Comprehensive AML Laws and Regulations: New Zealand

New Zealand has established a comprehensive framework to combat money laundering (ML) and terrorist financing (TF), aligning with international standards. These regulations span various sectors, including banking, insurance, asset management, wealth management, payment processors, fintech, lending, and crypto, ensuring the integrity of the financial system and compliance with global AML/CFT standards.

Key Laws and Guidelines

• Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act): The AML/CFT Act of 2009 serves as the primary legislation for combating money laundering and terrorist financing in New Zealand. The act mandates reporting entities to implement customer due diligence, maintain records, and report suspicious transactions. It also outlines the procedures for the confiscation of proceeds derived from money laundering activities.
• Financial Markets Conduct Act 2013: The Financial Markets Conduct Act regulates financial markets and institutions, ensuring they implement effective AML/CFT measures. The act mandates customer due diligence, transaction monitoring, and reporting of suspicious activities to the Financial Intelligence Unit (FIU).
• Department of Internal Affairs (DIA) Guidelines: The Department of Internal Affairs issues guidelines to support compliance with the AML/CFT Act. These guidelines provide specific instructions for various sectors, including banking, insurance, and fintech, on implementing effective AML/CFT measures. The guidelines also outline the responsibilities of reporting entities in conducting customer due diligence and reporting suspicious activities.
• Reserve Bank of New Zealand (RBNZ) Regulations: The Reserve Bank of New Zealand issues regulations to ensure compliance with AML/CFT standards within the banking sector. These regulations mandate the implementation of robust AML programs, customer due diligence, transaction monitoring, and the reporting of suspicious activities.

Regulatory Bodies

• Financial Intelligence Unit (FIU): The FIU, established under the AML/CFT Act, is the central agency responsible for receiving, analyzing, and disseminating reports on suspicious transactions. It coordinates AML efforts across various sectors and collaborates with international counterparts to enhance AML/CFT frameworks.
• Reserve Bank of New Zealand (RBNZ): The RBNZ oversees the implementation of AML regulations within the banking sector. It issues directives and guidelines to ensure compliance with AML/CFT standards and conducts regular inspections to enforce these regulations.
• Financial Markets Authority (FMA): The FMA regulates the securities market and non-bank financial institutions, ensuring that they implement effective AML measures. It issues guidelines for customer due diligence, transaction monitoring, and reporting of suspicious activities within the securities sector.
• Department of Internal Affairs (DIA): The DIA oversees the implementation of AML regulations for non-financial businesses and professions, including real estate and precious metals. It issues guidelines and conducts inspections to ensure compliance with AML/CFT standards.
• New Zealand Police: The New Zealand Police are responsible for investigating and prosecuting money laundering offenses. They collaborate with other Regulatory Bodies and law enforcement agencies to enforce AML laws and prevent financial crimes.

History of Regulations

• 2009: Enactment of the Anti-Money Laundering and Countering Financing of Terrorism Act.
• 2013: Enactment of the Financial Markets Conduct Act.
• 2014: Establishment of the Financial Intelligence Unit (FIU).
• 2016: Introduction of guidelines by the Department of Internal Affairs for non-financial businesses and professions to enhance AML compliance.
• 2017: Issuance of detailed AML guidelines for the banking sector by the Reserve Bank of New Zealand.
• 2019: Implementation of AML guidelines for the securities sector by the Financial Markets Authority.

Sector-specific Regulations

• Banking and Financial Institutions: Regulated by the Reserve Bank of New Zealand (RBNZ), the banking and financial institutions sector is required to implement robust AML/CFT programs, including strict KYC protocols, continuous monitoring of transactions, and the reporting of suspicious activities. Banks and financial institutions must also maintain records for a minimum of five years.
• Insurance: The insurance sector, overseen by the Department of Internal Affairs (DIA), mandates companies to implement effective AML measures. This includes customer due diligence, transaction monitoring, and the reporting of suspicious activities to the FIU.
• Asset Management and Wealth Management: Regulated by the Financial Markets Authority (FMA), asset management and wealth management firms must adhere to stringent AML regulations. These firms are required to implement robust AML programs, conduct thorough customer due diligence, and monitor transactions for suspicious activities. They must also report any suspicious transactions and maintain detailed records.
• Payment Processors and Fintech: Payment processors and fintech companies are subject to regulations issued by the DIA. These entities must implement comprehensive AML measures, including customer verification, real-time transaction monitoring, and the reporting of suspicious transactions. They must also comply with guidelines issued by the RBNZ for prudential standards.
• Lending: Lending institutions, both traditional and fintech-based, must adhere to AML regulations set by the RBNZ. These institutions are required to conduct customer due diligence, monitor transactions for suspicious activities, and report any suspicious transactions to the FIU. They must also maintain records of all transactions and customer information.
• Crypto: The crypto sector is regulated under guidelines issued by the FMA. Virtual asset service providers (VASPs) are required to implement robust AML measures, including customer verification, transaction monitoring, and the reporting of suspicious activities. VASPs must also maintain detailed records of all transactions.