Object reference not set to an instance of an object.
Brief Counsel

Financiers get new powers to prevent identity fraud

07 September 2010

Agencies affected by the Anti Money Laundering and Countering Financing of Terrorism Act (AML/CFTA) will be given new powers for the performance of customer due diligence in the Identity Information Confirmation Bill now before Parliament.This Brief Counsel provides a commentary on the Bill. 

What the Bill will do

The Bill will allow agencies affected by the AML/CFT requirements, when confirming the identity of new or existing clients, to check information received against that held by the Department of Internal Affairs under the Passport Act 1992, the Citizenship Act 1977 and the Births, Deaths, Marriages and Relationships Registration Act 1995. 

The checking mechanism will be through electronic applications to a central database to validate name, gender, date and place of birth and any other recorded data relating to the individual, e.g. passport number or photo.  Information submitted will be confirmed as “consistent” with the database, “not consistent” or “exception” (meaning that the individual is dead and/or has had a name change and the agency can seek further details on the matter).  This is designed to address privacy concerns by ensuring that applicant agencies are not provided with personal information which they do not already possess. 

The Bill is expected to reduce the compliance costs identified with the AML/CFTA.  Exact costings are not available as they were considered too difficult given the many possible variations in agency size and need.  But it is estimated that each application will cost around 50 cents, less if volumes are high. 

This compares to $26 for a birth certificate from the Births, Deaths and Marriages registry office.  The 50 cent rate is also low by international standards.  Applications to a similar data valuation service in the UK currently cost £1.77 for high volume users (more for others) and costs in Australia vary between $A70 cents and $A3 per transaction (depending on volumes).

Chapman Tripp comment

The Bill is short, comprising only 20 clauses, but will be important to the smooth running of the AML/CFT regime.

A possible flaw in the legislation as drafted is that it appears a data search could yield a “not consistent” response for as small a matter as the difference between “Philip” and “Phillip”.  Given the potential for legitimate mistakes, a “not consistent” result with no further information as to where the inconsistency exists seems somewhat unhelpful.

The Bill is still in its early stages, however (it has not yet had its first reading), and this concern could readily be addressed at select committee.

For further information, please contact the lawyers featured.

Contacts