New Zealand Law Society - Preparing for AML/CFT: Training staff

Preparing for AML/CFT: Training staff

This article is over 3 years old. More recent information on this subject may exist.

With 'Phase Two' of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act) set to bring lawyers into the regime, sole practitioners, partners and practice managers in firms throughout the country are considering how they can best comply with the AML/CFT Act, from 1 July 2018.

The AML/CFT Act requires all firms who may engage in 'specified activities' to describe in their AML/CFT compliance programme how they will conduct training on AML/CFT matters for 'senior managers', the AML/CFT compliance officer, lawyers and any other staff engaged in AML/CFT related duties. Accordingly, all who interact with clients, handle funds or otherwise assist with compliance should also be aware of their AML/CFT obligations and receive training.

Three key questions for any training programme are:

  • Who needs training?
  • What do they need training on?
  • How are they going to get that training?

Who needs training?

The key groups of people who require training are:

Front-line staff: Partners, directors and staff who deal with clients, handle funds and otherwise assist with AML/CFT compliance. This may include finance team staff, lawyers, law clerks, legal executives and secretaries.

Senior management: The AML/CFT Act defines this, in relation to a reporting entity that is not a company, as a person who occupies a position comparable to that of a company director. For a law firm this may include partners and other persons who occupy a position of influence over the management or administration of the firm (such as a CEO or CFO).

Compliance Officer: The person appointed under section 56 of the AML/CFT Act to administer the AML/CFT programme for a reporting entity.

What do they need training on?

People performing different roles need different training.

Front-line staff

Training for front-line staff should be broken down into stages – initially, you should explain why you are organising this training and give them a basic background of what AML/CFT is as some staff members may not understand the basics about money laundering and terrorism financing, or the role that lawyers play.

Training should also focus on what staff need to do on a day-to-day basis. Use real life scenarios from your firm such as:

  • When to do customer due diligence (CDD), ie, is the firm applying CDD to all clients on inception, or only when they instruct on a specified activity?
  • How to identify and verify a client’s identity (ie, CDD)?
  • What to say when a client does not want to produce identity documents?
  • What the systems are to identify suspicious activity?
  • What to do when you encounter potentially suspicious activity?
  • What records need to be kept?
  • What are the firm’s internal policies on AML/CFT?
  • What penalties might apply to them and the firm if they don’t comply with the AML/CFT Act?

For every question, give an answer and an example response. Consider having staff role-play using the example to put training in to action.

Senior management

In addition to the training requirements for front-line staff, senior managers need to understand their additional responsibilities, the liability they may face under the AML/CFT Act if they fail to comply, and the steps being taken by their firm to ensure compliance.

Additional topics for senior managers could include:

  • Key judgement calls eg, when risk requires extra CDD, when to reject a client who is a PEP (politically exposed person)?
  • Personal responsibilities and obligations as a senior manager of a reporting entity.
  • The content of an AML/CFT annual report.
  • The timing of the next independent audit of the AML/CFT programme, and what is the likely outcome?
  • How is the compliance officer performing, and do they need additional training or resources?
  • How are they kept informed of the firm’s AML/CFT compliance?

Compliance officer

The compliance officer needs the most in-depth training as they have the most obligations. As well as the training for senior management and front-line staff, the compliance officer needs to understand their specialist tasks including how to:

  • Monitor ongoing training and oversight responsibilities.
  • File suspicious activity reports to the Financial Intelligence Unit of the New Zealand police using the GoAML online portal.
  • Prepare and submit the AML/CFT annual report, the independent audit, and other specialist tasks to their AML/CFT supervisor.
  • Communicate with their AML/CFT supervisor – for lawyers this is the Department of Internal Affairs (DIA).

How are they going to get that training?

Training should not be an allocated hour or two each year where all staff listen to a lecture on AML/CFT. Training is ideally interactive and regular to achieve understanding. It can take a variety of forms, including:

Presentations and seminars by the compliance officer, an external consultant or an AML/CFT specialist lawyer.

E-learning and interactive online modules for staff to complete. Presentations and seminars are easy to run, but risk staff not being engaged. While you can show that a presentation was conducted, it is difficult to judge what staff have actually learned. Interactive e-learning modules that require staff to complete tests or modules, such as the Safetrac online training programme prepared by MinterEllisonRuddWatts, allow you to audit how successful your training has been.

Regular discussions about AML/CFT issues in staff meetings. Make it a regular agenda item for staff to bring up any AML/CFT issues they encountered or any activity that could be suspicious (keeping in mind the prohibitions on disclosing information related to a suspicious activity report). By regularly drawing attention to AML/CFT issues, you reduce the risk that obligations are forgotten until the annual report is due.

Regular updates and communications sent to staff. AML/CFT training takes time from the staff involved, both in organising and attending training. Emailing newsletters and reminders about AML/CFT issues on topical issues is an easy way for your business to help keep AML/CFT top of mind for staff.

Need help?

Some law firms may not have all the resources available in-house to train staff, and help may come from several different sources.

The DIA has awareness and training workshops to upskill lawyers in AML/CFT matters. It has also published the Guideline: Lawyers and Conveyancers Complying with the Anti-Money Laundering and Countering Financing of Terrorism Act 2009, which provides an overview of the regime for the legal profession.

The AML/CFT supervisors have also published various guidance and codes of practice available on their websites.

The New Zealand Law Society’s website contains a large number of guides under Practice Resources/ Practice Areas.

Consultants and AML/CFT specialist lawyers have training modules and e-learning offerings to help lawyers upskill. The initial compliance period for phase one entities allowed experts to build experience, and prepare proven modules to help educate staff.

Lloyd Kavanagh and Hartley Spring are co-authors of the AML/CFT section of Morison’s Company and Securities Law. Lloyd is Chair of MinterEllisonRuddWatts. Lloyd also leads, and Hartley is a solicitor in, the firm’s financial services team.

Lawyer Listing for Bots