The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act) has extended its reach to Accountants, bookkeepers and tax agents from 1stOctober this year. Lawyers came under the Act earlier this year and real estate agents will enter early next year. What does this mean to you?
The government knows that it is likely that money laundering is currently going on undetected in New Zealand. Money laundering is the method by which people disguise and conceal the proceeds of crime and protect and enjoy their assets. Some people in New Zealand may also be financing the activities of terrorists and known terrorist organisations. Financers of terrorism use similar techniques to money launderers to avoid detection by authorities and to protect the identity of those providing and receiving the funds.
People with criminal intentions value anonymity and are looking for ways to distance themselves from their activities while still enjoying the proceeds of their crime. Both domestic and international evidence suggests that using gatekeepers, such as accountants, is a way for criminals to create a false perception of legitimately acquired wealth.
The AML/CFT Act is activities-based. Professionals offering accounting services who undertake certain activities captured by the AML/CFT Act will need to undertake an assessment of their money laundering and terrorist financing (ML/TF) risk and develop a programme to ensure they comply with the requirements in the Act. If the accountant doesn’t provide any of these activities then there is no action required. However, if they do then they need to do certain things to ensure that they know who the client is e.g. are there any hidden owners somewhere in the structure of the clients business and in certain situations where the source of funds have come from into that business. If we are unable to verify identity or any other requirement of our due diligence on the client then we can’t provide the service. We are also obliged to report ‘suspicious activity’ that we might see in the course of providing our services. Banks are already reporting on cash transactions over certain limits internationally and domestically so our reporting will provide additional information to any investigation that may occur as a result of the reports.
The types of activity that is captured could be as simple as making transfers on your behalf within the MyIR environment. If we manage clients’ funds in any way we are captured. If we are asked to register a company we are captured. If we provide a registered address for service for a client we are captured. Accountants, as a result of the AML/CFT Act, may no longer provide some of these services. If we are just providing annual accounts then that’s not captured.
It’s created a lot of work for those of us that fall under the Act in assessing our risks of being used for money laundering or financing of terrorism and putting policies and processes in place to mitigate these risks. Most clients won’t be affected but for the few who need services that are captured then expect a request for name, address and date of birth verification as a minimum and if you are a trust then source of funds is a requirement as well.