New Zealand Issues Draft Anti-Money Laundering Bill

by Mary Swire, Tax-News.com, Hong Kong

19 September 2008

New Zealand's Associate Justice Minister, Clayton Cosgrove, announced on Wednesday the release of a draft Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Bill for consultation.

“Cabinet has approved the fundamental policy underpinning New Zealand’s anti-money laundering reforms and now we need the private sector to take a look at the proposals and give us their feedback and comments.

“It is very important that New Zealand continues to contribute to the global fight against money laundering and terrorism financing, but we must be mindful of the potential impact such reforms may have on New Zealand’s financial sector,” explained Mr Cosgrove.

New Zealand must reform laws in this area in order to comply with its international obligations as a member of the Financial Action Task Force (FATF). Cabinet decided that the new regulatory framework would comprise compliance obligations in two phases:

• Financial institutions and casinos will be the first group of businesses covered by the new requirements.
• Other businesses, including lawyers, accountants, and real estate agents, will be not be covered until the second stage, although they will remain subject to their existing legal obligations to prevent money laundering and terrorist financing.
• A regime for the supervision, monitoring and enforcement of the entities covered by the AML requirements using existing government agencies such as the Reserve Bank, the Securities Commission and the Department of Internal Affairs.
• new civil and criminal offences.
• a set of core requirements including customer due diligence, reporting, and AML/CFT policies and practices; and
• a set of objectives and criteria to guide ongoing development and implementation of the regulatory framework.

“There are three broad principles guiding these anti-money laundering reforms. The regime should be effective in detecting and deterring money laundering at minimum cost to industry, be ‘best-fit’ for New Zealand’s institutional environment, and to the greatest extent possible align with the Australian anti-money laundering regime,” Cosgrove added.

The recently completed AML/CFT cost compliance report was also released Wednesday. Deloitte was commissioned earlier this year to undertake an analysis of how much the implementation of a proposed AML/CFT framework may cost the private sector. This preliminary analysis was used to identify the range of costs that may be expected when adopting an AML/CFT regime in New Zealand.

Mr Cosgrove went on to say:

“I am pleased to see that Deloitte’s estimation of the costs to the private sector is considerably below what some in the industry had predicted. However I have directed that more work be done to ensure we have the lowest cost and best-fit model that is business friendly and will enable us to meet our international obligations.”

The implications of the Deloitte report will be considered along with submissions on the draft bill, with final policy decisions expected from Cabinet in February 2009. Introduction of the legislation is due to take place in April 2009.

In April next year FAFT will be auditing New Zealand’s overall compliance, and any recommendations resulting from the audit will be able to be put before the Select Committee hearing the Bill so adjustments can be made if necessary.

FATF is an inter-governmental body that sets international standards for combating money laundering and terrorist financing. Its 33 members include New Zealand, the United States, Great Britain, Canada and Australia.

Recommended