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Internal Affairs outlines corporate trustee AML/CFT reporting requrements

25 July 2019

The Department of Internal Affairs has released details of a 2019 annual reporting interim solution for corporate trustee companies whose AML/CFT obligations are being fulfilled by a parent law firm, accounting practice or TCSP.

"A corporate trustee company, whose AML/CFT obligations are being fulfilled by a parent law firm, accounting practice or TCSP that is a reporting entity in New Zealand is not required to submit an annual report by 31 August 2019," the department says.

One of the obligations for reporting entities under the AML/CFT Act is to submit an annual report to their supervisor by 31 August 2019.

The department says this waiver of the annual report obligations:

  • Applies only to corporate trustee companies that are subsidiaries of a law firm, accounting practice or TCSP that is a reporting entity under the AML/CFT Act in New Zealand.
  • Is conditional that the parent law firm, accounting practice or TCSP’s own annual report includes information relating to all relevant activities of the subsidiary corporate trustee company.
  • Is temporary while the Ministry of Justice considers the corporate trustee company class exemption application.    
  • Applies to Annual Report obligations for the period 1 July 2018 to 30 June 2019 only.
Background

The department says the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Amendment Act 2017 modified the basis on which providers of trustee services are captured as reporting entities under the AML/CFT Act. 

"As a result, any person, who in the ordinary course of business, acts as, or arranges for a person to act as, a nominee director or nominee shareholder or trustee in relation to legal persons or a legal arrangement is a reporting entity under the AML/CFT Act.

"In New Zealand there are many law firms, accounting practices and trust and company service providers (TCSPs) offering professional nominee or trustee services to their clients. The Department of Internal Affairs’ view is that any corporate trustee company that has been set up to act as a trustee is a reporting entity under the AML/CFT Act.

"One of the obligations for reporting entities under the AML/CFT Act is to submit an annual report to their supervisor by 31 August 2019.

"The Ministry of Justice is currently considering a class exemption for situations where a corporate trustee company is a subsidiary of a law firm, accounting practice or TCSP that is a reporting entity under the AML/CFT Act in New Zealand."

The department says that while this exemption application is being assessed, it has implemented an interim solution for corporate trustee companies specific to their annual report obligations.

Designated Business Group applications

The department says it has received notifications to establish Designated Business Groups (DBG) from law firms, accounting practices and TCSPs with their corporate trustee companies. In most circumstances, the Department has processed these notifications and eligibility to form a DBG has been confirmed.

"Please note that while the Ministry of Justice is considering the class exemption application, the Department will no longer be processing any more DBG notifications from law firms, accounting practices or TCSPs relating to their corporate trustee companies," it says.

"Instead, all such corporate trustee companies will be treated as though they are part of a DBG with their parent law firm, accounting practice or TCSP that is a reporting entity in New Zealand. The parent reporting entity will be responsible for ensuring that all AML/CFT requirements of the corporate trustee company are met.   

"This interim approach offers a practical solution to what could be a time-consuming DBG notification and updating process for law firms, accounting practices and TCSPs."

Last updated on the 16th September 2019