New Regulations from 9 July 2021

The amended AML/CFT Regulations will be in force on 9 July 2021.
AML/CFT Regulation
Change
What this means for DIA reporting entities
New regulation
Extend the default timeframe for AML/CFT audits to every three years, with some businesses potentially being eligible to be audited every four years.
AML/CFT audits will be required every three years. DIA can request a more frequent audit or a less frequent audit.

New regulation
Exempts liquidators appointed by the High Court under s241(2)(c) of the Companies Act from some customer due diligence requirements.
This affects reporting entities that are liquidators.  If you are appointed by a Court, you will not have to conduct initial customer due diligence on the liquidated company. Requirements continue relating to payments to beneficial owners, wire transfers, prescribed transaction and suspicious activity reporting.

New regulation
Wholly exempts transactions where a client pays money for specific low-risk disbursements, such as when a lawyer receives money to file an application in a Court.
You will no longer be captured under the AML/CFT Act when you receive funds from clients to pay certain types of low-risk payments, such as to government departments, some professional services (on behalf of your client), and some payments within NZ of less than $1000.  This means you will not have to conduct customer due diligence on the client and cease acting for the client if customer due diligence cannot be conducted.

New regulation
Ensures that limited partnerships can more easily be included in designated business groups
Limited partnerships will be eligible for inclusion in a designated business group where they are related to the other members of the designated business group.

New regulation
Reduces the potential for a business to unintentionally tip off people who are subject to a Police inquiry.
You will be exempt, for 30 days unless otherwise notified by the Police, from having to conduct enhanced due diligence in respect of the subject of a Commissioner’s Order. (A Commissioner’s Order is when the Commissioner of Police requires information relevant to a suspicious activity report or prescribed transaction report.)

New regulation
Protects businesses from companies that misuse nominee director relationships to obscure their beneficial owner.
You will have to obtain information from customers, who are companies, as to whether there are any nominee director relationships or nominee shareholder relationships. If the company declares that such a relationship exists, you will then be required to conduct enhanced customer due diligence on that customer.

Definitions regulation 3 – expiry date
The expiry date will be removed.
You can now have certainty that the current regulatory environment will continue after 27 July 2021.

Definitions regulation 13A – Inclusion: wire transfer of more than $1,000
Clarifies that this regulation applies to ordering institutions for wire transfers that occur outside of a business relationship with a customer, as well as applying to beneficiary institutions for wire transfers that are received outside of a business relationship with a customer.
This clarifies that AML/CFT obligations apply to an ordering institution of a wire transfer of more than $1000 if the reporting entity does not have a business relationship with the person sending the funds.
This also clarifies that AML/CFT obligations apply to a beneficiary institution of a wire transfer of more than $1000 if the reporting entity receives funds for somebody with which it does not have a business relationship.

Definitions regulation 15 – Inclusion: transactions involving certain stored value instruments
Amends the definition of ‘debit card’ so that the reference to ‘financial institution’ does not apply to a non-finance business and ensures structuring with stored value instruments cannot occur.
The change prevents multiple transactions or stored value instruments being issued to avoid the application of AML/CFT requirements.
The change also clarifies that non-finance businesses, for example cafes issuing loyalty cards with funds held on account, are not captured as reporting entities.

Definitions regulation 20 – Exclusion: lawyers, etc
Updates heading to reflect amended scope of exemption (estate administration and family trusts) and restructures the regulation to exclude the relevant activities instead of reporting entities who only provides the relevant activities.
AML/CFT obligations do not apply when carrying out a relevant service as an executor, administrator, or a trustee in respect of services provided in the administration of an estate or, in the case of a trustee, in respect of services provided to beneficiaries of a family trust. This applies to administration of estates and family trusts.

Definitions regulation 21B – Exclusion: persons carrying out property management activities
Restructures the regulation to exclude the activity of property management from the scope of ‘managing client funds’ instead of excluding reporting entities which only provide that activity.
This clarifies that AML/CFT obligations do not apply to property management activities even when you provide other real estate services which do attract AML/CFT obligations.



Definitions regulation 24A - Time at which real estate agents must conduct customer due diligence
Real estate agents that engage in commercial leasing will be required to conduct customer due diligence on the landlord when an offer to lease is presented, rather than when they sign an agency agreement.
For commercial leasing, real estate agents will now only be required to conduct customer due diligence on the landlord when an offer to lease is presented (rather than when they sign an agency agreement).
For other types of real estate transactions, the timing of customer due diligence remains the same.

Exemptions regulation 3 –  expiry date
The expiry date will be removed. This will provide business with more certainty.
You can now have certainty that the current regulatory environment will continue after 30 June 2020.

Exemptions regulation 8 – Transactions that are not occasional transactions or wire transfers exempt from section 49(2)(d) of Act
Updates this regulation to ensure clarity and ensure that transactions below applicable thresholds are exempt from record keeping requirements and repeals regulation 8(3) as it is unnecessary.
This change is unlikely to have any practical effect. It clarifies that for low value transactions that occur outside of a business relationship that are not occasional transactions (as defined), you will not have to keep a record of the parties to the transaction, though all other record keeping requirements will still apply.

Exemptions regulation 15 – Relevant services provided in respect of certain stored value instruments
Amends the definition of ‘debit card’ so that the reference to ‘financial institution’ does not apply to a non-finance business and ensures structuring with stored value instruments cannot occur.
The change prevents multiple transactions or stored value instruments being issued to avoid the application of AML/CFT requirements.
The change also clarifies that non-finance businesses, for example cafes issuing loyalty cards with funds held on account, are not captured as reporting entities.

Exemptions regulation 16 – Relevant services provided to related entities
More types of businesses will be captured by the ‘related businesses’ exemption.
AML/CFT obligations do not apply to relevant services provided to related entities. The definition of ‘related’ will include entities where A is ‘controlled’ by B (and vice versa) or where A and B are both ‘controlled’ by C.

Exemptions regulation 17 – Relevant services provided under premium funding agreement by insurance company
Exemptions regulation 18 – Relevant services provided under premium funding agreement by non-insurance company
The definitions for both regulation 17 and regulation 18 are contained within regulation 17, which has the potential for confusion. As the regulations are similar in scope it is appropriate to amalgamate the regulations.
No change to AML/CFT obligations. This is to reduce duplication of definitions.