Businesses that provide trust and company services

Criminals often use trusts and companies to launder money. Legitimate businesses that provide trust and company services may be affected by changes to the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act.

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If you provide services to help set up and/or run trusts and companies, you may need to put AML/CFT measures in place.

Some trust and company service providers have had to comply with the AML/CFT Act since 2013 when “Phase 1” began. If you have, you will also need to comply with new provisions. See Information for Businesses.

This will help prevent money laundering, make it easier for authorities to find out where ‘dirty’ money came from, prosecute criminals, seize illegally earned money and assets, and stop crime and terrorism.

Here’s a summary of the proposed changes.

Do I have to comply with the AML/CFT Act?

You will need to comply with the AML/CFT Act if, in the ordinary course of your business, you carry out one or more of the following activities:

  • acting as a formation agent of legal persons or legal arrangements
  • acting as, or arranging for a person to act as, a nominee director or nominee shareholder or trustee in relation to legal persons or legal arrangements
  • providing a registered office or a business address, a correspondence address, or an administrative address for a company, or a partnership, or any other legal person or arrangement (unless it's solely for a service which isn't covered by the Act)
  • managing client funds, accounts, securities, or other assets
  • providing conveyancing services (either yourself, or when you give instructions to someone else) to carry out a real estate transaction. “Conveyancing” is defined in section 6 of the Lawyers and Conveyancers Act 2006, and “transaction” is defined in section 4 of the Real Estate Agents Act 2008.
  • providing services (either yourself, or when you give instructions to someone else) to:
    • carry out a real estate transaction (as defined in section 4 of the Real Estate Agents Act 2008).
    • carry out a transaction on behalf of any person in relation to the buying, transferring or selling of a business or legal person (for example, a company) and any other legal arrangement; or creating, operating, and managing a legal person and any other legal arrangement.
    •  transfer a beneficial interest in land or other real property.

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What is “in the ordinary course of business”?

Whether an activity is in your “ordinary course of business” will depend on your particular business. It’s ultimately a question of judgment, which takes into account certain factors.

For most businesses, it will be obvious if an activity is in your “ordinary course of business”.

If you’re unsure, consider things such as whether the activity is something you do frequently or regularly; involves significant allocation of resources; or is related to a service or product that’s offered to customers.

For more information see the In the ordinary course of business (external link) guideline on DIA's website.

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When do I need to start complying?


You will have to comply from 1 July 2018. However, there are a number of steps you will need to take before that date to be prepared. See “What do I have to do to comply with the AML/CFT Act?”

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Why does the AML/CFT Act apply to businesses who provide these services?

Criminals and financers of terrorism often use such services to hold and move assets and funds anonymously.

Introducing AML/CFT measures will deter criminals from using your services and help detect them if they do.

Importantly, it will also strengthen the overall AML/CFT system. For example, in the ordinary course of your business, you may detect ‘red flags’ that might not be picked up by a bank or other financial service providers who interact with the same customers. That’s because you may have more information about the people or goods involved in a particular transaction.

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How much work will be involved?

The greater the AML/CFT risks your business faces, the more you’ll have to do to manage these risks. A small firm with long-term local clients may have fewer risks than a large firm with clients around the world.

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What do I have to do to comply with the AML/CFT Act?

Initially, you’ll have to:

  • designate someone in your business as an AML/CFT compliance officer
  • assess and document the money laundering and terrorist financing risks your business may face
  • establish an AML/CFT compliance programme setting out how you’ll detect and manage these risks.

On an ongoing basis, you’ll have to:

  • verify the identity of customers before providing conveyancing services as part of the sale or purchase of real estate. In some circumstances (such as if they represent a company or trust), you may also need to ask for information about where money came from and the other people involved. For more information about verifying customers’ identities, see: Information for customers about AML/CFT laws
  • submit a Prescribed Transaction Report to the Police Financial Intelligence Unit (FIU) if a client wants to conduct a transaction in cash that is $10,000 or more, or an international wire transfer of $1000 or more
  • monitor customers’ accounts to identify potential warning signs of money laundering and terrorism financing. You must report any suspicious transactions or activity to the FIU. For more information, see: Reporting suspicious activities
  • regularly review your risk assessment and compliance programme
  • have your risk assessment and compliance programme audited regularly
  • submit an annual report to the Department of Internal Affairs, which will supervise your sector.

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What can I do to reduce my compliance costs?

For information about ways to reduce compliance costs see: Working with others to reduce your AML/CFT compliance costs

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What help and oversight will be available?

The Department of Internal Affairs (DIA) will supervise all businesses that Phase 2 of the Act applies to. DIA will help you comply with the law and enforce it when needed. Some of the things DIA will do include:

  • helping you understand how criminals could use your services to launder money or finance terrorism.
  • providing support and guidance to help you identify money laundering ‘red flags’ and to comply with AML/CFT laws
  • investigating and taking action if you don’t meet your obligations.

A range of existing guidance material is already available to help get you started.  Now the Bill has been passed, we plan to engage with sectors to develop regulations, which will provide more clarity, and produce more guidance material.  For more information see: AML/CFT supervision and support for businesses

If you’re still not sure if you need to comply, see the Department of Internal Affairs (external link) .

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