The New Zealand Law Society has released guidance which aims to clarify the obligations under AML/CFT legislation of reporting entities which send or receive wire transfers.
The Department of Internal Affairs was consulted during preparation of Wire Transfers under the AML/CFT Act.
The guidance notes that there is much confusion about the nature and extent of a law firm's obligations under the AML/CFT Act in relation to funds received into a trust account. It says this seems to be because the Act was designed for financial institutions and has been subsequently re-purposed for lawyers and other professionals. The results is that some obligations are not easily identifiable or understood.
"It seems to be well understood that a law firm may be required to carry out customer due diligence if its client is the depositor or intended recipient of the funds. However, it is not altogether clear as to when a law firm may have additional reporting obligations in relation to such transactions."
The guidance says the obligations in relation to wire transfers are twofold and relate to prescribed transactions; and enhanced due diligence and identity requirements. These obligations are distinct, unrelated and operate in parallel to each other. However, they are easily confused.