The Government has announced that it will introduce the Anti-Money Laundering and Countering Financing of Terrorism (Omnibus) Amendment Bill (Bill), the fourth and final Bill in its programme to reform New Zealand’s anti-money laundering and countering financing of terrorism (AML/CFT) regime.
The Bill's key changes include:
- more flexibility in conducting customer due diligence, particularly for lower-risk customers and transactions;
- strengthened FIU powers, including temporary freezing of accounts;
- integration of financial sanctions into the AML/CFT framework; and
- significantly increased penalties and new enforcement tools for the Department of Internal Affairs (DIA).
Further detail on the Bill is set out below, and we recommend that reporting entities review the Bill now and assess how the proposed changes would affect their existing AML/CFT compliance. The introduction of the Bill is timely, being just before Parliament's scheduled dissolution on 1 October ahead of the 7 November General Election. If enacted, it would come into force one year after Royal assent.
Class Exemptions – managing intermediaries exemptions
In addition to the Bill, the Class Exemptions amendment notice has been gazetted. This renewed many of the expiring class exemptions for two to five years, including the exemption for employee security purchase schemes.
The key exceptions are the class exemptions at Parts 5 and 6 of the Class Exemptions notice relating to licensed managing intermediaries and specified managing intermediaries, which will expire at the end of this year. While there will be a one-year good faith period from 31 December 2026 to allow for internal policy work and consultation with impacted entities, the DIA has signalled that the aim is to shift from a broad exemption model to a more targeted, accountable approach. Reporting entities who currently rely on the Part 5 or Part 6 Class Exemptions should monitor the DIA's ongoing policy work and consultation closely.
Please contact one of our experts if you wish to discuss any aspect of the Bill or the Class Exemptions amendments.
Omnibus Bill
The Bill continues the shift towards a more risk-based regime. While low-risk transactions should not attract the same scrutiny as complex, high-risk arrangements, reporting entities will need greater capability and confidence to exercise professional judgement, particularly given the stronger penalty regime.
Risk-based approach to Customer Due Diligence (CDD)
One of the Bill’s central themes is greater proportionality in CDD.
The existing regime can result in reporting entities collecting and verifying information in circumstances where the underlying money laundering or terrorist financing risk is low. The Government has identified activities such as establishing family trusts, opening bank accounts for children and ordinary property transactions as examples where compliance requirements can be disproportionate. Earlier reforms in 2025 and 2026 have already removed the requirement to verify address information for standard CDD and removed the mandatory requirement for source of wealth verification simply because a customer was using a family trust.
The Bill would give reporting entities greater discretion to determine the information they need to obtain and verify based on the risks associated with a particular customer or transaction. In particular, reporting entities would be able to carry out simplified CDD (rather than standard CDD) where they have assessed the customer as low risk, which would be a significant and welcome broadening of the existing simplified CDD regime.
Stronger powers for the Financial Intelligence Unit (FIU)
The Bill also significantly strengthens the information-gathering and intervention powers available to the FIU, which in some cases require authorisation by an issuing officer (such as a judge or Justice of the Peace).
Among the proposed new powers for the FIU are:
- the temporary freezing of an account or transaction;
- obtaining information from entities that are not themselves reporting entities; and
- requiring reporting entities to provide information on an ongoing basis.
The safeguards and statutory thresholds applying to these new powers will warrant close attention as the Bill progresses, especially as it provides law enforcement with a direct mechanism to prevent suspected illicit funds from being moved.
Virtual assets and cash
As previously signalled, there will be restrictions on certain cash payments involving remittance services and virtual assets (including cryptocurrencies and tokens). The restrictions themselves would be set by regulations, with consultation indicated for early 2027.
Targeted financial sanctions
The Bill further integrates United Nations Security Council targeted financial sanctions, with mandatory obligations for reporting entities to assess and mitigate relevant sanctions risks and to include references to non-compliance with specified sanctions in their AML/CFT programmes.
Reporting groups: mandatory and voluntary frameworks
The Bill introduces new frameworks for mandatory and voluntary reporting groups, replacing the current "designated business group" framework.
A mandatory reporting group is a group of two or more related persons where each member is a reporting entity in New Zealand or a person that is resident in any other country and that is supervised or regulated for AML/CFT purposes. A mandatory reporting group must establish a group-wide AML/CFT programme, including controls for managing and mitigating risks at a group level and sharing information within the group.
Enforcement changes: stronger penalties and new tools
The Bill significantly strengthens the enforcement toolkit available to regulators and increases the consequences for non-compliance.
Key changes include:
- new infringement offence regime for minor non-compliance;
- increased maximum penalties for both civil and criminal matters. For individuals, the maximum civil pecuniary penalty would increase to $500,000 (or three times the commercial gain). For corporate offenders, civil pecuniary penalties and criminal fines may now be the greater of a specified sum (up to $5 million for civil penalties), three times the value of any commercial gain, or, where commercial gain cannot be readily ascertained, 10% of the turnover of the body corporate and all of its interconnected bodies corporate;
- extended limitation periods for criminal prosecutions from three years to five years; and
- new criminal offences, including an offence for structuring a legal person or legal arrangement to avoid the application of AML/CFT requirements, and offences for obstructing or providing false information to the Commissioner.