New Zealand Law Society - NZLS points to further AML/CFT Phase 2 exposure draft concerns

NZLS points to further AML/CFT Phase 2 exposure draft concerns

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In a supplementary submission to the Ministry of Justice on the AML/CFT Phase 2 exposure draft bill, the New Zealand Law Society says it has identified some further concerns.

The Law Society's first submission on the Anti-Money Laundering and Countering Financing of Terrorism reforms identified a number of issues, and stated that application of phase 2 to lawyers on 1 January 2018 was much too soon.

The supplementary submission points to concern at the broad definition of "designated non-financial business or profession" (DNFBP) in the exposure draft insofar as it applies to lawyers.

Every lawyer who in the ordinary course of business carries on any of the listed activities would come within the definition, and accordingly would be a reporting entity under section 5 of the principal Act.

The Law Society says there is a strong case for exempting from the definition of DNFBP lawyers who are employees of law firms or non-lawyer entities.

"Staff lawyers are under the direction and supervision of their employer and it would seem inappropriate to impose directly on them the obligations contained in the Act," it says.

In virtually all cases it would be entirely impractical for a staff lawyer to comply with a number of requirements. Instead, these should be complied with by the employer if the employer is a DNFBP, the Law Society says.