New anti-money laundering regime now in force

New anti-money laundering regime now in force

All New Zealand banks are now required to comply with the new anti-money laundering regime, which came into force on 30 June.

Under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 all New Zealand banks have additional obligations to check customer identity and, in some cases, account activity.

“The new regime applies to all banks, and other financial institutions, and builds on existing customer identification processes,” said New Zealand Bankers’ Association chief executive Kirk Hope.

“It will mainly affect people when they open bank accounts, or if they want someone else to have signing authority on their account. People will also notice changes in some cases when depositing cash over the counter and making international money transfers. Existing customers will also be asked to confirm their ID and contact details from time to time.”

The new law aims to make it harder to disguise the profits of crimes like drug and arms trafficking, fraud, robbery, and illegal prostitution and gambling. It will also help New Zealand to meet its international obligations and improve its financial reputation overseas.

“We all have a role to play here. Banks will be asking customers to provide more information about themselves. It’s important to bear in mind the bigger picture here.”

“Banks have invested heavily to make sure they are compliant with the new regime. Most have implemented the changes ahead of the deadline to help ensure a smooth transition to the new requirements,” Hope added.

ENDS

Q & A

What is money laundering and terrorism financing?

A number of serious crimes drive money laundering activity around the world. These include drug trafficking, fraud, robbery, illegal prostitution and gambling, arms trafficking, bribery and corruption.

Money laundering is the process of disguising the illegal origin of criminal profits.

Criminals use a range of methods and levels of sophistication to make money obtained from their criminal activities appear legitimate.

Terrorist groups also move funds to disguise their source, purpose and destination. Terrorism financing includes funding terrorist acts and organisations.

What does the new law do?

The Anti-Money Laundering and Countering Financing of Terrorism Act requires banks to:
·         Identify new customers
·         Re-identify existing customers in certain circumstances
·         Monitor customer transactions on an ongoing basis
·         Report certain transactions and suspicious activities.

What are the enhanced identification requirements for customers opening a bank account?

The law requires a greater level of customer due diligence from banks. When opening a bank account you’ll now need to provide better forms of ID. Previously a driver’s licence might have been enough. There are three combinations of ID you can provide, plus proof of where you live such as a telephone or power bill.  

The three enhanced ID options are:

Option 1
A current and valid form of photographic identification
One of these forms of ID:
·         New Zealand passport
·         New Zealand certificate of identity
·         New Zealand firearms licence
·         Emergency travel document
·         Overseas passport
·         Foreign-issued national identity document
·         New Zealand refugee travel document.

Option 2
A form of non-photographic  identification
One of these forms of ID:
·         New Zealand full birth certificate
·         Certificate of New Zealand citizenship
·         Citizenship certificate issued by a foreign government
·         Full birth certificate issued by a foreign government.

Together with a form of photographic identification
One of these alternate forms of ID:
·         New Zealand driver licence
·         18+ card (Hospitality Association)
·         A valid and current international driving permit.

Option 3
A valid New Zealand driver licence

Together with an additional form of identification
Choose one of these alternate forms of ID:
·         An embossed credit card, debit card or an EFTPOS card issued by a registered New Zealand bank
·         An original bank statement that’s been issued to you by a registered New Zealand bank within the last 12 months
·         An original document issued by a New Zealand Government agency that has your name and signature on it (like a SuperGold Card)
·         A statement issued to you by a New Zealand Government agency within the previous 12 months (like an IRD statement).

How will the new law affect customers making cash deposits?

When someone makes cash deposits over the counter of $10,000 or more, banks are required to confirm the person’s identity.
Where a bank has any suspicions about the customer receiving the deposit, the nature of the deposit, or account activity, banks will need to get more information, including the source of the funds. That’s likely to mean asking some questions about where the money came from, what it’s for, and what the person’s relationship with the account holder is.

How will international money transfers be affected?

When a customer is sending more than $1000 overseas, their bank needs to collect detailed information about the customer sending the money, and at least the name and account number (or a unique transaction reference) for the recipient.

When a customer is receiving more than $1000 from overseas, their bank needs to be satisfied that it has enough information about who has sent the money.

In the case of money transfers from anti-money laundering compliant countries, that information should be attached to the transfer. Where this information is not attached to the transfer, the bank must satisfy itself the transfer is legitimate. The bank also needs to be sure of the identity of the customer before releasing the money to them.

Information required when sending money overseas

The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 requires the bank to collect the following information:
(a) the originator’s full name; and
(b) the originator’s account number or other identifying information that may be prescribed and allows the transaction to be traced back to the originator; and
(c) one of the following:
(i) the originator’s address
(ii) the originator’s national identity number
(iii) the originator’s customer identification number
(iv) the originator’s place and date of birth; and
(d) any information prescribed by regulations.  

Under the regulations referred to in (d), the government also requires banks to get the name and account number (or a unique transaction reference) for the recipient.

What’s the cost to New Zealand banks of complying with the new law?

The estimated implementation cost for the whole industry is $90 million. This is a conservative estimate. Implementation costs include:
·         developing and establishing IT systems to collect and store customer information and monitor and report account activity
·         establishing dedicated project teams
·         reviewing product terms and conditions to ensure consistency with the new requirements
·         developing and providing staff education and customer information.

This cost does not include the ongoing costs of maintaining these new systems and dedicated teams. Ongoing costs per annum are estimated to be 10 per cent of the implementation costs.

Where can customers get more information?

Banks are able to answer questions about how the new law affects their customers.

Information about the Anti-Money Laundering and Countering Financing of Terrorism Act is also available at: www.justice.govt.nz/policy/criminal-justice/aml-cft  

ENDS

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