Money is put through a wash cycle to give it a squeaking clean appearance, implying it’s from a legitimate source, to cover criminals’ tracks from illegal activities such as fraud, drugs and tax evasion.
Then, the untraceable dollars can be spent or used it to fund further criminal activities.
Staggeringly, each year about $1.35 billion from the proceeds of fraud and illegal drugs is laundered through New Zealand businesses.
How is New Zealand trying to stop money laundering?
To improve New Zealand’s ability to tackle money laundering and terrorism financing, the Government has made law changes that affect various businesses and professions.
The Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Amendment Act 2017 puts in place phase two of New Zealand's AML/CFT laws.
The new laws:
· Extend the current AML/CFT act to cover more businesses (including real estate agents and conveyancers; many lawyers and accountants; some businesses that deal in expensive goods; and betting on sports and racing)
· Make some changes that affect phase one businesses (including banks, casinos and a range of financial service providers) who had to comply with the act since 2013.
The law changes put in place practical measures to protect businesses and make it harder for criminals to profit from and fund illegal activity.
They’ll also safeguard and help New Zealand live up to our reputation as being one of the least corrupt countries and a good place to do business.
Banks, other financial services providers and casinos already do this, as they’ve had to comply with the AML/CFT act since 2013.
Customer due diligence requirements
Recent changes mean that from 1 October 2018, BUSINESS buddy is required to collect and verify identification and other personal information about our clients, individuals who own or control clients, and individuals instructing us on behalf of clients.
This is called customer due diligence (CDD) and is a type of background check very similar to what you would have experienced already when dealing with your bank.
The AML/CFT law does this because the services accounting firms and other professionals offer may be attractive to those involved in criminal activity.
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 must identify potentially suspicious activity.
CDD verification requirements are like what you may have encountered when dealing with banks and lawyers, and BUSINESS buddy must sight identifying documents like a passport or driver licence, and record that information, even if we have an existing relationship with you.
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.
When do I have to provide information?
You’ll have to provide identification if:
· You become a customer or client of a business or professional that’s covered by the act (for example, when you ask an accountant or lawyer to establish a company or trust for you).
· There’s a material change in your accounts, financial arrangements or your business relationship with the business (like if the number or type of your transactions change significantly).
· You pay $10,000 or more in cash to a lawyer, accountant, conveyancer or real estate agent.
· You pay $15,000 or more in cash to a business that trades in high value goods (jewellery, precious metals, precious stones, watches, motor vehicles, boats, art or antiquities).
· You send $1000 or more overseas.
What information will I have to provide?
We need to obtain and verify certain information from you to meet the new legal requirements.
Required information includes confirmation of your:
· Full name
· Date of birth
To confirm the details, you may need to provide your:
· Driver licence
· Birth certificate
· A recent bank statement or power bill
If BUSINESS buddy assists you with company or trust work, you may need to provide extra information including:
· Details about the people associated with the trust or company, such as the directors, shareholders, trustees and beneficiaries.
· Where and who the funds came from.
What will BUSINESS buddy do with the information?
BUSINESS buddy keeps a secure record of your information.
If we notice something that’s a warning sign of money laundering or financing of terrorism, by law we must report it to police.
If you have any further questions regarding the changes, feel free to contact BUSINESS buddy on 0800 283 399.