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DIA encouraging lawyers to pool resources to meet AML/CFT obligations

05 October 2017

Department of Internal Affairs is regulating law firms and lawyers to ensure they meet the requirements of the Act.

It says from 1 July 2018 lawyers and conveyancers involved in activities covered under the Anti-Money Laundering and Countering Financing of Terrorism Act (AML/CFT) will need to have a compliance programme in place to assist in the detection of, and to mitigate the risk of money laundering and financing of terrorism.

“Large and small legal firms alike will need to meet these obligations.” It says.

The Department says there is an opportunity for some law firms to pool their resources as part of a ‘designated business group’ (DBG) to make it easier to collectively meet the requirements of the Act.

Likewise, it says conveyancers who operate as sole traders may also benefit from establishing a DBG.  The term ‘designated business group’ refers to two or more persons who have come together to form a group to meet their obligations under the AML/CFT Act on a shared basis.

How it works is that the DBG will elect a member who will represent it.

“Every DBG member would need to ensure they consistently comply with their AML/CFT obligations, and ensure their shared compliance framework addresses every area of risk across all members of the group.” The DIA says.

It says a member of a DBG can rely on another member to carry out certain obligations on their behalf, including 'customer due diligence' (in certain situations), as well as developing risk assessments, suspicious activity reports, and prescribed transaction reports.

Meanwhile Information around how DBGs could apply to lawyers is still taking shape and the finer points of forming and operating a DBG will be confirmed in official guidance being released in December this year.

Last updated on the 6th October 2017