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Redraft needed for proposed AML/CFT Annual Report form

01 November 2017

The Annual Report form in proposed Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) regulations needs to be redrafted, the New Zealand Law Society says.

The form - which will need to be completed by the majority of New Zealand's lawyers - is poorly constructed with unclear terminology, repetitious and takes a "one size fits all" approach, the Law Society says in comments to the Ministry of Justice on the draft regulations

The proposed Annual Report includes questions and information not relevant to legal practice and which lawyers are likely to find very difficult to understand and respond to.

"It would be far preferable to have an annual report specifically tailored to the legal sector that gathers only the information that is relevant and necessary for lawyers' AML/CFT reporting purposes.

"As it stands, the proposed Annual Report form will involve a quite onerous level of data collection for the legal profession. The first reporting year starts on 1 July 2018, and lawyers will need to have systems and software in place by then to capture a range of data not currently collected in the normal course of legal practice, for AML/CFT reporting purposes."

The Law Society says lawyers will need a great deal of support and guidance from the Phase 2 supervisor, the Department of Internal Affairs, and the Law Society itself - particularly if the form is not redrafted to be relevant to legal practice. It says it would be happy to work with officials to draft an annual report designed for lawyers.

"Regardless of the form used, lawyers' AML/CFT annual reports will contain commercially sensitive information and the profession will want assurances that the information provided to the supervisor and other AML/CFT bodies will be appropriately safeguarded.

Time for submissions inadequate

The Law Society says the consultation period of 11 working days allowed was simply inadequate for the legal profession and other affected sectors to consider and comment meaningfully on the proposed AML/CFT reporting requirements.

"A rushed consultation about the draft regulations is counterproductive. It would have been better to allow sufficient time for the profession's input, to ensure the reports are fit for purpose and do not impose unnecessary compliance costs on lawyers (bearing in mind that those costs are likely to be borne ultimately by consumers of legal services)."

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Last updated on the 1st November 2017