NZ’s largest supplier of safe deposit boxes warned under anti-money laundering laws

29 July 2019

The Department of Internal Affairs has issued a formal warning to Customhouse Safe Deposits Limited (CSDL) under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act).

Trading as Commonwealth Vault, CSDL is the largest safe deposit provider in New Zealand and trades in gold and silver bullion.

The formal warning was issued on 24 June 2019 for:

• failing to meet AML/CFT Act requirements including failing to conduct customer due diligence and failing to adequately monitor accounts and transactions
  
• failing to keep records
  
• failing to establish, implement or maintain an AML/CFT programme.

It is not alleged that CSDL was involved in money laundering or the financing of terrorism.

“This is a case of repeated non-compliance, with little regard for money laundering risks,” says Mike Stone, Director of the Department’s AML Group.

“In 2014, following a desk-based review, we found CSDL was non-compliant with its AML/CFT requirements. We worked with them to achieve an acceptable standard of compliance and they agreed that they would maintain it.

“Since then, CSDL has not only failed to maintain an on-going level of compliance but also allowed it to deteriorate, which is unacceptable.

“Due to the diverse nature of products and services offered by CSDL, it’s vital that they assess their risks and put a robust AML/CFT programme in place. This is usually driven by a competent compliance officer however, the compliance officer at CSDL did not have the depth of understanding of AML/CFT requirements and did not ensure on-going compliance.”

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

Since the AML/CFT Act came into force on 30 June 2013, the Department has issued 30 formal warnings, either for failure to meet particular risk assessments or AML/CFT programme obligations or for failing to submit an annual AML/CFT report.

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Media Desk
Te Tari Taiwhenua Department of Internal Affairs
Mobile: +64 27 535 8639 email: media@dia.govt.nz

Questions & Answers

What is a formal warning issued under section 80 of the Act?
Formal warnings can be issued when a supervisory agency, such as the Department of Internal Affairs, has reasonable grounds to believe that a reporting entity has engaged in conduct that constitutes a civil liability act. These civil liability acts are specified in section 78 of the Act.

Why has a formal warning been issued to Customhouse Safe Deposits Limited?
The formal warning has been issued on the basis that the Department has reasonable grounds to believe that Customhouse Safe Deposits Limited has:

• Failed to conduct customer due diligence as required by subpart 1 of Part 2 of the Act (section 78(a) of the Act).
• Failed to keep records in accordance with the requirements of subpart 3 of Part 2 of the Act (section 78(e) of the Act).
• Failed to establish, implement, or maintain an AML/CFT programme (section 78(f) of the Act).

What other action can be taken if a reporting entity does not comply with the requirements of the Act?
Where reporting entities engage in conduct that does not comply with the requirements of the Act, supervisory agencies have various enforcement actions available to them. This includes civil or criminal action, which could result in (but is not limited to) the imposition of:

• Civil penalties of up to $200,000 in the case of an individual, and $2 million in the case of a body corporate; and
• Criminal penalties of imprisonment for up to two years or a fine of up to $300,000 in the case of an individual, and $5 million in the case of a body corporate.

There have been two court proceedings under the AML/CFT Act concluded to date: Ping An Finance (Group) New Zealand Company Limited and Qian DuoDuo Limited. Both were civil proceedings and both respondents were money remitters.

• Ping An Finance – pecuniary penalty of $5.29 million plus costs and an injunction against its director from providing financial services
• Qian DuoDuo Limited – pecuniary penalty of $356,000 plus costs

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