Anti-Money Laundering - Why is this important and why we need to ask you for personal information.
New Zealand passed a law called the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (“the AML/CFT law” for short). The purpose of the law reflects New Zealand’s commitment to the international initiative to counter the impact that criminal activity has on people and economies within the global community.
Money laundering is the process (crime) of making “dirty money” look “clean”, and it occurs when funds from illegal activities such as drug dealing, terrorist funding, prostitution, human trafficking, among others are integrated into the financial system to make it appear as though they belong to legitimate sources. Criminals do this by moving the money to a place where it is less likely to attract attention.
It’s estimated about $1.35 billion from fraud and illegal drugs is laundered through legitimate businesses in New Zealand each year. However, the true cost and impact is many times that figure when you factor in all the crimes that generate “dirty” money and the suffering they cause.
The Act requires Financial Institutions and business (i.e., Banks, Accounting/Bookkeeping services, Real Estate Agents and Casinos), that handle money or may be used to launder money must do several things to help combat money laundering and terrorist financing, and to help Police bring the criminals who do it to justice.
They must assess the risk they may face from the actions of money launderers and people who finance terrorism and must identify potentially suspicious activity.
This has created a whole new level of internal compliance that is a compulsory statutory obligation and that requires both ongoing and annual review.
"KNOW YOUR CUSTOMER" / CUSTOMER DUE DILIGENCE
Our customer relationships are a key part of our business at BKNZ and “Knowing Our Customers” is about feeling confident in who our customers are and what they do. So, we can feel confident that in completing work and acting on their behalf, that our actions are both ethical and compliant. To make that assessment bookkeepers must obtain and verify information from prospective and existing clients about a range of things. This is part of what the AML/CFT law calls “customer due diligence”.
This is the cornerstone of AML. This not only covers identity verification for individuals, company directors and shareholders, trustees, and beneficiaries, but any person/ entity that may have a more than 25% ownership or have a high level of control or influence. Depending on the level assessed risk (i.e., companies and trusts where there may be multiple owners and levels of ownership), the due diligence may become complex as the IDV must always be completed for the actual “real person”. Trusts and cases requiring enhanced CDD may also require “Source of Funds”.
At BKNZ we use a government verified Onboarding and AML cloud-based software – 2Shakes to automate some of this process. Being able to electronically verify our customers either face to face or remotely while also meeting IRD, DIA, ACC, Companies Office, and MBIE legislative and security requirements, really simplifies this process.
Information we need for AML
Identity Verification – Individual
To confirm these details the following document options will be required from you to verify your address and your identity:
To Verify Address:
One of the following (no older than 12 months)
To Verify identity:
Use one of the following 3 options to verify identity
One form of primary photo ID:
One form of primary non-photo ID:
and one form of secondary photo ID
New Zealand driver licence and one of the following:
Companies and Trusts
Companies – We require the company name, number, Directors and Shareholders. (who also may be companies/ trusts) . We also require the details of any individuals who may hold a high level of control in the company – i.e., Company executives, Managers.
Trusts – Trust name and purpose – details of Settlors, Trustees, and beneficiaries. The name of the legal firm that assists with maintaining the trust and copy of the Trust Deed.
We may also need to ask you for further information. We will need to ask you about the nature and purpose of the proposed work you are asking us to do for you. Information confirming the source of funds for a transaction or for the purchases of assets may also be necessary to meet the legal requirements.
If you cannot provide the required information
If we request information and we are not able to obtain the required information from you, it is likely we will not be able to act for you. Because the law applies to everyone, we need to ask for the information even if you have been a client for a long time. When required, we will let you know what information we need, and what documents you need to show us and let us photocopy.
If you got this far, email us and we’ll send you a choccy fish!
For this reason, we are charging an annual fee based on the level of annual compliance required.
Simple (Low Risk) AML Annual Compliance (example)
Individuals not associated with a company/s or Trust/s
Closely held companies with only 1-2 directors / shareholders (all real people)
Complex (High Risk) AML Annual Compliance (example)
Companies - fall into enhanced due diligence; with complex ownership; have a change of ownership; fall into high-risk category
Trusts - (automatically fall into enhanced due diligence)