Regulators out in the regions

AML/CFT News and updates

14 September 2022

AML/CFT Regulators from the Department inspected 12 reporting entities throughout Whanganui, Taupo and Hamilton during June and July as part of the Department’s aim to have a visible regulatory presence around the regions. The reporting entities visited comprised of law firms, real estate agents, accountants and remittance providers.

The inspections and 4 education visits across the three regions were driven by our risk analysis and our knowledge of our reporting entities and sectors. The analysis undertaken also made good use of data provided by the Police Financial Intelligence Unit (FIU).

The visits were scheduled to ensure reporting entities were implementing policies, procedures and controls (PPCs) to effectively manage the ML/TF risks faced by their business. At each visit, regulators used a hybrid model of education and investigating skills to test the PPCs in place.

“We reasonably expect all reporting entities visited to be compliant with the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 by now. It was therefore disappointing that we identified reporting entities on the visits who were clearly non-compliant,” says Renata Kawala, Senior AML/CFT Regulator at the Department.

“These non-compliant reporting entities will be the subject of follow up remediation or sanction action by the Department”.

Examples of issues identified

  • Reporting entities did not have sufficient understanding of when to apply enhanced CDD.
  • Reporting entities could not identify what reasonable steps were taken to determine whether a customer or beneficial owner was a Politically Exposed Persons.
  • Reporting entities were not verifying customer identify before conducting business.
  • Reporting entities did not have sufficient knowledge of identifying and reporting suspicious activity to the FIU.
  • A small but significant percentage of law firms continue to use template AML documents that have not been tailored to the specific risks and requirements for their business.

We’ll be continuing this important ‘on the ground’ focus with inspections throughout the 2022/2023 year to promote AML/CFT best practice.