Businesses trading in high value goods and AML/CFT

Dealers of expensive goods are at risk of being exploited by criminals to launder money. They’re among several professions whose members may be affected by proposed changes to the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act.

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If you deal in high value goods, you may need to put AML/CFT measures in place once ‘Phase 2’ of the Act comes into effect.

This will help prevent money laundering, make it easier for authorities to find out where ‘dirty’ money came from, prosecute criminals, seize illegally earned money and assets, and stop crime.

Here’s a summary of the proposed changes.

Will I have to comply with the Act?

You’ll need to comply with the AML/CFT Act if you buy or sell jewellery, precious metals, precious stones, watches, motor vehicles, boats, art or antiquities, and you:

  • accept or make cash payments of $15,000 or more in one transaction
  • accept or make several cash payments involving the same customer that total $15,000 or more and you suspect they’re trying to stay under the $15,000 threshold (what’s known as ‘related transactions’)

If you decide not to accept or make cash payments of $15,000 or more, then you don’t have any obligations under the AML/CFT Act.

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Why are high value dealers who deal in large amounts of cash covered by the Act?

Crimes such as dealing in illegal drugs, gang-related crimes and tax evasion can generate large amounts of cash.

Criminals target high value dealers to launder the proceeds of their crimes — their ‘dirty’ money — to cover their tracks and avoid detection. They buy expensive goods with cash, then sell them and get ‘clean’ money for personal use or to fund more criminal activity. They also might keep expensive goods for personal use, trade them with other criminals, or take them overseas and sell them there to avoid raising ‘red flags’ in New Zealand financial institutions.

Introducing AML/CFT measures will deter criminals from using your services and help detect them if they do.

mportantly, it will also strengthen the overall AML/CFT system. For example, high value dealers may detect ‘red flags’ that banks and other financial service providers who interact with the same customers may not pick up, because you may have more information about cash transactions and the goods involved.

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What will I have to do?

When you deal in any of these expensive goods and accept or make a cash payment (or a series of ‘related transactions’) of $15,000 or more, you would need to:

  • verify the identity of the customer. For more information about verifying customers’ identities, see:
    Information for customers about AML/CFT laws
  • keep a record of the customer’s identity and their transaction.
  • send a prescribed transaction report to the Police Financial Intelligence Unit (FIU), setting out details about the transaction.

If a customer’s activity is suspicious, you may decide to file a suspicious activity report with the FIU. For high value dealers, this is optional. For more information on reporting to the FIU, see the information about rules for businesses that deal in high value goods at:

Reporting suspicious activities

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What can I do to reduce my compliance costs?

The easiest way is to not to deal in cash above $15,000 – then you wouldn’t have any obligations.

But if you do, for information about potential ways to reduce compliance costs, see:

Working with others to reduce your AML/CFT compliance costs

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What help will be available?

It’s proposed that the Department of Internal Affairs will supervise high value dealers, as well as other sectors that Phase 2 of the Act will apply to. It will help you comply with the law and enforce it when needed. For more information see:

AML/CFT supervision and support for businesses

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When will I need to start complying with the Act?

A Bill will be introduced to Parliament in early 2017 and the Government intends to pass the law around the middle of the year.

After that, businesses will have a period of time to prepare for the changes. It’s proposed that high value dealers will have to comply 24 months after the Bill is passed.

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