AML/CFT law and regulations establishes a framework for tackling the crimes of money laundering and terrorism financing.
AML/CFT laws and regulations require businesses to put in place appropriate controls to make it harder for them to be used to launder money, and when they are or suspect they are being used to launder money report it to the authorities.
AML/CFT is also a programme of activity (set out in AML/CFT policies, procedures and controls) designed to manage and/or mitigate the risk that legitimate businesses are being used to launder money generated through illegal activity.
Your AML/CFT programme should be designed to support a business playing its part in preventing, detecting and reporting instances of money laundering and terrorism financing that occur through the legitimate products and services it offers.
Money Laundering seeks to disguise the origins of illegally obtained money and is the methods by which the proceeds of crime are made to appear legitimate.
There are no hard and fast rules about how money is laundered. However, money laundering cannot occur without a crime which gives rise to the illegally obtained funds.
Such crimes are called ‘predicate crimes’. Common predicate crimes are drug trafficking, human trafficking, fraud, theft, corruption, and tax evasion.
There are no hard and fast rules about how terrorism financing takes place.
The techniques used by terrorism financiers are very similar to those used by money launderers, however unlike money laundering the source of funds may be legitimate and their intended use or purpose is illegal.
Targeted Financial Sanctions (TFS) target a country, the trade in specific goods or services with a country, or persons and entities within a country.
Targeted Financial Sanctions (TFS) target a country, the trade in specific goods or services with a country or parties within a country. Sanctions regulations also prohibit financial dealings with designated entities or individual citizens of a country.
There are three types of Targeted Financial Sanctions:
Sanction regimes are political in nature and are an instrument of foreign policy and economic pressure that can also be currency sensitive, and therefore have extra-territorial considerations and reach.
Sanctions compliance leverages the techniques and controls used for AML/CFT to ensure a business is not undertaking business with sanctioned parties or supporting the trade in goods and services that is prohibited by TFS.
In 2017 the New Zealand parliament passed an Amendment Act which introduced “Phase 2”, extending the obligations to additional business sectors and made changes that impact the “Phase 1” entities. This a significant step for New Zealand which is a step change for the AML/CFT regime.
The Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Amendment Act 2017 put in place “Phase 2” of New Zealand’s AML/CFT laws, which:
The Amendment Act 2017 will come into effect in stages for different sectors to give businesses time to prepare for the changes.
In 2018 there will be increased regulatory focus on AML/CFT compliance. Being AML/CFT compliant has never been more important.
As a Phase 2 business covered by the AML/CFT Act obligations you must:
On an ongoing basis, you must:
Some of the changes made by the AML/CFT Amendment Act 2017 also affect Phase 1 businesses (that is, banks, casinos, a range of financial service providers, and some trust and company service providers), these include:
Initialism are the AML/CFT experts, so you don’t have to be.
With over 30 years of expert knowledge and real world experience our AML/CFT compliance solutions will help you to navigate your legal and regulatory requirements so that your business complies with its AML/CFT obligations in the fastest and most cost-effective way.
Initialism has a range of AML/CFT solutions to support becoming AML/CFT compliant and maintaining compliance:
Our solutions allow you to tailor support based on your capacity, experience and budget.