Business continuity covers a range of aspects relating to a business being able to perform in the event of a disaster – building access, IT requirements, data records, the list goes on. However, there are other things to consider, and perhaps it’s not always the most obvious choices that should take priority.
The legislation is constantly changing – to keep up with the fast-paced and ever-evolving business world and the latest technological advances. You can’t plan for every eventuality, but there are some things you can plan for.
From July 2018, The AML Act and CFT Act 2009 Is Changing
On July 2018, the Anti-Money Laundering (AML) and Countering Financing of Terrorism (CFT) Act 2009 is changing. The Act, introduced in June 2013, imposed a series of obligations on banks, fund managers, financial advisers, debt collectors, safe deposit box vaults and numerous other entities, and was designed to ensure such businesses and financial instructions were able to detect and report potentially criminal origins or purposes of money.
This year, these legislative requirements are being extended to include the legal, real estate, sports betting, and high-value goods industries (jewellery, precious metals, precious stones, watches, motor vehicles, boats, art, or antiques where cash payments of $15,000 or more are taken). It is estimated the impact will more than quadruple the number of businesses in New Zealand required to contend with The AML Legislation requirements.
With a shift from a warning to prosecution, it’s imperative businesses understand their obligations in ensuring AML processes and structures are in place ahead of the legislation coming into force for their industry.
What do you need to know?
Under the legislation, each reporting entity needs:
- A Risk Assessment of the potential for the business to be exposed to money laundering and financing of terrorism activities
- An AML/CFT Programme with procedures to detect, deter, manage, and mitigate the possibility of money laundering taking place
- A Compliance Officer appointed to administer and maintain your AML/CFT programme
- Customer Due Diligence processes including customer identification and identity verification
- Suspicious Transaction Reporting, Auditing and Annual Reporting processes
- To file an annual report with their supervisor (the Reserve Bank of New Zealand, the Financial Markets Authority or the Department of Internal Affairs).
A Compliance Officer is required to maintain your AML/CFT programme
The Compliance Officer role is perhaps one of the most important aspects of the AML/CFT system. An employee must be designated to administer and maintain a business’ AML/CFT programme. It doesn’t have to be a standalone position; however, the role must report to a senior manager of the reporting entity with access to any board of directors or relevant management committee.
The CFT and AML Compliance Officer has a substantial stake in the business to meet legislative requirements with them becoming personally liable for breaches of the Act, the penalties for which can be up to $200,000 per breach.
Under the extended legislation, all new customers, any beneficial owner (an individual who owns 25% or more of the customer or has effective control of that customer) or any person acting on behalf of a customer will be required to undergo Customer Due Diligence.
It’s also anticipated that when there is a material change to a business relationship, the client will be subject to Customer Due Diligence. It is likely that customer due diligence will need to be carried out on all existing business relationships in the future. It is recommended that any reporting entity establishes a process for performing Customer Due Diligence on their existing customer relationships so that they’re prepared.
Monitoring Suspicious Activity in addition to Transaction Reporting to the Police Financial Intelligence Unit is also an important component of the legislation. International wire transfers of $1,000 or more and any physical cash transaction of $10,000 or more must be reported to the Police Financial Intelligence Unit. For high-value goods dealers, they will have to file reports on any cash transaction of $15,000 or greater and may file a report on suspicious activity that does not result in a transaction.
For more detailed information on the AML Act and the CFT Act, download the free Bartercard eBook: Your guide to the Anti-Money Laundering and Countering Financing of Terrorism Act.