AML (Anti-Money Laundering) and CFT (Countering the Financing of Terrorism) refer to the laws, regulations, and procedures designed to prevent criminals from disguising the proceeds of crime and funding terrorism. The AML/CFT Act in New Zealand ensures that businesses identify and mitigate these risks to protect the financial system from abuse​.

AML/CFT obligations apply to businesses known as reporting entities, which are classified into Phase 1 and Phase 2 entities under the AML/CFT Act:

• Phase 1 entities (since 2013) include financial institutions such as banks, money remitters, fund managers, casinos, and virtual asset service providers (VASPs).

• Phase 2 entities (since 2018) include lawyers, accountants, real estate agents, high-value dealers, and trust and company service providers (TCSPs).

Each of these sectors has specific obligations under the Act, such as conducting customer due diligence (CDD), reporting suspicious activities, and maintaining a risk-based AML/CFT compliance programme​​.

As a reporting entity, you must comply with the following AML/CFT obligations:

1. Conduct Customer Due Diligence (CDD)

• Verify the identity of customers, beneficial owners, and those acting on behalf of customers.

• Apply Standard, Simplified, or Enhanced CDD based on the risk level.

• Collect and verify Source of Wealth (SoW) and Source of Funds (SoF) for high-risk customers​.

2. Develop and Maintain an AML/CFT Risk Assessment

• Identify money laundering (ML) and terrorism financing (TF) risks specific to your business.

• Assess risks related to customers, transactions, products, services, and geographical exposure​.

3. Implement an AML/CFT Compliance Programme

• Establish policies, procedures, and controls to mitigate identified risks.

• Designate an AML Compliance Officer responsible for oversight.

• Provide ongoing staff training on AML/CFT obligations​.

4. Monitor and Report Suspicious Activities

• Submit Suspicious Activity Reports (SARs) to the Financial Intelligence Unit (FIU) when unusual or suspicious transactions occur.

• File Prescribed Transaction Reports (PTRs) for large cash transactions over NZD 10,000 and international wire transfers over NZD 1,000​.

5. Perform Ongoing CDD and Transaction Monitoring

• Regularly review customer information and update CDD records.

• Identify unusual transaction patterns and monitor high-risk clients​.

6. Maintain Records for at Least Five Years

• Keep records of CDD documents, transaction history, and AML compliance activities.

• Ensure records are readily available for audits and regulatory inspections​.

7. Conduct Independent Audits and File Annual Reports

• Undergo an independent AML/CFT audit at least every three years.

• Submit an Annual AML/CFT Report to the relevant regulator (DIA, FMA, or RBNZ)​.

Failure to meet these obligations can result in significant fines, legal action, or reputational damage

Non-compliance can lead to:

• Heavy financial penalties (fines up to NZD 2 million for individuals, NZD 5 million for companies)

• Criminal charges and potential imprisonment

• Reputational damage and loss of business trust

• Regulatory intervention from the Department of Internal Affairs (DIA), Financial Markets Authority (FMA), or Reserve Bank of New Zealand (RBNZ)​.

Your business is captured under the AML/CFT Act if it conducts activities that pose a risk of money laundering or terrorism financing. The Act applies to reporting entities, which fall into two phases:

• Phase 1 entities (since 2013) – Includes banks, financial institutions, money remitters, casinos, and Virtual Asset Service Providers (VASPs).

• Phase 2 entities (since 2018) – Includes lawyers, accountants, real estate agents, high-value dealers, and trust and company service providers (TCSPs).

How to determine if your business is captured Your business is likely captured if it:

• Handles financial transactions on behalf of customers, such as transferring money, managing client funds, or conducting currency exchange.

• Provides trust and company services, including setting up or managing trusts, companies, or nominee arrangements.

• Conducts real estate transactions, such as acting as an agent for property sales or purchases.

• Trades in high-value goods, such as cars, jewellery, or artwork, and accepts cash payments of NZD 10,000 or more.

If you are unsure whether your business is captured, contact Seamless AML for expert guidance and compliance support​​.