Review – Section 59 Independent audits of Designated Non-Financial Businesses and Professions (DNFBPs)

AML/CFT News and updates

01 June 2023

From January to April 2023, the AML/CFT Group completed a review focusing on law firms, accounting practices and real estate agents’ compliance with the independent audit requirements of section 59 of the AML/CFT Act.

A group of 60 law firms, accounting practices and real estate agents from across the country were selected for review. The review sought to identify common areas for improvement across their independent audits and determine the appropriateness of actions taken to address them.

While a range of areas for improvement were identified across the audits, four common areas were:

  • Identification of new customers – A lack of clear policies, procedures, and controls to verify the identity of customers that do not align to the Identity Verification Code of Practice (IVCOP).
  • Politically Exposed Persons (PEPs) – Weaknesses in procedures adopted for conducting PEP checks.
  • Risk assessments – A lack of analysis specific to identifying and mitigating risks posed by the reporting entity’s products and services, methods of delivery and the institutions that it interacts with.
  • Generic templates – the continued use of generic templates that have not been customised to the reporting entity’s risks, context, and business.

In some cases, we identified that reporting entities had taken limited or no steps to address areas for improvement identified by their independent auditor. This is a concern as there is an expectation that non-compliance or partial compliance identified in an audit report must be considered by a reporting entity and addressed.

For further information regarding your independent audit obligations, refer to the Independent Audit Guideline (PDF, 324KB).

Next steps:

It is important that reporting entities continue to ensure compliance with the requirements of the AML/CFT Act. We will continue to use targeted reviews to inform our supervisory work programme, including to identify those reporting entities requiring on-site inspection to further assess their compliance with the AML/CFT Act.

For further information regarding our regulatory approach, refer to our Approach to Regulation (PDF, 4.4MB) and Guide to our Compliance and Enforcement Activities (PDF, 7.4MB)