Anti-Money Laundering and
Countering the Financing of Terrorism

Submissions on the third discussion document (Supervisory Framework)

First NZ Capital (FNZC)

SUBMISSION ON THE FATF INTER - AGENCY WORKING GROUP'S THIRD DISCUSSION DOCUMENT - "ANTI MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM: SUPERVISORY FRAMEWORK"

Please find below a submission by First NZ Capital (FNZC) in respect of the Third Discussion Document.

Part 6 - Requirements to regulate and supervise

First NZ Capital agrees with the proposed approach. However, there would need to be clear understanding of what fit and proper criteria would be used in respect of non-bank financial institutions such as, for example, NZX Participant Firms. Further, there needs to be consistency of standards across non-bank financial institutions and DNFBPs.

Part 7 - Supervisory functions and powers

Supervisors

(i) Yes. A meaningful and practicable risk-based approach would need to be developed. Would a registered bank taking cash deposits automatically be deemed a higher risk business than a non-bank financial institution that does not accept cash deposits nor make payments in cash?

(ii) Yes. The powers need to be meaningful.

Financial Intelligence Unit

(i) Yes. It is important so that guidelines that aid appropriate compliance are made available and that businesses keep abreast of real-life examples and techniques.

(ii) Yes. Consideration needs to be given as to whether there should duplication in the context of the scope and powers of the supervisors.

Part 8 - Supervisory Models: Options

(i) Yes.

(ii) Respectfully, we would not agree that the Securities Commission is as necessarily familiar with the securities sector in terms of front line supervision of NZX Participant Firms by NZX. NZX Participant Rules already contain prescriptive requirements that supplement anti-money laundering law. NZX inspects compliance with those rules. A logical step would be to extend the supervisory scope of NZX in terms of compliance with anti-money laundering law by NZX Participant Firms.

Part 9 - Two staged Implementation of supervisory reforms

(i) Yes albeit recognising the risks involved, the unlevel regulatory playing field and the fact that there is really no other option given the lack of supervisory expertise for a period.

Part 10 - Proposed AML/CFT Supervisory framework

Legislation

(i) Yes.

AML/CFT Advisory Group

Agree subject to the comments at Part 8, (ii) above.

We trust that this submission is helpful.

Yours faithfully

Richard Bodman
Director, Compliance Officer
FIRST NZ CAPITAL