The Ministry of Justice (MOJ) has proposed a range of updates to the anti-money laundering and countering of financing of terrorism (AML) regulations including shifting to a single regulator model.
While the phase two AML proposals, released last week, principally extend compliance obligations to a raft of previously exempt professionals such as lawyers, accountants and real estate agents, the MOJ document also tables a number of general tweaks to the system.
Currently, AML compliance is regulated by a triptych of bodies – the Financial Markets Authority, the Reserve Bank, and the Department of Internal Affairs – which the MOJ says may not be appropriate under the extended regime.
“Other government or statutory agencies may be better placed to supervise some Phase Two sectors, given their experience working with these sectors,” the MOJ says.
One option could be to broaden the number of bodies supervising AML compliance, including industry bodies, the MOJ says. Alternatively, the discussion document floats the idea of a single AML regulator.
“We recognise that establishing a single supervisor would be resource intensive and involve a lengthy implementation period,” the MOJ says. “Significant establishment costs would be involved in either establishing a new agency or significantly enhancing the capability of an existing sector supervisor.”
The MOJ also proposes extending the current information sharing to a wider set of organisations.
“The people and agencies that could potentially share AML/CFT information with others are the sector supervisors, industry regulators, intelligence agencies, Inland Revenue, Customs, and other public sector entities,” the document says. “It’s also been suggested reporting entities could benefit from sharing information with other reporting entities.”
Other MOJ proposals include allowing simplified due diligence to apply to state-owned entities and “majority-owned subsidiaries of publicly traded entities in New Zealand and in low risk overseas jurisdictions” as well as widening the reporting scope to include suspicious activities rather than simply transactions.
Phase two of the AML regime was scheduled to be introduced four years from the initial regulatory roll-out in 2013, which roped financial institutions and other intermediaries (including advisers) as well as casinos into the compliance program.
This time around lawyers, accountants, real estate agents, the gambling sector (including the NZ Racing Board and Lotteries) and ‘high-value goods dealers’ will be landed with AML duties.
The MOJ says ‘high-value goods dealers’ – such as gold bullion agents – could be specified under regulations.
“Another option is to extend AML/CFT obligations to all businesses which engage in cash transactions above an applicable threshold,” the discussion document says. “The scope of this sector could include auctioneers, brokers, bullion dealers, jewellers, precious metal and stone dealers, motor vehicle and boat dealers, antique and art dealers, and any other business that accepts or provides large amounts of cash.”
Consultation on the AML proposals closes on September 16 with legislation slated to be enacted by July 2017.
