Today, the Financial Markets Authority, the Reserve Bank of New Zealand and the Department of Internal Affairs (the supervisors) released new and updated guidelines for reporting entities under the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) regime.
This guidance is valuable for current Phase 1 reporting entities as well as lawyers, accountants and real estate agents who are preparing to become reporting entities under Phase 2 of the AML/CFT regime.
The new enhanced customer due diligence (EDD) guideline, in particular, gives AML/CFT reporting entities valuable guidance, including for example:
- when the level of risk in a particular situation requires EDD
- when a material change occurs in the nature and purpose of the business relationship with the customer, and
- what a reporting entity may and may not do when it is not possible to complete EDD.
The supervisors have also updated the following existing guidelines:
- the “ordinary course of business", which contains minor clarificatory updates to the previous guideline
- the formation and scope of designated business groups, which include updates for Phase 2 entities who may wish to form a DBG (including updated forms for doing so) and updates relating to the new Prescribed Transaction Regime for DBGs, and
- the explanatory note to the identity verification code of practice, which provides new guidance to reporting entities that seek to comply with Part 3 of the Code by using electronic identity verification.
Phase 2 reporting entities (lawyers, conveyancers, accountants, real estate agents and high-value dealers) will also soon benefit from forthcoming guidelines from the supervisors, which we expect will be release before the end of 2017.
Lawyers and law firms, in particular, should also expect a Sector Risk Assessment from the DIA before the end of 2017. We expect this will be extremely helpful in preparing their own risk assessments.
Please contact us if you would like to know more about how the guidance has changed. If you would like advice on what this guidance means for you, or help with preparing for your compliance obligations as a Phase 2 reporting entity, please contact one of the authors listed.