Recent reporting changes affect all businesses that currently – or will – have to comply with the AML/CFT laws.
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One of the most important ways of preventing and detecting money laundering and terrorism financing is when businesses and professions report information to the Police Financial Intelligence Unit (FIU).
The reports help law enforcement to find out where laundered money comes from, stop crime, prosecute criminals, and seize illegally earned money and assets.
Changes to the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act have expanded the types of things business have to report. Different rules apply to businesses that deal in expensive goods (known as high-value dealers).
If you provide services or carry out transactions covered by the Act, you have to monitor customers’ accounts for suspicious transactions.
As a general rule, suspicious transactions are ones that are inconsistent with a client’s usual activities or what you’d expect for that type of client. In many cases, reporting entities will be unaware what the actual criminal activity is. However, by screening transactions for indicators of unusual activity, a suspicion of criminal offending may arise. A transaction may have many factors that, considered individually, do not raise a suspicion, but, considered collectively, suggest criminal activity.
Guidance on forming suspicion may be found in the FIU’s Guidelines relating to reporting of suspicious transactions (external link) on the Police website.
If you notice suspicious transactions, you have to submit a report to the FIU if you have reasonable grounds to suspect it’s relevant to a criminal offence and might help an investigation or prosecution.
Changes to the AML/CFT Act mean you also have to report suspicious activity.
This is because you might notice things that could provide valuable financial intelligence for detecting crime, even if the customer doesn’t make a transaction.
Previously, important information wasn’t being reported to the Police because it wasn’t directly related to a transaction. For example, a business may have suspected a customer was seeking to establish trusts or company structures in order to launder money or evade tax. But if no underlying transaction had been carried out, the business didn’t have to report this.
The recent changes mean suspicious activities (as well as suspicious transactions) will need to be reported.
Phase 1 businesses will have to do this from 1 July 2018. Phase 2 businesses (other than high value dealers) will have to report suspicious activities from the date they have to start complying with the Act.
The FIU and government agencies that supervise businesses can provide you with guidance and reports to help identify suspicious activity and typical money laundering or terrorism financing ‘red flags’ or indicators.
Examples of indicators include:
A transaction may have many factors that, considered individually, do not raise a suspicion, but, considered collectively, suggest criminal activity. For more information, see the NZ Police website:
All business covered by the AML/CFT Act will have to report international wire transfers and physical cash transactions over certain amounts (known as prescribed transactions) to the FIU.
This will make it more difficult for criminals to use multiple small transactions, multiple senders or multiple recipients to avoid detection.
Prescribed transactions are:
Phase 1 business will have to do this from 1 November 2017. Phase 2 businesses will have to report prescribed transactions from the date they have to start complying with the Act.
The obligations above won’t apply to high value dealers.
However, you will have to file reports to the FIU on cash transactions of $15,000 or more.
Also, if a customer’s activity is suspicious, you may decide to file a suspicious activity report with the FIU, though this is optional.
Businesses submit reports to the FIU using goAML, a secure and confidential online tool for exchanging information with the unit.
You need to register for goAML to submit reports. Further information is available at the NZ Police website:
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