Yesterday's announcement that Cabinet has approved an AML/CFT reform work programme with a focus on providing regulatory relief will come as welcome news for many New Zealand businesses.
The reform work announced by Associate Justice Minister Nicole McKee will be undertaken in three parts.
- First, immediate relief via processes which are already underway (the Statutes Amendment Bill and the proposed AML/CFT Amendment Bill);
- Second, structural changes to the AML/CFT regime and the creation of a "sustainable funding model to create a more effective and efficient system"; and
- Third, additional regulatory changes to implement international standards and deliver "a more risk-based system".
Immediate relief via amendment bills
The "immediate relief" is to come from two amendment bills:
- The Statutes Amendment Bill was introduced to Parliament on 23 September 2024 and, among other things, seeks to amend the AML/CFT Act by:
- clarifying that address verification only has to be carried out according to the level risk involved in a transaction;
- excluding cheque deposits made at a registered bank or non-bank deposit taker from the definition of "occasional transaction";
- extending the timeframe in which a law firm must make a suspicious activity report from 3 to 5 working days; and
- extending the timeframe in which reporting entities must make certain prescribed transaction reports from 10 to 20 working days.
- Decisions for a proposed Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill were released by Cabinet in August 2024. Those decisions included 25 proposed amendments to be made to the AML/CFT Act – a summary of the most significant of those changes can be found here.
Structural changes and funding model
Yesterday's announcement does not provide further detail on the structural changes and funding model proposed by the Government.
However, one of the Ministry of Justice's recommendations from its 2022 report following its statutory review of the AML/CFT Act was to conduct further analysis to determine whether an alternative approach to the structure of the AML/CFT regime was viable. Suggestions for potential structural changes included:
- creating a new agency to delivery policy, administration and financial intelligence; creating a single supervisory agency rather than the 3 existing supervisors; or creating a combined supervisor and Financial Intelligence Unit;
- amending the AML/CFT Act to ensure the Financial Intelligence Unit is sufficiently independent;
- formalising existing private sector advisory group models; and
- exploring a "hybrid public/private funding model" to ensure the regime was sufficiently resourced.
Additional regulatory changes
As with the structural changes and funding model, yesterday's announcement has not provided any detail on the scope of the further regulatory changes. However, based on Associate Minister McKee's comments on permitting "a more risk-based approach", we would expect any regulatory changes to seek to reduce AML/CFT compliance burden for New Zealand businesses.
Yesterday's announcement also comes on the back of the Government's ongoing reform to the AML/CFT regulations. The first two of three stages of regulatory reform came into effect on 31 July 2023 and 1 June 2024 respectively, and the final stage is expected to come into effect on 1 June 2025. Our insight on those regulatory changes can be viewed here.
While these changes are largely welcome, their somewhat piecemeal nature makes compliance complex for reporting entities. Please get in touch with one of our experts if you would like to discuss.