If you have recently tried to start a new investment or open a bank account, you would have been required to prove your identity, location of residence, and perhaps proof of your source of funds.
New Zealand has passed a law called the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (we will call it the AML/CFT law). The purpose of the law reflects New Zealand's commitment to the international initiative to counter the impact of criminal; activity has on people and economies within the global community.
These identity requirements are all part of the AML/CFT law. The Act was widened (via the Anti-Money Laundering and Countering Financing of Terrorism Amendment Act 2017) to include lawyers from 1 July 2018 and accountants from 1 October 2018. Real Estate agents also became subject to this legislation on 1 January 2019.
The purposes of the Act are to:
- detect and deter money laundering and the financing of terrorism (ML/FT);
- maintain and enhance New Zealand's international reputation by adopting, where appropriate in the New Zealand context, recommendations issued by the Financial Action Task Force (FATF); and
- contribute to public confidence in the financial system.
According to the Ministry of Justice, an estimated $1.5 billion is laundered in New Zealand every year and the penalties for non-compliance by accountancy practices are severe (up to $5m).
The law says that accounting firms and other professionals must assess the risk they may face from the actions of money launderers and people who finance terrorism and to identity potentially suspicious activity.
To make this assessment we must obtain and verify information from prospective and existing clients about a range of things. This is part of what the AML/CFT law calls "customer due diligence" ('CDD').
CDD requires an accounting firm to undertake certain background checks before providing services to clients or customers. Accountants must take reasonable steps to make sure the information they receive from clients is correct, and so they need to ask for documents that show this.
We will need to obtain and verify certain information from you to meet these legal requirements.
This information includes:
• your full name; and
• your date of birth; and
• your address.
To confirm these details, documents such as your driver's license or your birth certificate, and documents that show your address, such as a current bank statement will be required.
All new clients who are engaging us to provide "designated activities " as listed in the AML/CFT law will be required to provide confirmation of identity and address.
For existing clients where we provide "designated activities", or there is a material change in the services we provide, we will contact you to collect the required information.
If you are engaging us for work involving companies or trusts, we will need information about the company or trust including the people associated with it (such as directors and shareholders, trustees and beneficiaries).
We may also need to ask you for further information. We will need to ask you about the nature and purpose of the proposed work you are asking us to do for you. Information confirming the source of funds for a transaction may also be necessary to meet the legal requirements of the act.
However, as a matter of course and particularly if your situation changes, we will need to go through with you to update engagement letters and verification of identity. The level of detail and proof we need will be determined by the services we provide to you and whether you engage with us as an individual, company or family trust.
Before we start working for you, we will let you know what information we need, and what documents you need to show us and let us photocopy and certify it.
We apologise for the inconvenience these new processes may cause, but we are obligated to comply with the Act. We will work as hard as we can to streamline the process and minimise your frustration with being asked for proof of identity, and other information described above.