Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT)

The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT) came into effect on 1st October 2018 in NZ and now applies to most accountants.

What is AML/CTF?

The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 is an act that has been brought into effect to address money laundering.
Money laundering is a process where 'dirty money' received from criminal activities, such as misuse of drugs, theft, and tax evasion, is passed through legitimate businesses and turned into 'clean money'. It is a significant problem, both here and worldwide.

Anti-money laundering and counter-terrorism financing legislation has been implemented in New Zealand and Australia in two phases. Phase 1 has been in effect for a number of years and applies to banks, casinos, and a range of financial service providers.

Phase 2 in New Zealand has brought the accounting profession into the regime. This will enable New Zealand to meet its obligations as members of the Financial Action Task Force by bringing them into line with international best practice.

 

What does this mean for our Clients?

This act means that from 1st October 2081, all accountants must perform CDD (Customer Due Diligence) on their Clients.It must be conducted on the following parties (if applicable):

  • The client; and
  • Any beneficial owner of a client; and
  • Any person acting on behalf of a client.

A beneficial owner is any individual (a natural person):

  • Who owns greater than 25% of the client; or
  • Who has effective control of the client; or
  • On whose behalf a transaction is conducted.

 

What information is needed?

As we do your accounts, we will also include an AML/CFT letter outlining what information we need and from whom. In most cases, this will be a copy of your passport and a utility bill showing your address. We can accept non-photographic ID however, this requires 2 forms of ID. The options will be in the letter we send you. It is best that you bring in these original documents and we can take a copy and certify as a true copy.

We can only accept non-original copies delivered if these have been certified by a trusted referee. Included in this list are Lawyers, a Member of the Police, Justice of the Peace. If you are going to get the copy certified and send us a copy, please contact us first as there is specific wording needed for the certification.

In the case of Trusts, we must have a statement from you as to the source of wealth of the Trust. As well we will be collecting identification details of all named beneficiaries. We are recommending to clients that have Kumeu Taxation Trustee Co Ltd. as a Trustee of their Trust, to have us removed. That is because we will have to recollect all CDD annually.

 

 

What are the obligations for KTS?

In addition to holding the information, we are now required to report any suspicious activity that we note. This may involve large deposits of funds, large numbers of cash transactions, and the like.

When this happens, we must seek from you, in writing, an explanation of the transaction or activity and this must be received by us within 3 days. If the response is acceptable then it goes no further. If not, we are required to report the transaction to the NZ Police for it to be investigated. You will not know that we have referred this to the Police as we are required not to tell clients so that they can’t be tipped off.

Every 2 years KTS will be audited to make sure that we are complying with the act.

 

How will this affect me?

This means that as your accountant we must obtain information of a personal nature from both our existing and new clients. This has resulted in a good deal of work and inconvenience to our Clients which we apologize for, however, we are required by law to obtain this information.

 

Penalties

Non-compliance with the AML/CFT Act can result in some serious penalties as follows.
Maximum penalties for non-compliance:

  • Individual – a term of imprisonment of not more than 2 years and a fine of up to $300,000.
  • Reporting Entity9 Accountants) – a fine of up to NZ$5 million.

 

If you would like to read further or require any further information please refer to the Chartered Accountants ANZ website.