Anti-Money Laundering and Countering Financing of Terrorism Act 2009

Introduction 

The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (the Act) comes into full force on 30 June 2013. One of the Acts aims is to ensure that “reporting entities” take appropriate measures against money laundering and financing of terrorism. 

Reporting entities 

The definition of “reporting entity” is activity-based, and will broadly include casinos and financial institutions (which include persons who, in the ordinary course of business, accept deposits/repayable funds, lend to or for a customer, manage portfolios etc). 

What will reporting entities need to do?

If a business is a “reporting entity”, it will need to do the following:

• Undertake a “risk assessment” to identify potential money laundering and financing of terrorism issues that it could expect in the ordinary course of running its business. The risk assessment will look at the nature of the business, its products, delivery, customers, countries and institutions;
• Adopt an ongoing compliance programme and ensure that programme is monitored by a specially appointed Compliance Officer;
• Undertake customer due diligence – in relation to the customer, its beneficial owner, and any person acting on behalf of the customer. This will involve assessing each new and, in certain cases, existing customer and determining what level of due diligence should be carried out (standard, simplified or enhanced). Generally a full name, date of birth/company registration number and, if acting on behalf of the customer, the person’s relationship to the customer will be required. Customer due diligence must be undertaken before the business relationship is established or the transaction is started;
• Monitor transactions and report suspicious transactions; and
• Keep records of transactions and identity information for five years. 

These steps will change the way people interact with financial institutions going forward. 

Supervisors

Three agencies have been appointed as “supervisors” for different types of reporting entities:

• The Reserve Bank will supervise banks, life insurers and non-bank deposit takers;
• The Financial Markets Authority will supervise securities issuers, trustee companies, future dealers, collective investment schemes, brokers and financial advisors; and
• The Department of Internal Affairs will supervise casinos, non-deposit taking lenders, money changers and others that are otherwise not supervised. 

Conclusion

The Act will come into full force in less than three months. If you consider that your business may be a “reporting entity” for the purposes of the Act, you will need to act now. 

Note that this regime is similar - but not identical - to the Australian regime, and you should therefore be careful when purchasing software/training programmes from Australia, as these will need to be reviewed carefully for compliance with the Act. Customers of financial institutions (including banks) and casinos will also need to be aware that they may experience more stringent identity checks than they did prior to the Act coming into force. 

Laura is an Associate in our Commercial Team and can be contracted on 07 958 7461.