AML guidance and publications

Sector Risk Assessment

One of the statutory functions of an AML supervisor is to assess the level of risk of money laundering and terrorism financing across all the reporting entities it supervises. The Reserve Bank published its Sector Risk Assessment (PDF 336KB) in March 2011. More information can be found in the questions and answer page and accompanying news release, or in the Information Pack (PDF 65KB) produced by the AML supervisors.

Codes of Practice

Under the AML/CFT Act, supervisors are empowered to develop Codes of Practice containing suggested methods that reporting entities can use to comply with their regulatory obligations. While not mandatory, they can provide a defence against charges of non-compliance (a “safe-harbour”), if followed correctly. Codes of Practice relevant to the firms supervised by the RBNZ will appear here.

Identity Verification Code of Practice 2011

This Code of Practice (PDF 122KB, published September 2011) provides a suggested best practice for all reporting entities conducting name and date of birth identity verification on customers (that are natural persons) they have assessed to be low to medium risk. The news release that accompanied the code’s release is also available.

Guidelines

Supervisors are also empowered to develop guidelines and other guidance aimed at helping reporting entities meet their obligations.

Risk assessment guideline

A risk assessment is the first step that a reporting entity must take before developing a programme to address money laundering and terrorism financing risks. It involves identifying and assessing the risks a business might reasonably expect to face. The Risk assessment guideline (PDF 182KB, published June 2011). is in four parts and is accompanied by additional resources that may assist when conducting a risk assessment.

AML/CFT programme guideline

An AML/CFT programme sets out internal policies, procedures and controls to detect money laundering and financing of terrorism and to manage and mitigate the risk of it occurring. An AML/CFT programme is based on your Risk Assessment. AML/CFT programme guideline (PDF 115KB, published December 2011).

Interpreting “Ordinary Course of Business” guideline

The Interpreting “Ordinary Course of Business” guideline (PDF 97KB, published September 2011) helps clarify the meaning of the phrase “in the ordinary course of business”, as found in the AML/CFT Act. The guideline, and the meaning of this phrase, is important if your business carries on an activity that is listed under the definition of ‘financial institution’ in the Act.

Territoriality guideline

This guideline provides information relating to the carrying on of financial activities by businesses both within and outside New Zealand. The Territoriality guideline [PDF 90KB, published December 2012] is designed to assist such businesses to determine whether they are reporting entities under the AML/CFT Act.

Insurance business coverage guideline

The Anti-Money Laundering and Countering Financing of Terrorism (Exemptions) Regulations 2011 exempt certain relevant services from the AML/CFT Act or parts of the Act. The Insurance Business Coverage guideline (PDF 113KB, published February 2012) helps clarify some exemptions available in these regulations as they apply to insurance.

Countries assessment guideline

You are required to assess the AML/CFT risks associated with the countries you deal with. For example, this may be necessary when you deal with a non-resident customer, or an overseas institution. The Countries assessment guideline (PDF 456KB, published July 2012) will help you decide when you need to undertake an assessment and how to approach an assessment.

Audit guideline

This guideline provides an overview of matters to consider when arranging an audit, as required under section 59(2) of the AML/CFT Act. The Guideline for audits of risk assessments and AML/CFT programmes (PDF 159KB, published December 2012) will help reporting entities manage the requirement to audit AML/CFT risk assessment and AML/CFT programmes.

Designated business group guidelines

This guideline was published in two parts in July 2012. The Designated Business Group - scope guideline (PDF 264KB) outlines the obligations that may be shared by members of a designated business group. The Designated Business Group – formation guideline (PDF 298KB) highlights the eligibility criteria and election process when forming or joining a designated business group. It also explains the process for notifying an AML/CFT supervisor about the formation of, or change to, a designated business group and provides the forms for doing so.

Beneficial ownership guideline

The Beneficial ownership guideline (PDF 211KB, published December 2012) provides information to assist in the identification and verification of a customer’s beneficial owners. The guideline also provides information to help reporting entities understand the distinction between a beneficial owner and a person acting on behalf of a customer. Fact sheets on beneficial ownership and customer due diligence are available for these customer types:

Trusts (PDF 160KB, published April 2013),

Sole traders and partnerships (PDF 153KB, published April 2013),

Companies (PDF 156KB, published April 2013),

Co-operatives (PDF 153KB, published April 2013), and

Clubs and Societies (PDF 145KB, published April 2013).

Expected publications

Several guidelines have already been published. These are approximate dates for publications that are under consideration.

2012 AML/CFT regulations (including the Annual reporting form)	April 2013 (is dependent on Parliamentary processes)
The AML/CFT Act 2009 and regulations	in full effect from 30 June 2013

Further guidance and information

The NZ Police published a National Risk Assessment in March 2011. This contains information about AML issues at a national level, from a law enforcement perspective. The NZ Police Financial Intelligence Unit also publishes Quarterly Typology Reports. The purpose of these reports is to provide a picture of current, emerging and longer-term AML/CFT risk factors. Visit www.police.govt.nz/FIU for more information.

Further information on the development and review of the AML legislation and related regulations can be found on the Ministry of Justice website.