AML guidance and publications
FIU/ACAMS Conference 2017 Slides
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 1.25MB) in April 2017.
The AML/CFT Act requires all reporting entities to prepare an annual report.
The Anti-Money Laundering and Countering Financing of Terrorism (Requirements and Compliance) Amendment Regulations prescribe the form and content of the annual report. The regulations were updated in 2016.
The AML/CFT supervisors have published a User Guide to Annual AML/CFT Reports (PDF 1.6MB, published May 2016) to assist reporting entities when completing their annual reports.
The next Annual Report is likely to be due by the end of August 2018. Further information will be published closer to this date.
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
The Code of Practice (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.
Amended Identity Verification Code of Practice 2013
On 10 October 2013 an Amended Identity Verification Code of Practice was gazetted under section 64 of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act). The amendments come into force on 1 November 2013.
Identity Verification Code of Practice 2013 (PDF 130KB), published October
The Explanatory Note (PDF 1MB), published October 2013, summarises recent changes to the code.
Key changes to the Code of Practice
Part 1: Documentary Identity Verification
- Adjustment to the national identity card information to recognise that some countries don't use signatures but may use other biometric measures.
Part 2: Document Certification
- Inclusion of international certification requirements.
- Clarification that a trusted referee cannot be a person involved in the financial transaction or business requiring the certification.
Part 3: Electronic Identity Verification
- Inclusion of a description of electronic identity and the subsequent verification.
- Inclusion of the ability to rely on a single independent electronic source of verification when that source establishes a high level of confidence.
- Removal of a reference to address identity verification. NB. This does not detract from the use of address as a key element of customer due diligence.
Complying with a code of practice is not mandatory, although it constitutes a safe harbour. If a reporting entity fully complies with the Code it is deemed to be compliant with the relevant parts of the AML/CFT Act. If a reporting entity opts out of the Code, it must inform its supervisor and must adopt practices that are equally effective, otherwise it risks non-compliance.
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" (PDF 97KB) guideline, 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.
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.
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:
Acting on Behalf of a Customer (PDF 1MB), published August 2013
Sole traders and partnerships (PDF 153KB), published April 2013
Companies (PDF 156KB), published April 2013
Co-operatives (PDF 153KB), published April 2013
Clubs and Societies (PDF 145KB), published April 2013
The Ministry of Justice has published a class exemption for managing intermediaries on its website.
Wire transfers guideline
This guideline clarifies the types of transactions that are wire transfers for the purposes of the AML/CFT Act. The Wire transfers guideline (PDF 1MB), published August 2013, also describes who the parties are in a transaction and what responsibilities they have.
AML Update includes insights on Risk Assessments and other useful information for reporting entities in the AML/CFT supervisory space.
Further guidance and information
The NZ Police Financial Intelligence Unit (FIU) 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.