The Department of Internal Affairs

Te Tari Taiwhenua | Department of Internal Affairs

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Formal warning issued to Denton Morrell Limited 


30 April 2019 

A formal warning to an Auckland-based reporting entity under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act) has been issued by the Department of Internal Affairs. Formal warnings are issued when a supervisory agency has reasonable grounds to believe that a reporting entity has engaged in conduct that constitutes a civil liability act.

Denton Morrell Limited, company number 5313201, failed to meet AML/CFT Act requirements over the period 17 November 2015 to 2 May 2018 that include failing to conduct customer due diligence, as required by subpart 1 of Part 2 in the Act; failing to adequately monitor accounts and transactions and failing to establish, implement or maintain an AML/CFT programme. The formal warning to Denton Morrell Limited was issued on 30 January 2019 under section 80 of the AML/CFT Act. It is not alleged that this reporting entity was actually involved in money laundering or the financing of terrorism.

Denton Morrell Limited specifically provides its customers with trust, company and limited partnership establishment for individual and corporate clients; trust and company administration/management services; registered office services and consultancy – in particular reviews of existing family asset holding structures and succession planning. 

Risk based regulatory approach

“We are committed to helping businesses understand and fulfil their AML/CFT obligations as we know how important brand and reputation are to businesses in New Zealand. We also know how disruptive and harmful it can be to a business who is unwittingly taken advantage of by money launderers or those involved in financing terrorism,” said Mike Stone, Director of the Department’s AML Group.

“It is imperative registered entities keep tabs on who they’re doing business with and constantly review potential customers and transactions. In the case of Denton Morrell Limited, many of its customers are from countries considered high risk jurisdictions by international AML/CFT standards. It failed in its AML/CFT obligations to conduct enhanced customer due diligence and there were inconsistencies with source of funds/wealth verification.” 

The Department required Denton Morrell Limited to take immediate action to rectify all areas where it was non-compliant with its AML/CFT obligations. The Department will continue to monitor the company and consider further enforcement action if it engages in conduct that does not comply with the AML/CFT Act.

The Department is the supervisory agency that monitors trust and company service providers for compliance with their obligations under the AML/CFT Act. This is the third trust and company service provider that has been issued a formal warning and the fifth formal warning to be published as a summary. Since the AML/CFT Act came into force on 30 June 2013, the Department has issued 27 formal warnings, either for failure to meet particular risk assessment or AML/CFT programme obligations or for failing to submit an annual AML/CFT report.

Two judgments have been issued by the High Court for conduct by AML/ CFT reporting entities constituting civil liability acts under the AML/CFT Act.  Both actions were brought by the DIA as the AML CFT supervisor.   The first judgment was issued in the Auckland High Court in September 2017 making orders requiring Ping An Finance (Group) New Zealand Company Limited to pay a total of $5.29 million in pecuniary penalties. It also granted injunctions restraining the company and its sole director, Mr Xiaolan Xiao, from providing financial services that would cause either of them to be a reporting entity under the AML/CFT Act.  This was followed by a decision on 27th July 2018 against Quin Duo Duo Limited resulting in an order to pay $356,000 in pecuniary penalties.     

Ends

Media contact: 

Department of Internal Affairs Media Team

027 535 8639