AML/CFT Compliance
AML/CFT Compliance: Emerging practical issues

Under the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act 2009, certain businesses are required to put preventative measures in place to help detect and deter money laundering and countering financing of terrorism.
Phase 1 of Act has been in force since 2013. It applies to banks, casinos and a range of financial service providers. Under Phase 2 of the Act, the AML/CFT requirements kicked in for lawyers on 1 July 2018, for accountants on 1 October 2018 and all real estate agents will come under the AML/CFT regime on 1 January 2019.
In this month’s Law Talk, the New Zealand Law Society has published my article on this important subject. I have emphasised that:
– There is no one-size fit all approach to AML/CFT compliance; and
– A “set and forget” approach is not appropriate.
This is a developing area of law that is relatively new in New Zealand.
The penalties for non-compliance in the case of an individual, is a term of imprisonment of not more than 2 years and/or a fine of up to $300,000. For a firm, the penalty is, a fine of up to $5 million. In addition, the Act also confers upon the Court the power to order the imposition of pecuniary penalties.
In the case of Department of Internal Affairs v Ping An Finance (Group) New Zealand Company Limited [2017] NZHC 2363, a case decided under the AML/CFT Act in 2017, the High Court ordered the defendant to pay to the Crown $5.3 million for failing to conduct customer due diligence (CDD), failing to adequately monitor accounts and transactions, entering into or continuing a business relationship with a person who does not produce or provide satisfactory evidence of the person’s identity, failing to keep records, and failing to report suspicious transactions.
More recently, in Department of Internal Affairs v Qian Duoduo Limited [2018] NZHC 1887, the DIA was seeking $2.6 million from the defendant for failures in respect of risk assessments, failure to undertake CDD, failure to undertake ongoing CDD and account monitoring, and failure to keep adequate records.
So, for a reporting entity, failure to comply with the Act or inadequate compliance can give rise to serious consequences which may include punitive fines, reputational damage, disciplinary action, loss of business and possible civil or criminal proceedings against the company and/or its directors.
My article on emerging practical issues in this area of law can be found online:
https://www.lawsociety.org.nz/practice-resources/practice-areas/aml-cft/amlcft-compliance-emerging-practical-issues
In that article I discussed aspects of appointment of a compliance officer, choosing an appropriately qualified auditor, ethical issues for lawyers and how to minimise compliance costs.
The evolving nature of your business, your business practices and the changing characteristics of your clientele mean you cannot adopt a “set and forget” approach to preparing compliance documents.
Ismail Rasheed, the owner of IR Legal, is a lawyer with 18 years’ experience who specialises in Immigration, Tax, and AML/CFT Laws.
Email: office@irlegal.lawyer
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