Training: A Power Tool for Better Compliance


Why is it Important?

AML supervisors have dealt out two strong reminders recently of just how crucial education and staff training are in ensuring firms meet their AML obligations.

This follows two firsts on the enforcement front, with national real estate chain Property Brokers Limited and Auckland-based Kidd Legal becoming the first firms in their respective sectors to be issued formal warnings by their AML supervisor, the Department of Internal Affairs (DIA).

Both warnings referred, amongst other things, to staff capability. In Kidd Legal’s case, the DIA said it was unable to demonstrate how the company would ensure compliance from staff. While, with Property Brokers, the DIA was concerned the company was failing to meet its obligations around the training of compliance staff.

AML alarm bells

Strategi Group executive director David Greenslade says that of particular concern to supervisors in the area of AML training and education are things like failing to find any evidence that training has been taking place, or that training is insufficient or irregular. This extends to inadequate training and vetting of senior management. Generic training programmes that are not tailored to meet the needs of specific AML/CFT roles and the company itself, will also ring alarm bells.

Furthermore, the Financial Markets Authority has raised concerns over programmes and training materials that include references to Australian AML/CFT legislation, rather than our own.

Strategi Compliance, an arm of the broader Strategi Group, has many years of experience in AML/CFT training, ongoing support and audit services across New Zealand. This includes completing over 1000 audits of reporting entities under all three AML/CFT supervisors.

“We work in collaboration with the Financial Markets Authority and the Department of Internal Affairs to help improve compliance across industries and to ensure our clients get the best advice on meeting the necessary requirements.”

The basics

The Anti-Money Laundering/Countering Financing of Terrorism Act 2009 requires reporting entities to have adequate and effective policies, procedures, and controls in place for training relevant employees. This includes compliance officers, senior management, directors and any other staff involved in AML/CFT related duties.

“There are no rules or codes relating to AML/CFT training,” Greenslade says. “Therefore, it is purely a business decision as to how a reporting entity chooses to meet this obligation.”

However, Greenslade notes that certain professional bodies (such as Chartered Accountants Australia and New Zealand, the New Zealand Law Society and the Real Estate Institute of New Zealand), require their members to meet specific continuing professional development requirements that have AML/CFT training built in. The Code of Professional Conduct for Financial Advice Services alludes to AML/CFT training with standard 9 requiring ongoing CPD on topics that impact the provision of regulated financial advice.

What does AML/CFT training look like?

Training is more than just a tick box exercise to meet regulatory obligations Greenslade says.

“It also acts as a powerful tool to educate employees about what to do if they come across something that could be money laundering or terrorism financing.”

Greenslade says an effective training programme not only explains the relevant laws and regulations, but works through the policies and procedures the firm uses to mitigate the risks the company faces, Greenslade says.

“Good training might include formal courses – carried out virtually or in the classroom, or it could be regular communication with employees that provides education and helps to maintain their awareness of AML requirements on an ongoing basis.”

Greenslade says this might be regular emails, newsletters, periodic team meetings, or through things like the company’s intranet site. However it happens, training needs to be tailored to specific roles, as there are different needs to be squared off, he says.

For example:

  • Customer-facing staff need a deep and practical understanding of the importance of the AML/CFT mitigations the company uses, so they can be vigilant and ready to report suspicious client behaviours as needed.
  • Staff responsible for undertaking customer due diligence procedures (verification of identities) should have specific training covering this.
  • The AML/CFT compliance officer needs more advanced and ongoing training to ensure they stay abreast of requirements and emerging trends.
Senior management does not need the same degree of training as those staff directly engaged in AML functions. However, their training should cover the importance of the regulatory requirements, the potential consequences of failing to comply and the unique risks of the particular company. Ensuring senior managers have this understanding is essential, Greenslade says.

“Without a general understanding of this information, senior management can’t adequately provide for AML/CFT oversight, approve policies or allocate the appropriate resources for the compliance function.”

Situations may also arise within a company that require immediate training sessions on specific AML/CFT issues – such as following up after an audit or a visit by the AML/CFT supervisor.

However training is carried out, it needs to be regular and ongoing. Periodic refreshers are required and it is important new employees receive appropriate training and within a reasonable time-frame.

Strategi Compliance provides a range of services to meet these needs. It is experienced in providing AML/CFT training for all types of staff and runs generic Zoom and classroom-based courses, or can tailor training for individual firms. It also runs annual refresher training, as well as providing ongoing training throughout the year.

“We believe training is the platform upon which effective, best practice compliance is built. Compliance that not only ticks the boxes for supervisors, but makes a difference in protecting our country against the risks – and consequences – that money laundering and terrorism financing present,” Greenslade says.

Strategi Compliance

Strategi Compliance is New Zealand’s leading provider of FMCA licensing, AML/CFT audits/training and compliance services to the financial services industry. They also provide similar services to the legal, accounting and real estate sector having completed over 1000 AML/CFT audits.

Strategi Institute

Strategi Institute began in 2010 and is currently the only actively operating Category 1 (top) rated provider of the New Zealand Certificate in Financial Services (Level 5) qualification, as certified by the New Zealand Qualifications Authority. The Institute provides the level 5 qualification, short courses, micro-credential courses and continuing professional development to the financial services and professional services sector.

Read more on AML compliance and how Marion Garlick from Gilligan Sheppard went about ‘Creating an AML Compliance Programme

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