Implementation Anti-Money Laundering and Countering Financing of Terrorism Act 2009

The legislation

On 30 June 2013 the Anti-Money Laundering & Countering Financing of Terrorism Act 2009 came into force. The new legislation aims to identify money laundering proceeds which have been generated from underlying criminal activities. 

What is money laundering and terrorist funding?

"Money Laundering" is the process of disguising money that has originated from illegal activities, which is then ‘laundered’ in an attempt to make the money appear as if it has come from a legitimate source. 

Financiers of terrorist activities adopt similar techniques to money launderers, with an emphasis on concealing the identity of the individuals or groups involved in the transaction. An example may be transferring $9,999.99 between individuals to avoid reaching the $10,000.00 threshold which could automatically trigger a financial institution to look further into the transaction. 

The impact on New Zealand

Despite New Zealand being geographically distant from international terrorism, New Zealand is not immune to terrorist activities. With advances in technology, it is now much easier for criminals/terrorist to take advantage of countries with minimal money laundering or terrorism regulations. Terrorists do this by depositing and withdrawing money through other countries banking systems, therefore minimising the threat of being caught by their own country’s authorities. 

By implementing this legislation, New Zealand is building and enhancing its international reputation. New Zealand cannot be seen as a ‘weak link’ as this could detrimentally affect New Zealand businesses which may be subject to costs, delays and other barriers when trading internationally. 

How will it affect consumers?

Customers of a financial institution (including banks and finance companies) may notice more stringent processes in comparison to the period prior to the legislation coming into effect. A request to your bank which may have once seemed relatively simple, may now involve customers having to provide copies of additional documentation, such as certified copies of photo identification, confirmation of address, or a pay slip to verify the source of income. 

When requesting a service or product from a financial institution, each component of the requests must be assessed by the financial institution in order to be legally compliant. A customer will be required to provide identification; provide details of individuals who will benefit from the transaction and may be required to justify the transaction among other things.

All information gathered under the new legislation is protected in accordance with the Privacy Act 1993. 

If you would like further information please contact Laura Monahan on 07 958 7479.