Beginning June 1, 2024, the second phase of amendments to the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act 2009 (Regulations) will come into effect. These forthcoming changes bear considerable significance, especially for reporting entities and virtual asset service providers (VASPs). Ensuring compliance will entail revising protocols, documentation, and systems to align with the updated regulations. Proactive preparation to meet the impending compliance deadline effectively will be crucial.

Background

The amendments stem from a comprehensive review of the AML/CFT Act 2009 by the Ministry of Justice, initiated as part of the government's response to the Royal Commission of Inquiry following the March 15 attacks. The review identified the need for regulatory adjustments to strengthen New Zealand's defences against money laundering and terrorism financing while reducing compliance burdens on businesses.

Key Changes

1. Expanded Obligations:

The second stage of amendments, effective June 1, 2024, introduces new obligations for entities already subject to AML/CFT requirements. This includes reporting entities across various sectors, with a particular focus on virtual asset service providers (VASPs).

2. Virtual Asset Transactions:

Virtual asset transactions, including deposits, withdrawals, exchanges, or transfers, will be considered within the scope of the AML/CFT Act. This formalises the treatment of VASPs and requires them to enhance compliance and reporting systems.

3. Customer Due Diligence (CDD):

Changes to CDD processes mandate obtaining and verifying additional information for legal persons and arrangements, including ownership and control structures. Enhanced CDD measures are required when source of funds and/or wealth information is insufficient.

4. Wire Transfers and Reporting:

Wire transfer regulations are clarified, with ordering institutions required to ensure identification information accompanies each transfer. Intermediary institutions must address international wire transfers lacking essential information, and reporting requirements are extended to additional entities.

Implications for Businesses

These regulatory changes necessitate thorough review and adaptation of compliance procedures, documentation, and IT systems by reporting entities. Businesses, especially VASPs and financial institutions, must ensure timely preparation to meet the June 1, 2024 deadline for compliance.

Conclusion

The upcoming amendments to New Zealand's AML/CFT regulations represent a significant milestone in the country's ongoing efforts to combat financial crime. By aligning with international standards and imposing stricter obligations on reporting entities, these changes aim to enhance the effectiveness of anti-money laundering measures while safeguarding the integrity of the financial system. Businesses must prioritise compliance efforts to navigate the evolving regulatory landscape effectively.

For more information and guidance on navigating the AML/CFT regulations, or if you need assistance updating your current risk assessment and AML/CFT programme to incorporate the changes, contact our experts at One AML. Together, we can ensure your business remains compliant and resilient in the face of emerging financial risks.

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