After two years of being in the AML regime, phase 2 reporting entities understanding of the risk associated with being involved with less than reputable clients and customers has matured. The conversation has moved from a reluctant ‘why do I have to go’, to one of curiosity and an understanding of the many benefits that can be gained from ‘hopping on-board the AML bus’ or in the car to Nana’s house.
Find out how tic company can help Accountants with their AML obligations.
New Zealand’s AML/CFT regime was initially received as warmly as a compulsory visit to your Nana’s – a little bit of kicking and screaming, searching for excuses and reluctantly realising you have no choice but to smile sweetly and grin and bear it."
Rajeev Nedumaran 
Tadius Munapeyi 
tic company 
