New Zealand's report card on anti-money laundering efforts released

FATF's Mutual Evaluation Report on New Zealand's AML/CFT regime was released overnight and is making headlines this morning.
 
To a large extent, FATF is complimentary of New Zealand's AML/CFT regime, stating that the system is effective in many respects. However, FATF identifies seven priority actions which are likely to have a significant influence on the shape and enforcement of the regime going forward:

1. That improvements should be made to the availability of accurate and up to date beneficial ownership information, and steps taken to mitigate the risks posed by nominee shareholders and directors. It is specifically noted that trusts are widely used in New Zealand and that there are comparatively fewer measures available to enable law enforcement to detect the abuse of trusts for money laundering and terrorism financing purposes. 
2. That there is a need to ensure that the AML/CFT supervisors have sufficient enforcement options available to them, and – in particular – that RBNZ has adequate resources to supervise banks. FATF does observe, however, that the implementation of AML/CFT controls by banks (and other large financial institutions) is generally of a good standard.
3. That improvements should be made in relation to the supervision and enforcement of targeted financial sanctions obligations.
4. That Phase 2 of the AML/CFT Act (capturing lawyers, conveyancers, accountants, real estate agents and others) requires "consolidation". The Report reflects that Phase 2 entities are still developing their understanding of money laundering and terrorism financing risks.
5. That improvements should be made to the FIU's ability to directly identify new targets and trends.
6. That specific gaps and vulnerabilities in the AML/CFT Act need to be addressed, including in relation to licencing and registration of reporting entities and gaps in particular in relation to businesses that conduct money or value transfer services.
7. That steps should be taken to sustain the recent increase in money laundering prosecutions.

The 260-page Report is essential reading for everyone engaged in AML/CFT compliance and enforcement in New Zealand. The Report will be a cornerstone document for the now imminent statutory review of the AML/CFT Act, and also acts as a welcome new source of guidance on the interpretation of the regime as it currently stands.

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