ANTI-MONEY LAUNDERING LEGISLATIVE CHANGES: WHAT YOUR BUSINESS NEEDS TO KNOW
Over the next two years New Zealand’s anti-money laundering legislation will be changing to encompass more and more types of businesses. Here’s what you’ll need to know and focus on if yours is one.
What exactly is ‘money laundering’?
Simply put, money laundering is disguising the origin of criminally acquired money using three steps - ‘placement’, ‘layering’ and ‘integration’.
Normally this involves introducing illegitimate money into a legitimate pool of funds, slowly transferring those funds through the pool and eventually withdrawing them for circulation in the general economy.
It’s similar to how terrorist financing works, but with different intent. Often the origins of terrorist financing are legitimate and the intended use is not, whereas a money launderer’s ultimate goal is to spend legally. However, in New Zealand both processes are against the law.
Why is anti-money laundering legislation changing?
As with any criminal activity, legislation exists within New Zealand to detect and prevent money laundering.
Anti-money laundering (or AML) legislation up until recently has only applied to certain financial institutions and casinos. Over the next two years however, this will change drastically.
The government has planned four key waves of legislative change, each requiring a new set of businesses to comply with AML requirements as soon as possible. It’s a move to better protect Kiwi businesses, but it’ll be sharp learning curve for many as well.
When are changes being made?
Here’s a breakdown of the four AML legislative change stages to help you and your business keep ahead of the curve.
- 1 July 2018 – This is the first wave to kick off compliance requirements, beginning with lawyers, conveyancers and certain trust and company professionals.
- 1 October 2018 – The second wave of requirements will come into effect three months later, including accountants under AML legislation too.
- 1 January 2019 – In the New Year real estate agents will also be required to comply with AML requirements.
- 1 August 2019 – The final wave will see businesses dealing in high value goods like jewelry, art and antiques subject to the new requirements for certain cash transactions.
How can I prepare?
In business, being ready for legislative change is half the battle. Even if you’re affected by the first wave of AML requirements, you’ll have until July 2018 to put new plans and practices in place.
There are a few things you can do to help reduce the cost of AML compliance in the long run - the first being becoming familiar with exactly what the new requirements mean for your business.
You can find the exhaustive list of requirements and compliances through the Parliamentary Counsel Office. Take the time to read them through and see how many your business is already covering.
It’ll pay to start planning for any systems that you need to develop for customer due diligence - access to information about your customers that will let you assess their risk to your business.
Now’s also a good time to put in place new plans for record keeping, reporting and training any staff to prepare for the upcoming changes.
Here’s how K3 helps your business get ready
Linking in with K3 means professional preparation for legislative change and a totally unique implementation strategy.
Because we offer three pillars– accounting, consultancy and legal – we look at every aspect of your business to tailor a gradual strategy specifically for you.
It’s a multidimensional approach designed for the best possible outcome, and it means when the AML changes come in to play you’ll already be sorted.
For more on the new AML legislation or to book a consultation, get in touch with our team.