Frequently Asked Questions for High Value Dealers (HVDs) 

A.  Cash transactions

1. If I transact using a form of payment other than cash (i.e. eftpos or credit card) am I captured as a HVD?

If the transaction does not involve cash, you will not be captured as a HVD by the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act).

You only need to meet your AML/CFT obligations if the cash transaction (or series of related cash transactions) is NZD10,000 or more.

Please note that cash for the purposes of the AML/CFT Act means physical currency (which includes New Zealand dollars and foreign currency) or bearer-negotiable instruments such as cheques.

2. I am a HVD who trades using cheques (bearer-negotiable instruments). Do I need to submit a prescribed transaction report (PTR) to the New Zealand Police Financial Intelligence Unit (FIU)?

If you are a HVD transacting using bearer-negotiable instruments such as personal, bank or traveller’s cheques, you are not required to submit a PTR to the FIU. However, you must meet your other AML/CFT obligations if the transaction (or series of related cash transactions) reaches NZD10,000 or more (i.e. conduct customer due diligence and keep the appropriate records).

Page 7 of the Guideline: High Value Dealers: Complying with the AML/CFT Act 2009 provides more information on the differences between a transaction using physical currency (i.e. NZ dollars and foreign currency) and bearer-negotiable instruments (i.e cheques, promissory notes, bills of exchange, bearer bonds, money orders, postal order or similar orders).

3. What does ‘related cash transactions mean?’

Whether cash transactions are related or not will be a matter of judgement depending on the circumstances. Below are some factors to consider for determining whether cash transactions are related:

  • Is the same customer trading with you regularly using cash, and the individual transactions are under NZD10,000 but collectively they equal/exceed NZD10,000?
  • Is the customer’s behaviour predictable? (i.e. trading in the same/similar high value good every week with cash, over a number of weeks).
  • Has a purchase been made on layby and the customer pays for the instalments using cash totalling (or above) NZD10,000?
  • Do cash transactions from different customers appear related in some way?

We realise despite your best efforts that it may be difficult for you to spot cash transactions that are related, especially if they are spread over time. The Department will be satisfied that you have met your AML/CFT obligations in this regard if you can demonstrate that you are taking reasonable steps to identify related cash transactions (and are carrying out CDD when the cash threshold of NZD10,000 is reached or exceeded).

See page 11 of the Guideline: High Value Dealers: Complying with the AML/CFT Act 2009 for some examples of related cash transactions.

B.  High Value Goods

4. What is captured as a high value good under the AML/CFT Act?

The high value goods which are included in the AML/CFT Act include:

  • Motor vehicles
  • Ships
  • Jewellery
  • Watches
  • Gold, silver, or other precious metals
  • Diamonds, sapphires, or other precious stones
  • Paintings
  • Prints
  • Protected foreign objects
  • Protected NZ objects
  • Sculptures
  • Photographs
  • Carvings in any medium
  • Other artistic or cultural artefacts

For further information on ‘high value good’ as defined by the AML/CFT Act, please refer to pages 8 and 9 of the Guideline: High Value Dealers: Complying with the AML/CFT Act 2009.

5. Does the AML/CFT Act cover vehicle/ship parts, accessories, engine upgrade jobs, general merchandise?

The definition of a high value good as per the AML/CFT Act does not cover parts, accessories, engine upgrade jobs, and general merchandise.

6. Does the AML/CFT Act cover the buying/selling of caravans?

A caravan falls under the definition of a trailer in accordance with the Motor Vehicle Sales Act 2003. It is therefore excluded from the definition of a motor vehicle, and is not considered a high value good. Therefore, high value dealers that buy and/or sell caravans are not captured by the AML/CFT Act.

C.   Customer Due Diligence (CDD)

Standard Customer Due Diligence

7. I am a HVD. What information am I required to collect on my customer to meet my AML/CFT requirements?

As you are a HVD you are only required to carry out standard customer due diligence (CDD), not enhanced customer due diligence (EDD) for high-risk customers/transactions like other reporting entities.

You are required to obtain and verify the following information on the customer, the beneficial owner(s) and the person acting on behalf of the customer:

  • Full name
  • Date of birth
  • The relationship to the customer (if the person you are transacting with is not the customer)
  • Company identifier or registration number (if applicable).

Unlike other reporting entities you are not required to obtain and verify information relating to the customer’s address or registered office.

Note that if a person is acting on behalf of the customer you must ensure they are a properly authorised representative. It is ultimately a business decision on how you go about ascertaining that they have the authority to act on behalf of the customer. Any information you collect on this should be held on record.

8. What happens when the customer who makes the transaction isn’t the beneficial owner of the company or the trust – how is the HVD supposed to identify and verify the beneficial owner’s information if they are not present at the transaction?

The obligation to verify the customer, the person acting on behalf of the customer and the beneficial owners of the customer is with the HVD. This will mean identifying who the beneficial owner is (e.g. via the Companies Office Register) and asking them to supply their identity document(s) and verifying those identity documents. How the HVD verifies the documents will be up to them. It is recommended that you use the Identity Verification Code of Practice. This will mean sighting the documents (and the beneficial owner) face-to-face, using a trusted referee to certify the documents or using electronic verification methods.

Practically, this will involve asking the beneficial owner(s) to come in or asking them to have their documents certified and post them in or using an electronic verification supplier which could come at a cost.

Please note that this situation will only occur where a customer is purchasing high-value goods using cash at NZD10,000 or more.

9. I am a HVD – do I need to do enhanced customer due diligence (EDD) on high-risk customers such as trusts and politically exposed persons?

No, you are only required to carry out standard CDD on customers (including on trusts and politically exposed persons). 

The Amended Identity Verification Code of Practice 2013 (IVCOP)

10. What forms of identification should we be using to verify our customers?

Identity verification needs to be done by collecting and sighting documents, data or information provided from a reliable and independent source. You are required to keep records of this information. The Amended Verification Code of Practice 2013 (IVCOP) provides suggested best practice for anyone conducting name and date of birth identity verification on customers (who are natural persons) who have been assessed to be low to medium risk. Note that IVCOP should be read in tandem with the Explanatory Note.

Part 1 of the IVCOP outlines some of the information documents which are acceptable for AML/CFT purposes. You need one form of primary photographic identification such as a New Zealand passport; or one form of primary non-photographic identification such as a New Zealand full birth certificate in combination with a secondary or support form of photographic identification; or a NZ driver’s licence and another approved form of identification that is specified on page 5 of IVCOP (i.e. a credit card). The most common combination of identification that HVDs are likely to come across is a NZ driver’s licence and a credit card. Note that if you accept a credit card, debit card or eftpos card, it must contain the person’s name and signature.

11. Why isn’t a NZ Driver’s Licence accepted under the IVCOP as a stand-alone form of identification?

At the time IVCOP was drafted, Cabinet agreed the NZ Driver’s Licence is primarily a traffic law enforcement tool to enable Police to determine whether the holder is entitled to be driving. The licence was not designed or intended to be used as a general purpose identification document. While it is a ubiquitous document, it is not supported by sufficient evidence of identity standard to warrant inclusion as a primary identification document under IVCOP.

12. Is it mandatory to comply with IVCOP?

No. Complying with a code of practice such as IVCOP is not mandatory. The AML/CFT regime allows for flexibility and scope for innovation because reporting entities can opt out of a code of practice. However, if fully complied with, a code of practice such as IVCOP operates as a ‘safe harbour’. The legal effect of a code of practice is described in section 67 of the AML/CFT Act.

Please note that if you opt out of a code of practice you do not receive the benefit of the safe harbour. In these circumstances, you must comply with the relevant statutory obligation by some other equally effective means. In order for this to be a defence to any act or omission, you must have provided written notification to DIA that you have opted out of compliance with IVCOP and intend to satisfy your obligations by some other equally effective means.

13. Do I need to certify copies of original identity documents provided for CDD purposes?

No. If you have sighted the original identity documents of your customer, you comply with Part 1 of IVCOP. You should take copies of the documents and note the date on which you sighted them.

In these circumstances, there is no requirement for you to also obtain certified copies of these documents (under Part 2 of IVCOP). Part 2 of IVCOP is for situations where the original identity documents are not available.

14. Is it sufficient that my customer provides me with certified copies of documents (i.e. not originals) for CDD purposes?

Yes, certified copies of identity documents are acceptable under Part 2 of IVCOP. As per above, Part 2 of IVCOP should be used in situations where the original identity documents are not available.

Please refer to IVCOP to determine who is able to certify copies of a document as a trusted referee.

15. How should the trustee referee certify the copy of the identity document?

There is no specified wording in either the IVCOP or in legislation. Part 2 of IVCOP only states that the trusted referee “make a statement to the effect that the documents provided are a true copy and represent the identity of the named individual (link to the presenter)”.

You might find the New Zealand Law Society practice briefing helpful in relation to certification and verification under the AML/CFT Act: Certification and Verification under the AML/CFT Act 2009 (PDF, 171KB - NZ Law Society website).

D. Other

16. What are the requirements for a registered auctioneer that sells high value goods?

If you are a registered auctioneer that sells high value goods, then you are a HVD for the purposes of the AML/CFT Act and will have fewer AML/CFT obligations compared to other reporting entities. Please refer to the Guideline: High Value Dealers: Complying with the AML/CFT Act 2009 for more detailed information on your AML/CFT obligations.

Note that if you are a registered auctioneer that sells real estate, you will have the same AML/CFT obligations as a real estate agent. Please refer to the Guideline: Real Estate Agents: Complying with the AML/CFT Act 2009.

17. What AML/CFT obligations do I have as a HVD if we provide in-house financing to our customers?

A HVD trading in motor vehicles/ships using cash at or above NZD10,000 (or a series of related cash transactions of NZD10,000 or above) will have obligations as a HVD under the AML/CFT Act.  A motor vehicle/ship dealer finance company* registered (or required to be) on the Financial Service Providers Register (FSPR) and carrying out captured activities under the AML/CFT Act will be a ‘financial institution’, and therefore full AML/CFT obligations will apply.

*separate legal entity to motor vehicle/ship dealers.

Disclaimer:

This guideline is provided for information purposes only and cannot be relied on as evidence of complying with the requirements of the AML/CFT Act. It does not constitute legal advice and cannot be relied on as such. If after reading this guideline you do not fully understand your obligations, you should seek suitable professional or legal advice or contact your supervisor, the Department of Internal Affairs (DIA) at Amlcft@dia.govt.nz.

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