Reporting Entities obligations to report go beyond Prescribed Transactions (Large Cash, Occasional, Cross Border, etc). Phase II entities need to identify Typologies and behaviours that arouse suspicion and to report activity and transactions that are suspicious. The level of SAR/STR reporting from Phase II entities in NZ is extremely low, especially considering the number of entities involved. Time to stop complaining about the obligations and consider the big-picture advantages of compliance - improve your observation skills and start reporting. Happy to assist with any training.
1. The expected changes to the regulations affecting Reporting Entities have not been completed. The Ministry of Justice has advised that the timeframes for amendments to these regulations has changed and the Ministry now aims to have the new regulations in force by July 2021. Until the new regulations come into force reporting entities MUST comply with the requirements of the current regulations.
2. For those entities who have planned AML/CFT audit activity based on the expectation of new timeframes, and who are now required to complete required activity under the current regulations, (including real estate agents whose 1st audit was due 1 January 21), DIA advises that “no adverse compliance action will be taken if you do not complete your audit by your current deadline”. This is conditional on you acting “in good faith”. Good faith could be demonstrated by early engagement with an independent and appropriately qualified auditor to ensure you meet your audit obligations under the Act and regulations.
3. Being a member of a Designated Business Group (DBG) does not remove the obligation for Reporting Entities to ensure compliance documentation and audits adequately and effectively address the elements relevant to each member of the DBG. The AML/CFT Compliance Officer for each Reporting Entity must be satisfied in this regard. Retaining Evidentiary Documentation of that ‘Satisfaction’ is recommended!
4. A Reporting Entity cannot be its own Compliance Officer. Sole-Practitioner Reporting Entities with no employees must appoint another person as a compliance officer [ss56 (2) & (3)]. The Interpretation Act 1999 defines a person as including ‘a corporation sole, a body corporate, and an unincorporated body”. It is therefore permissible for Sole-Practitioner Reporting Entities to appoint professional providers as their Compliance Officer - care should be taken to ensure that any such “person” carries appropriate liability insurance.