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AML & CFT – What’s it all about?

On 30 June 2013 legislation called The Anti Money Laundering (“AML”) and Counter Financing of Terrorism (“CFT”) Act 2009 (“the Act”) takes effect.

The Act puts in place a high level risk-based framework designed to aid the prevention of money laundering and financing of terrorism activities here in New Zealand. 

New Zealand has had legislation in place for some time which focused on aspects of money laundering but, in the international context, the world has moved on and New Zealand is now behind other international jurisdictions in this area.  If New Zealand does not take steps to address the gap that has emerged, it will likely have a negative impact on its international economic competitiveness. 

The new Act will help remedy this issue by putting in place a stronger framework.  This framework includes new requirements relating to the information that will be required by entities such as banks, investment managers, and financial advisers from their clients over time, and identity requirements when a new client relationship is being established. 

Reporting entities under the Act are required to complete a Risk Assessment that identifies the money laundering (“ML”) and terrorism financing (“TF”) risk that may exist in their business, and develop an AML/CFT programme to manage that risk. 

An Authorised Financial Adviser or financial advisory firm will be captured under these requirements as a reporting entity when it arranges for another reporting entity (such as a product provider) to provide a relevant service (such as selling a financial product) to its customer.

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