AML/CFT Legislative Changes
The Ministry of Justice has released a Cabinet Paper on four associated bills relating to reforms in the justice system, intended to improve the effectiveness and efficiency of our regulatory system. Among these bills, there is the Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) Amendment Bill. Moreover, a Statutes Amendment Bill was introduced in Parliament, proposing further AML/CFT compliance changes. The amendments proposed are meant to be minor and technical, aimed at securing broad political support.
This post highlights some key proposed changes.
Cabinet Paper
To provide relief on your obligations and apply a more risk-based approach to customer due diligence (CDD) for trusts, the AML/CFT Amendment Bill proposes to specify that you would not be required to verify information relating to the source of funds or source of wealth of the trust, if you are satisfied that standard CDD would be sufficient.
You are required to ‘have regard to’ any applicable guidance material produced by the Financial Markets Authority or the Police for your risk assessment. This language could be interpreted as allowing you to consider, but ultimately reject, government advice. The AML/CFT Amendment Bill proposes to change the language from ‘have regard to’, to something more appropriate.
You are required to take ‘reasonable steps’ to determine whether a customer is a politically exposed person (PEP). This wording has created uncertainty on the nature of the steps to be taken and when those steps should be taken. The AML/CFT Amendment Bill proposes to clarify this passage.
You are required to retain records in a form enabling their ‘immediate’ availability. The AML/CFT Amendment Bill proposes to amend this provision to specify a timeframe within which you would be required to comply with requests to produce records.
The Minister and Associate Minister of Justice intend to introduce the four bills to Parliament by December 2024. Following that, there will be an implementation period, to make sure that you have adequate time to adapt your policies, procedures and controls.
Statutes Amendment Bill
The Statutes Amendment Bill proposes to clarify that you can apply a risk-based approach when verifying the address of a customer, the beneficial owner of a customer, or any person acting on behalf of a customer.
The Statutes Amendment Bill is awaiting its first reading and referral to the Select Committee. This was number 6 on the Parliamentary Order Paper for 26 September 2024, but it may change.
