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Customer due diligence obligations arising out of conveyancing transactions involving banks

21 June 2018

Discussions are taking place over customer due diligence obligations arising out of conveyancing transactions involving banks from 1 July when AML/CFT begins for lawyers.

The New Zealand Law Society and the Property Law Section have been in discussion with the Reserve Bank and the Department of Internal Affairs – the AML/CFT supervisors for banks and lawyers - and the New Zealand Bankers’ Association.

From 1 July, lawyers will have an obligation to perform a risk assessment and due diligence on their clients.  Discussion has taken place around obligations arising for lawyers when banks, in the course of a conveyancing transaction, issue lawyers with mortgage instructions (and in that context are also a client of the lawyer).  On the face of the legislation, this gives rise to an obligation to perform Simplified Due Diligence on the bank, or any person acting on behalf of the bank (section 11, section18(2)(n)).

“We consider this requirement is unnecessarily onerous and could potentially frustrate conveyancing transactions,” says Property Law Section manager Katrina Thomas.

“Our meeting with the AML/CFT supervisors was positive and we are looking at ways to achieve a mutually satisfactory solution to this issue.  We hope to provide a further update from the supervisor shortly.  The Bankers’ Association will likewise keep its own members informed.”

Last updated on the 16th September 2019