Formation Agent and Nominee Services
The AML/CFT Amendment Regulations 2023 clarify some requirements for law firms, accounting practices and trust and company service providers (TCSPs) that carry out the following activities:
acting as a formation agent of legal persons/arrangements; and
acting as, or arranging for a person to act as, a nominee director or nominee shareholder or trustee in relation to legal persons/arrangements.
The Department of Internal Affairs issued some guidance to clarify the areas that have been affected by the amendment regulations. Let’s have a look at them.
Formation Agent
First, when you are instructed to form a legal person/arrangement as an occasional activity, the client is the person who instructs you to form the legal person/arrangement. In addition, you must take reasonable steps to verify the identity of any person(s) that will meet the definition of beneficial owner of the prospective legal person/arrangement. (Reg 5F Definitions).
Nominee Relations
Second, when you are instructed to act as (or arrange for a person to act as) a nominee director, a nominee shareholder or a trustee of a legal person/arrangement, the client is the legal person/arrangement that you are acting for (or arranging for someone else to act for). The client is not a third-party intermediary (e.g. an agent or another law firm, accountant or TCSP) that engages you on behalf of the client. In this scenario, the third-party intermediary should probably be considered the person acting on behalf of the client (Reg 5G Definitions).
Corporate Trustee or Nominee Company
Third, when you deliver your trust and company services through separate legal persons (i.e. a corporate trustee or nominee company), you are the reporting entity for that activity. The corporate trustee or nominee company that is carrying out those services on your behalf is not a reporting entity when:
the corporate trustee or nominee company is your subsidiary or is controlled by you; and
you have established an AML/CFT Compliance Programme for the services provided on your behalf.
(Reg 24AF Exemptions).
If you are affected by these requirements, update your Risk Assessment and Compliance Programme to ensure compliance.
Get in touch if you have any questions or need assistance.
