AML has been in place in New Zealand since 2013 and in addition to applying to your relationship with us from 1 July, will apply to your relationship with your accountant from 1 October 2018 and any Real Estate Agent you deal with after 1 January 2019.
Why this, why now?
AML is a global initiative with responsible countries agreeing to adopt AML systems that include practical measures to make it harder for criminals to profit from and fund illegal activity; and to restrict the flow of money to terrorist organisations.
The Government has chosen to roll this out in stages, now being the time for lawyers and conveyancers to join the regime.
Some criminals try to use lawyers to help hold and move assets and funds anonymously. Introducing AML measures will deter criminals from using our services and help us detect them if they do.
In implementing AML we are doing our bit to safeguard and help New Zealand live up to its reputation as one of the least corrupt countries in the world and a good place to do business.
What this will mean for you as our client.
The law requires us to 'know our clients' and to collect and verify information to show that we know our client is who they say they are.
Your first thought might be "but I have been dealing with Wynn Williams for years and you already know all about me!"
Whilst we may know a lot about you already, AML includes a set of rules that prescribe what we must do to complete 'customer due diligence' (CDD). This includes collecting specific information from you, holding proof of ID and verification of your physical address. In certain circumstances we will also be required to obtain evidence of your source of wealth or the source of funds used to settle a transaction.
At its simplest, this will be nothing more that sighting your passport and a document such as a bank statement, rate demand or utility bill addressed to your usual residential address and holding a copy of these on our file for audit purposes.
For overseas clients, companies and trusts we will need more information and will let you know what we require at the time we request it from you.
We may hold existing information that satisfies some of our customer due diligence requirements and where we do, we will only request the documentation we need to complete the process.
For existing clients, we will update our CDD information next time we receive an instruction from you or when your circumstance change. We may do this earlier if you have a current transaction on the go and if we hold funds in our trust account on your behalf.
For new clients, we will need to complete CDD before we act on your instruction and will incorporate this into our new client engagement process.
Our team will try and make this as easy for you as we can. However, we will need your co-operation and timely response to any request for information.
It is important to understand that under AML, we are unable to continue to work with you if we cannot complete our required CDD.
Clearly neither of us wants to find ourselves in this situation.
What is money laundering and terrorism financing?
Money laundering is the process by which criminals convert the proceeds of crime to realise and enjoy the financial benefits of their offending. While there are many methods to undertake money laundering, the core principle from a risk perspective is the criminal abuse of vulnerabilities within the financial, legal and property systems.
Money laundering is commonly described as having three stages:
- Placement: Introducing illegal funds into the formal financial and business system (for example depositing cash from drug sales into accounts, co-mingling it with business takings or using it to purchase assets);
- Layering: Moving, dispersing, or disguising illegal funds or assets to conceal their true origin (for example using a network of complex transactions involving multiple banks or accounts, or companies and trusts); and
- Integration: Investing the disguised funds or assets in further criminal activity or legitimate business, or enjoying high-value property assets and luxury goods. At this stage, the funds or assets appear to have been legitimately acquired.
Terrorism financing is the process by which terrorists and sympathisers raise and move funds to conduct terrorist acts and operations. There is a distinction between money laundering and terrorism financing in that terrorism financing may seek to move money from the legitimate economy to use it for a criminal act, while money laundering seeks to move proceeds from a criminal act to the legitimate economy. Nonetheless, many of the methods and financial channels used are the same. Like money laundering, terrorism financing is generally described as having three stages:
- Raising funds: Terrorism financers raise funds through legitimate earning, donations and/or criminal offending;
- Transferring funds: Once raised, funds for terrorist causes need to be moved to the place where they will be used, which often requires funds to be moved internationally. This can be done by physically couriering cash or high value commodities, moving funds through the international financial system, or alternative mechanisms for moving value; and
- Use: Terrorist groups use the funds either to commit terrorist acts or to fund ongoing operations. Any use of the funds by a terrorist group to support the organisation and its cause is terrorism financing.
If you have any specific questions about AML and what this will mean for you, please contact or our AML Compliance Officer: firstname.lastname@example.org