Services › Anti-Money Laundering › AML/CFT News - October 2011

In this issue:

• Identity Verification Code of Practice
• Authorised Financial Advisers
• Roadshow wrap–up
• Ordinary Course of Business Guideline
• Milestones

Identity Verification Code of Practice 2011

The Identity Verification Code of Practice (the code) was gazetted on 1 September 2011 and comes into force on 30 June 2013.

The code sets out an acceptable practice for verifying the name and date of birth of customers (people, not corporations) whom reporting entities have assessed as low to medium risk. The code details acceptable forms of identification, and outlines when secondary or supporting identification is required – for example, a passport on its own, or a New Zealand Driver Licence with an Eftpos card. It also provides for document certification by trusted referees.

Although the code is not mandatory, it constitutes a ‘safe harbour’ – a reporting entity that fully complies with the code is deemed to be compliant with the relevant parts of the legislation. If a reporting entity decides to opt out of the code, it must adopt practices that are equally effective, otherwise it risks non-compliance.

The code is forward-looking, allowing reporting entities to take advantage of any reliable and independent verification services that might be developed in the future (e.g. the final paragraph of Part 2, and clause 3 b)).

Examples of these include the services that are not yet available, but envisaged by the Identity Information Confirmation Bill and the Electronic Identity Verification Bill. These services are not currently available. If the Bills are passed into law and services made available to the private sector, supervisors will contact reporting entities with information on how they will operate.

The trusted referees for document certification in Part 2 of the code are based on positions and professions in New Zealand. If reporting entities have customers in other countries using trusted referees that do not meet the definitions within the code, they will need to opt out of the code.

This does not prevent documents certified in other countries being used for identity verification purposes under the AML/CFT Act. However, overseas referees must be the equivalent of those listed in the code. For example, a lawyer in another country that is a member of, and supervised by, a professional body similar to the New Zealand Law Society (as defined in the Lawyers and Conveyancers Act 2006). If you have any queries about the code please contact your supervisor.

Which financial advisers have AML/CFT obligations?

Under AML/CFT regulations, if you are required to be an authorised financial adviser (AFA), you will probably have to comply with the AML/CFT Act when you arrange for your customers to invest in financial products.

Advisers not required to be AFAs because they only provide advice to wholesale customers or give class advice may still have AML/CFT obligations under these regulations.

If you carry out any of the activities listed under the definition of financial institution in the AML/CFT Act you are likely to have AML/CFT obligations.

Also note that if you are a financial adviser with AML/CFT obligations, the company that employs you will be the ‘reporting entity’.

The Financial Markets Authority supervises financial advisers for AML/CFT. More detailed guidance will be provided in the near future.

AML/CFT roadshow wrap-up

In August and September representatives from Internal Affairs, the Financial Markets Authority and the Police Financial Intelligence Unit held presentations in 14 locations around the country.

The roadshow provided a good opportunity for reporting entities to hear about the context for the AML/CFT regime as well as the obligations they will need to comply with from 30 June 2013. The roadshow presentation, including presentation notes, as well as a summary of frequently asked questions, are available on the Internal Affairs and Financial Markets Authority websites.

Those in attendance engaged well, providing supervisors with an indication of the types of issues facing reporting entities as they work towards understanding and implementing their new obligations.

Attendees have been sent a survey. If you haven’t yet responded, please do so. This information will assist in planning the 2012 roadshow.

Guide to interpreting ‘ordinary course of business’

Under the AML/CFT Act, if certain activities are in your ‘ordinary course of business’ you are likely to have AML/CFT obligations.

If you are unsure whether any of your activities are in your ordinary course of business, please refer to this interpretive guideline, issued recently by the AML/CFT supervisors and available on their websites.

Supervisors’ work programme - milestones

Many reporting entities have asked what supervisors are working on and when future guidelines can be expected. The following are the approximate milestones supervisors are working towards.

AML/CFT programme	December 2011
Countries assessment	December 2011
Issuers of securities	February 2012
Beneficial ownership	June 2012
Designated business groups	June 2012
Other guidelines (including sector specific)	As required
Annual report form (via regulations)	June 2012 (dependent on parliamentary processes)
Second round of roadshows	2012 (date yet to be decided)
AML/CFT Act 2009 in force	30 June 2013

Contact us

Internal Affairs is your supervisor if you are a casino, money service business, payroll remittance business, non-deposit taking lender, financial leasor, safe deposit/cash storage provider, non-bank credit card provider, trust and company service provider or any other financial institution not supervised by the Reserve Bank or Financial Markets Authority.

Please email amlcft@dia.govt.nz if you have any questions.

The Financial Markets Authority is your supervisor if you are an issuer of securities, broker, financial adviser, trustee company, collective investment scheme or futures dealer.

Please email aml@fma.govt.nz if you have any questions.