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.
To help trust and company service providers understand the risks they face and build their compliance programmes, helpful guidance is available on the Department of Internal Affairs website. See the Codes of practice and guidance(external link) and the sector risk assessment(external link).
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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.
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:
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.
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?”
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.
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.
Initially, you’ll have to:
On an ongoing basis, you’ll have to:
For information about ways to reduce compliance costs see: Working with others to reduce your AML/CFT compliance costs
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:
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).