New Zealand Law Society - Law Society questions Anti-Money Laundering legislation implementation date

Law Society questions Anti-Money Laundering legislation implementation date

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January 2019 is a far more realistic date than July 2018 for bringing lawyers into the requirements of the Anti-Money Laundering and Countering Financing of Terrorism legislation, the New Zealand Law Society says.

The Law Society has presented a submission on the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill to the Law and Order select committee. The bill proposes that Phase 2 of the AML/CFT law applies to lawyers from 1 July 2018.

The AML/CFT regime is principles-based, meaning the applicable regulations, codes and guidelines on Phase 2 must be available well in advance, Law Society spokesperson Mary Ollivier says.

“The availability of the Phase 2 regulations and guidance – which are still to be developed – will be essential to any business developing procedures to ensure that they meet their obligations under the AML/CFT legislation. A longer implementation period will allow this essential work to be done,” she says.

“The Law Society totally agrees that the legal profession has an obligation to be involved in the global response to money laundering and terrorist financing. However, the key is going to be effective and efficient implementation of Phase 2. The timetable in the bill puts that at threat.”

Mrs Ollivier told the committee that the Law Society did not consider that the Phase 2 provisions should be applied to lawyers ahead of the other occupations involved.  Because of the unique ethical and legal requirements for lawyers, there was a case for the other occupational groups being included first.

The Law Society submission also outlined practical problems with the timeframe proposed for reporting suspicious activity.

The legislation requires a reporting entity to report an activity “as soon as practicable but no later than three working days after forming its suspicions.”

“The expression ‘forming its suspicions’ is imprecise and that poses a real difficulty,” Law Society Vice President (Auckland) Tim Jones said.

“A lawyer might consider that a matter could possibly be a suspicious activity, but because of the imprecision might need to consult another lawyer.

“Giving only three working days to report is also another problem. Preparation of a suspicious activity report will probably be time-consuming. Lawyers will also have to consider whether they include any privileged information in the report. Again, this might mean the lawyer needs to take independent legal advice.”

The Law Society submission also outlines problems which could arise from non-lawyers providing legal services and the practical difficulties of identifying legal privilege obligations.


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