New Zealand Law Society - AML/CFT: What happens on 1 July?

AML/CFT: What happens on 1 July?

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

Many lawyers and conveyancers could be wondering what the Department of Internal Affairs will be doing from 1 July when practitioners are captured under phase 2 of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act).

The Department of Internal Affairs (DIA), the supervising agency responsible for ensuring lawyers and conveyancers meet their obligations under the reporting regime, has a Financial Integrity (AML/CFT) Team.

Its manager, Mike Stone, says come 1 July, the DIA will continue an educative and proportionate approach to compliance obligations.

“We expect that the majority of people with these responsibilities will be doing their best to meet the deadline. But with all the best intentions they may get some components of the process wrong. We are focused on having a cooperative relationship recognising where businesses are genuinely trying to do the right thing, and therefore helping them meet their obligations,” he says.

Mr Stone says increased knowledge, along with more resources for the department, should provide enhanced help to people from the beginning of the compliance date.

But while education will always be a major focus, so will their regulatory capacity as the appointed supervisor.

“There will be some businesses out there, some law firms and sole practitioners that we will be requesting their compliance documentation from. We’ll be asking to look at their risk assessment and compliance programme and we’ll do a technical assessment of those documents,” he says.

Under the legislation, the DIA does have the option of making unannounced visits.

“Unless there was a risk requirement or intelligence that required us to take that approach, that would not be how we would normally approach things,” he says.

While the DIA would hope not, it is possible that some lawyers and conveyancers captured under the Act have done nothing or little to prepare for their compliance obligations.

Mr Stone says they’ve learned a lot from supervising phase 1 of the AML/CFT Act, and much of that will be utilised in phase 2.

“You can’t always treat everyone the same based on the range and complexity of businesses out there. We have a lot of tools that we operate including engaging by phone and email, providing written advice and personally visiting businesses,” he says.

The DIA also has an established system of remediation.

“We might assess whether a risk assessment and compliance programme meets the requirements of the Act,” says Mike Stone. “There might be some shortcomings but we’d provide advice and come to an agreement with that firm or practitioner to remediate those issues within a given time.

“Not everybody will be willing to do that, so in some circumstances that might escalate to looking at a formal warning or enforceable undertaking for serious non-compliance. In the worst-case scenario, civil and criminal prosecution tools might be used,” he says.

Mr Stone says from 11 June, DIA’s full-time dedicated 17-person team, which is split between Wellington and Auckland, will start to increase towards a target of 56 full-time staff with a broader geographical focus.

“It will encompass a range of personnel including operational regulators, practice leaders, intelligence and policy analysts, dedicated engagement and innovation staff, along with a larger management team,” he says.

Lawyer Listing for Bots