AML/CFT reform: ongoing legislative changes
On Wednesday, 18 December 2024, Associate Justice Minister Nicole McKee introduced the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill (Bill), aimed at providing regulatory relief for businesses. This Bill, alongside the Statutes Amendment Bill, seeks to make amendments to the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act). The Bill includes 26 amendments designed to improve the efficiency, effectiveness, and consistency of the AML regime in New Zealand.
Key changes include:
- Relaxing mandatory enhanced customer due diligence (CDD) requirements for low-risk customers, by providing that reporting entities are not required to conduct certain identity verification requirements in respect of certain customers or persons if they are satisfied that any risks have been mitigated by conducting standard and enhanced CDD under the AML/CFT Act.
- Clarifying the definition of ‘trust and company service provider’, to exclude financial institutions from the definition if the only relevant activity they carry out is managing client funds, accounts, securities, or other assets.
- Adopting a more risk-based approach for identifying foreign politically exposed persons, by requiring that reporting entities have appropriate risk management systems in place to determine whether customers or beneficial owners are politically exposed persons.
Additionally, the Minister has approved six ministerial exemptions to reduce compliance costs for low-risk businesses and has renewed the AML/CFT Class Exemptions Notice (our summary of which can be found here), now effective until December 31, 2026. These changes are part of a broader effort to improve the AML/CFT regime by appropriately aligning compliance obligations with the risk level, tackle organised crime, and align with international standards. Further long-term changes are also being developed by the Ministry of Justice.
