ANTI MONEY LAUNDERING
The government has recently made changes to the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (the “Act”) to prevent money laundering and terrorism financing within various businesses and professions (including lawyers, accountants and real estate agents).
The Act aims to enhance the reputation of New Zealand businesses and maintain the view that New Zealand is a safe place to run a business.
Money laundering is the process of disguising the origins of illegally obtained money. Financing of terrorism is where financial support is provided to individual terrorists or terrorist organisations.
The Department of Internal Affairs (“DIA”) regulates and monitors compliance with the Act and is responsible for reporting any breaches.
The Act imposes preventative measures to ensure services provided by businesses are not used by criminals to hold and move funds anonymously.
Compliance with the Act for lawyers came into place on 1 July 2018. This involves lawyers completing customer due diligence (“CDD”) on clients before acting for them even where they are long-standing clients or the lawyer knows them personally.
The level of information required to complete the CDD will vary depending on the matter type, but as a minimum, lawyers are required to obtain and hold for each client involved evidence of full legal name, date of birth; and address.
Examples of evidence for the above information can be Driver’s Licence or Passport, and a utility bill, other government issued letter or bank statement recording the client’s address.
Depending on why you have instructed a lawyer to act for you, further information may be required. For example, if a lawyer is paying funds to you from their trust account, the lawyer must also confirm with you the bank account number that the funds are being paid to. This usually involves obtaining a bank deposit slip, bank statement or online screenshot showing the account number and your name. Alternatively, where lawyers receive funds into their trust account, particularly from overseas accounts, they may require verification of the funds. This is particularly important in property transactions as the DIA have identified overseas money being laundered in this manner.
This information is not only required for individuals, but also for trusts, companies and partnerships. So, if you have a lawyer acting for your family trust for example, they will require proof of address and ID for each trustee. In the case of a company, your lawyer will require the same information for all directors and shareholders.
You will find that if you require a real estate agent, lawyer, and your bank for a single transaction, all three entities will ask for the same information (where they do not have the information already). Accordingly, it is best practice if you can provide the required information to the parties that require it from the outset of your matter. This will ensure your matter progresses smoothly and may result in reduced CDD compliance fees.
While the Act has imposed further compliance requirements and administrative work on lawyers and other professionals, its aim is to reduce money laundering and prompt people to question ‘red flags’ to ensure that New Zealand is a desirable and safe place for business.