Attention all Reporting Entities: New AML/CFT regulations have been introduced…

Last year the Ministry of Justice implemented new regulations under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (‘AML/CFT Act’).  These have brought some significant changes to the regime which will apply to all existing reporting entities, service providers, and other entities involved in the financial sector.

The regulations cover a broad range of areas within the regime, but can be broadly split into:

1. Immediate regulatory relief (introduced from 31 July 2023);
2. New obligations for existing entities (commencing from 1 June 2024); and
3. Extending the coverage of the regime (commencing from 1 June 2025).

The key changes to be aware of are as follows:

Amendments from 31 July 2023

• Clarifying when customer due diligence should be carried out where there are non-regulated services that have been provided by a reporting entity;
• Defining who is the “customer” for a number of different kinds of reporting entities (including real estate agents and those in financial services);
• Exempting corporate trustees or nominee company subsidiaries from the regime where their activities are covered by their parent’s AML/CFT compliance programmes;
• Wire transfers of $1,000 outside of a business relationship are now considered an “occasional transaction”; and
• Extending a range of exemptions for Crown entities, registered charities and non-court appointed liquidators,

Amendments from 1 June 2024

• Expanding information which is required as part of a standard customer due diligence (CDD) in situations where a customer is a legal person or legal arrangement as defined in the Act.
• Prescribing additional enhanced CDD measures if the usual enhanced CDD measures are insufficient to manage the risk of money laundering and the terrorism financing. This includes:

          - Obtaining further information from customers in relation to a specific transaction;

          - Examining the purpose of the transaction;

          - Enhancing the monitoring of the business relationship; and

          - Obtaining the approval of senior management to continue with the transaction or relationship.

• Introducing a new record-keeping obligation where all reporting entities must keep records of prescribed transaction reports for at least 5 years after the termination of the business relationship.
• Requiring AML/CFT regulations to differentiate between the circumstances where CDD is conducted to obtain information about the source of the funds or source or wealth of the customer, or both.
• Require reporting entities to review their risk assessments to consider new or developing technologies before they are implemented or used.
• Clarifying when enhanced CDD is required where there are potential grounds to report a suspicious activity.

Amendments from 1 June 2025

• Revoking the current broad exemption for online auctions and replacing it with a narrower exemption for transactions between a provider of an online marketplace and the buyers/sellers if the transaction does not exceed $10,000 in any 12-month period.
• Requiring reporting entities to rate the risk of a new customer when conducting CDD and to keep a record of that rating. This rating should be reviewed as appropriate.

While the most recently implemented changes on 31 July of this year do not represent a significant change from the current, all reporting entities will need to understand or seek advice about how the amended regulations will impact their current operations. 

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.