Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill

Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill

Government Bill

248—1

Explanatory note

General policy statement

Money laundering is the process by which money obtained through crime is made legitimate to conceal its criminal origins. Financiers of terrorism use similar techniques to money launderers to avoid detection by authorities and to protect the identity of those providing and receiving the funds.

This Bill amends the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (the Act). The Act aims to detect and deter money laundering and financing of terrorism so that criminals cannot enjoy the profits of their activity, or reinvest it into further criminal conduct, including the financing of terrorism. It currently applies to banks, financial institutions, and casinos, and sets out those entities’ core obligations, including—

  • developing a risk assessment and compliance programme:

  • undertaking customer due diligence (customer identification and verification):

  • account monitoring:

  • submitting suspicious transaction reports to the Financial Intelligence Unit of the New Zealand Police.

This Bill will amend the Act so that the obligations also apply to real estate agents, lawyers, accountants, conveyancers, the New Zealand Racing Board, and some high-value dealers. When undertaking certain activities that pose a high risk for money laundering and terrorism financing, these sectors will be required to know who their customers are and on whose behalf they act. The sectors will be required to report large cash transactions, and (other than high-value dealers) will also be required to report suspicious activity, and develop and maintain a risk assessment and compliance programme. High-value dealers will be able, but not required, to report suspicious activities that come to their attention.

The Bill also establishes the Department of Internal Affairs as the relevant anti-money laundering and countering financing of terrorism (AML/CFT) supervisor for estate agents, lawyers, accountants, conveyancers, the New Zealand Racing Board, and some high-value dealers. Supervision of Phase II businesses and professions is essential to ensure that AML/CFT obligations are implemented in practice. This is important to ensure that Phase II businesses are not being misused and to protect New Zealand’s international reputation as a hostile environment for criminal funds.

The Bill also makes amendments to existing provisions to improve the operation of the AML/CFT regime. These include—

  • expanding the scope of reporting requirements to include reporting suspicious activities (this implements a recommendation made by the recent Government Inquiry into Foreign Trust Disclosure Rules by John Shewan):

  • expanding the situations where reporting entities can undertake simplified customer due diligence:

  • providing greater flexibility to share information to meet the purposes of the Act, including mechanisms to enable information flows between the Government and the private sector (this implements a recommendation made by the recent Government Inquiry into Foreign Trust Disclosure Rules by John Shewan).

The expanded scope of the Act will mean that, if the Police need to investigate money laundering or organised crime, the Police can more easily access relevant information and trace who has been involved.

New Zealand’s AML/CFT regime also helps New Zealand meet its international obligations under the Financial Action Taskforce (FATF)—an inter-governmental forum of technical experts on money laundering and countering terrorist financing. Expanding the sectors covered by the Act will close the existing regulatory gaps and align with FATF recommendations. This expansion will improve the ability to detect and deter money laundering and terrorism financing, and enhance New Zealand’s international and trade reputation.

The provisions of the Bill strike a balance between combating crime, minimising costs, and enabling New Zealand to meet its international obligations. New Zealand needs to ensure that it is not a weak link in international efforts to counter money laundering and the financing of terrorism.

Departmental disclosure statement

The Ministry of Justice is required to prepare a disclosure statement to assist with the scrutiny of this Bill. The disclosure statement provides access to information about the policy development of the Bill and identifies any significant or unusual legislative features of the Bill.

Regulatory impact statement

The Ministry of Justice produced a regulatory impact statement on 2 March 2017 to help inform the main policy decisions taken by the Government relating to the contents of this Bill.

Clause by clause analysis

Clause 1 is the Title clause.

Clause 2 is the commencement clause. Most of the Bill comes into force on 1 July 2017. However, clauses 54, 55, 56(2) to (5), and 57 come into force on a date set by the Governor-General by Order in Council (to enable these provisions to come into force at the earliest date they are able to be practically implemented), which,—

  • in the case of clauses 53, 54, and 56, must not be later than 1 July 2019:

  • in the case of clause 55(2), must not be later than 1 January 2019:

  • in the case of clause 55(3), must not be later than 1 July 2019:

  • in the case of clause 55(4), must not be later than 1 July 2018:

  • in the case of clause 55(5), must not be later than 1 October 2018.

Clause 3 identifies the Anti-money Laundering and Countering Financing of Terrorism Act 2009 as the principal Act being amended.

Part 1Amendments to principal Act

Clause 4 amends section 4, which provides an overview of the principal Act. The amendment adjusts the overview to account for the inclusion of provisions dealing with requirements on reporting entities to report suspicious activities and protection of persons making suspicious activity reports.

Clause 5 amends section 5, which concerns interpretation. The amendments—

  • insert definitions of accounting practice, conveyancing practitioner, designated non-financial business or profession, high-value dealer, incorporated conveyancing firm, incorporated law firm, law enforcement purposes, law firm, lawyer, non-bank deposit taker, real estate agent, regulator, regulatory purposes, search warrant, suspicious activity report, and trust and company service provider:

  • replace the definitions of designated business group and existing customer:

  • adjust the definitions of financial institution, occasional transaction, prescribed transaction, reporting entity, and transaction:

  • repeal the definition of suspicious transaction report.

Clause 6 replaces section 6. New section 6 specifies the application of the principal Act to reporting entities.

Clause 7 amends section 7, which concerns amounts not in New Zealand currency. The amendment changes the phrasing of the threshold provision from “exceeds” to “is equal to or above”.

Clause 8 amends section 14, which concerns the circumstances when standard customer due diligence applies. The amendments adjust the circumstances, and provide that real estate agents must conduct standard customer due diligence at the times, and with any other modifications, specified in regulations.

Clause 9 amends section 18, which concerns the circumstances when simplified customer due diligence applies. The amendments adjust the list of specified customers, and provide that real estate agents must conduct simplified customer due diligence at the times, and with any other modifications, specified in regulations.

Clause 10 amends section 22, which concerns the circumstances when enhanced customer due diligence applies. The amendment provides that real estate agents must conduct enhanced customer due diligence at the times, and with any other modifications, specified in regulations.

Clause 11 amends section 23, which concerns enhanced customer due diligence: identity requirements. The amendments adjust the requirement for additional information.

Clause 12 amends section 27, which concerns wire transfers: identity requirements. The amendment changes the phrasing of the threshold provision from “over” to “is equal to or above”, and replaces “suspicious transaction” with “suspicious activity”.

Clause 13 amends section 31, which concerns ongoing customer due diligence and account monitoring. The amendment replaces “suspicious transaction” with “suspicious activity”.

Clause 14 amends section 32, which concerns reliance on a member of a designated business group. The amendments change the phrase “but no later than 5 working days” to “on request by the reporting entity, but within 5 working days of the request”. They also replace “suspicious transaction” with “suspicious activity”.

Clause 15 amends section 33, which concerns reliance on other reporting entities or persons in another country. The amendments change the phrase “but no later than 5 working days, after the business relationship is established or the occasional transaction is conducted” to “on request by the reporting entity, but must be given within 5 working days of the request”. They also insert a provision that specifies that a reporting entity relying on a third party to conduct the customer due diligence procedure is not responsible for ensuring that customer due diligence is carried out in accordance with the principal Act if certain conditions are met.

Clause 16 amends section 36, which concerns the protection of personal information and designated business groups. The amendment replaces “suspicious transaction” with “suspicious activity”.

Clause 17 amends section 37, which concerns the prohibitions if customer due diligence is not conducted. The amendment replaces “suspicious transaction” with “suspicious activity”.

Clause 18 replaces subpart 2 of Part 2, which deals with suspicious transaction reports. New subpart 2, which deals with suspicious activity reports, consists of the following provisions:

  • new section 39A, which provides definitions of service and suspicious activity for the purposes of new subpart 2:

  • new section 40, which requires reporting entities to report suspicious activities:

  • new section 41, which sets out the nature of suspicious activity reports:

  • new section 42, which defines privileged communication:

  • new section 43, which provides that auditors may report suspicious activities:

  • new section 44, which concerns the protection of persons reporting suspicious activities:

  • new section 45, which provides immunity from liability for disclosure of information relating to money laundering transactions:

  • new section 46, which concerns the disclosure of information relating to suspicious activity reports:

  • new section 47, which concerns the disclosure of information in proceedings.

Clause 19 inserts new section 49A, which requires reporting entities to keep a copy of suspicious activity reports for at least 5 years.

Clause 20 amends section 51, which concerns the obligation to keep other records. The amendments provide that the obligation includes keeping records prescribed by regulations. They also require reporting entities to keep a copy of the records for at least 5 years.

Clause 21 amends section 57, which concerns the minimum requirements for AML/CFT programmes. The amendments provide that the AML/CFT programmes must be in writing, change “suspicious transactions” to “suspicious activities”, and require reporting entities to have regard to certain guidance material when developing AML/CFT programmes.

Clause 22 replaces section 59 with the following provisions:

  • new section 59, which provides that reporting entities must review and audit their risk assessment and AML/CFT programmes:

  • new section 59A, which provides that high-value dealers must ensure that their compliance with their AML/CFT obligations, and regulations made under the principal Act, is audited when the relevant AML/CFT supervisor requests:

  • new section 59B, which specifies who must carry out the audits.

Clause 23 amends section 68, which concerns reports about movement of cash into and out of New Zealand. The amendment changes “more than” to “equal to or above”.

Clause 24 amends section 69, which concerns reports about receipt of cash from outside New Zealand. The amendment changes “more than” to “equal to or above”.

Clause 25 amends section 70, which concerns reporting requirements. The amendments replace the phrase “in the prescribed form” with “in the appropriate prescribed form”, and provide that certain reports must be provided to a Customs officer at the time prescribed.

Clause 26 amends the cross-heading above section 92. The amendment changes “transaction” to “activity”.

Clause 27 amends section 92, which concerns the failure to report suspicious transactions. The amendments replace each occurrence of “transaction” with “activity”.

Clause 28 amends section 93, which concerns the provision of false or misleading information in connection with suspicious transaction reports. The amendments replace each occurrence of “transaction” with “activity”.

Clause 29 amends section 94, which concerns the unlawful disclosure of suspicious transaction reports. The amendments replace each occurrence of “transaction” with “activity”.

Clause 30 amends section 95, which concerns the failure to keep or retain adequate records relating to suspicious transactions. The amendments replace each occurrence of “transaction” with “activity”.

Clause 31 amends section 96, which concerns the obstruction of investigations relating to suspicious transaction reports. The amendments replace each occurrence of “transaction” with “activity”.

Clause 32 amends the heading to section 99, which concerns the time limit for the prosecution of offences relating to civil liability acts and suspicious transaction reports. The amendment replaces “transaction” with “activity”.

Clause 33 amends section 106, which concerns the failure to report cash over the applicable threshold value that is moved into or out of New Zealand. The amendments replace each occurrence of “over” with “equal to or above”.

Clause 34 amends section 107, which concerns the failure to report cash over the applicable threshold value received by person in New Zealand from overseas. The amendments replace each occurrence of “over” with “equal to or above”.

Clause 35 amends section 117, which concerns search warrants. The amendment provides that subpart 4 of Part 4 of the Search and Surveillance Act 2012 applies.

Clause 36 amends section 130, which concerns AML/CFT supervisors. The amendment adjusts the list of AML/CFT supervisors to account for designated non-financial businesses or professions, high-value dealers, and the New Zealand Racing Board, and provides for certain AML/CFT supervisors to be prescribed.

Clause 37 amends section 137, which concerns the power to use information obtained as an AML/CFT supervisor in another capacity and vice versa. The amendments insert references to the Insurance (Prudential Supervision) Act 2010, the Non-bank Deposit Takers Act 2013, the Racing Act 2003, and the Charities Act 2005.

Clause 38 replaces section 139 with the following provisions:

  • new section 139, which sets out a power to disclose information in certain circumstances, and does not apply to any information that may be disclosed or shared under an agreement specified in new section 140A:

  • new section 139A, which provides for the making of regulations relating to information sharing.

Clause 39 amends section 140, which concerns the power to use and disclose information supplied or obtained under other enactments for law enforcement or regulatory purposes. The amendment augments the relevant list of enactments.

Clause 40 inserts new section 140A. Its purpose is to facilitate access to data holdings by government agencies for law enforcement purposes. It permits the disclosure or sharing of relevant information in accordance with certain written agreements.

Clause 41 amends section 142, which concerns the financial intelligence functions of the Commissioner of Police. The amendments adjust those functions, change “suspicious transaction” to “suspicious activity” in section 142(e), (f), and (h), and change “suspicious transaction reports” to “financial intelligence reports” in section 142(g).

Clause 42 replaces section 143. New section 143 sets out the powers relating to the financial intelligence functions of the Commissioner of Police.

Clause 43 amends section 144, which concerns the delegation of the powers of the Commissioner of Police. The amendment alters the delegation permitted by changing “inspector” to “inspector or an equally senior Police employee”.

Clause 44 amends section 145, which concerns guidelines relating to the reporting of suspicious transactions. The amendments replace each occurrence of “transaction” with “activity”.

Clause 45 amends section 146, which concerns consultation on proposed guidelines. The amendments replace each occurrence of “transaction” with “activity”.

Clause 46 amends section 147, which concerns the availability of guidelines. The amendment replaces “transaction” with “activity”.

Clause 47 amends section 148, which concerns reviews of the guidelines. The amendments replace each occurrence of “transaction” with “activity”.

Clause 48 amends section 153, which concerns the making of regulations. The amendments adjust the provision that permits the making of regulations prescribing amounts or thresholds that are required to be prescribed for the purposes of the principal Act. They also insert provisions that permit the making of regulations authorising and regulating the sharing of information—

  • between reporting entities in different groups:

  • between the Commissioner of Police, the New Zealand Customs Service, AML/CFT supervisors, and international authorities.

Clause 49 amends section 154, which concerns the making of regulations relating to the application of the principal Act. The amendments provide for the making of regulations that—

  • exempt certain financial activities or classes of financial activities from the application of all or part of the Act:

  • declare, for certain purposes, any entity or class of entities to be an approved entity or approved class of entities.

The amendments also delete the reference to the Financial Transactions Reporting Act 1996 and repeal section 154(3)(c) and (5).

Clause 50 inserts new section 156A, which provides for the review of the operation of the principal Act in 2021.

Clause 51 replaces sections 157 to 159 with the following provisions:

  • new section 157, which provides that the chief executive may grant certain exemptions:

  • new section 158, which provides the chief executive must consult before granting exemptions:

  • new section 159, which sets out the requirements relating to exemptions.

Clause 52 repeals sections 162 and 163.

Part 2Amendments to other enactments and repeal

Clause 53 revokes various provisions of the Anti-Money Laundering and Countering Financing of Terrorism (Definitions) Regulations 2011 (new regulation 20(1) is the original regulation 20(1)(a) and (b) without the content of paragraph (a)).

Clause 54 revokes various provisions of the Anti-Money Laundering and Countering Financing of Terrorism (Requirements and Compliance) Regulations 2011.

Clause 55 repeals various provisions of the Financial Transactions Reporting Act 1996.

Clause 56 repeals the Financial Transactions Reporting Act 1996.

Hon Amy Adams

Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill

Government Bill

248—1

Contents

Explanatory note
1Title
2Commencement
3Principal Act
4Section 4 amended (Overview)
5Section 5 amended (Interpretation)
6Section 6 replaced (Application of this Act to reporting entities)
6Application of this Act to reporting entities
7Section 7 amended (Amounts not in New Zealand currency)
8Section 14 amended (Circumstances when standard customer due diligence applies)
9Section 18 amended (Circumstances when simplified customer due diligence applies)
10Section 22 amended (Circumstances when enhanced customer due diligence applies)
11Section 23 amended (Enhanced customer due diligence: identity requirements)
12Section 27 amended (Wire transfers: identity requirements)
13Section 31 amended (Ongoing customer due diligence and account monitoring)
14Section 32 amended (Reliance on member of designated business group)
15Sections 33 amended (Reliance on other reporting entities or persons in another country)
16Section 36 amended (Protection of personal information and designated business groups)
17Section 37 amended (Prohibitions if customer due diligence not conducted)
18Subpart 2 of Part 2 replaced
39AInterpretation
40Reporting entities to report suspicious activities
41Nature of suspicious activity report
42Privileged communication defined
43Auditors may report suspicious activities
44Protection of persons reporting suspicious activities
45Immunity from liability for disclosure of information relating to money laundering transactions
46Disclosure of information relating to suspicious activity reports
47Disclosure of information in proceedings
19New section 49A inserted (Obligation to keep reports of suspicious activities)
49AObligation to keep reports of suspicious activities
20Section 51 amended (Obligation to keep other records)
21Section 57 amended (Minimum requirements for AML/CFT programmes)
22Section 59 replaced (Review and audit of risk assessment and AML/CFT programme)
59Review and audit of risk assessment and AML/CFT programmes
59AAudit of compliance with AML/CFT obligations
59BWho carries out audit
23Section 68 amended (Reports about movement of cash into or out of New Zealand)
24Section 69 amended (Reports about receipt of cash from outside New Zealand)
25Section 70 amended (Reporting requirements)
26Cross-heading above section 92 amended
27Section 92 amended (Failing to report suspicious transaction)
28Section 93 amended (Providing false or misleading information in connection with suspicious transaction report)
29Section 94 amended (Unlawful disclosure of suspicious transaction report)
30Section 95 amended (Failure to keep or retain adequate records relating to suspicious transaction)
31Section 96 amended (Obstruction of investigation relating to suspicious transaction report)
32Section 99 amended (Time limit for prosecution of offences relating to civil liability act and suspicious transaction reports)
33Section 106 amended (Failure to report cash over applicable threshold values moved into or out of New Zealand)
34Section 107 amended (Failure to report cash over applicable threshold value received by person in New Zealand from overseas)
35Section 117 amended (Search warrant)
36Section 130 amended (AML/CFT supervisors)
37Section 137 amended (Power to use information obtained as AML/CFT supervisor in other capacity and vice versa)
38Section 139 replaced (Power to disclose information supplied or obtained as AML/CFT supervisor)
139Power to disclose information
139ARegulations relating to information sharing
39Section 140 amended (Power to use and disclose information supplied or obtained under other enactments for law enforcement or regulatory purposes)
40New section 140A inserted (Data access for law enforcement purposes)
140AData access for law enforcement purposes
41Section 142 amended (Financial intelligence functions of Commissioner)
42Section 143 replaced (Powers relating to financial intelligence functions of Commissioner)
143Powers relating to financial intelligence functions of Commissioner
43Section 144 amended (Delegation of powers of Commissioner)
44Section 145 amended (Guidelines relating to reporting of suspicious transactions)
45Section 146 amended (Consultation on proposed guidelines)
46Section 147 amended (Availability of guidelines)
47Section 148 amended (Review of guidelines)
48Section 153 amended (Regulations)
49Section 154 amended (Regulations relating to application of Act)
50New section 156A and cross-heading inserted
156AReview of operation of Act
51Sections 157 to 159 and cross-heading above section 157 replaced
157Chief executive may grant exemptions
158Chief executive must consult before granting exemption
159Requirements relating to exemptions
52Sections 162 and 163 repealed
53Amendments to Anti-Money Laundering and Countering Financing of Terrorism (Definitions) Regulations 2011
54Amendments to Anti-Money Laundering and Countering Financing of Terrorism (Requirements and Compliance) Regulations 2011
55Amendments to Financial Transactions Reporting Act 1996
56Financial Transactions Reporting Act 1996 repealed

The Parliament of New Zealand enacts as follows:

1 Title

This Act is the Anti-Money Laundering and Countering Financing of Terrorism Amendment Act 2016.

2 Commencement

(1)

This Act (except sections 53, 54, 55(2) to (5), and 56) comes into force on 1 July 2017.

(2)

Sections 53, 54, and 56 come into force on a date (not later than 1 July 2019) appointed by the Governor-General by Order in Council.

(3)

Section 55(2) comes into force on a date (not later than 1 January 2019) appointed by the Governor-General by Order in Council.

(4)

Section 55(3) comes into force on a date (not later than 1 July 2019) appointed by the Governor-General by Order in Council.

(5)

Section 55(4) comes into force on a date (not later than 1 July 2018) appointed by the Governor-General by Order in Council.

(6)

Section 55(5) comes into force on a date (not later than 1 October 2018) appointed by the Governor-General by Order in Council.

3 Principal Act

This Act amends the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (the principal Act).

Part 1 Amendments to principal Act

4 Section 4 amended (Overview)

Replace section 4(3)(b) with:

(b)

subpart 2 includes provisions dealing with requirements on reporting entities to report suspicious activities and protection of persons making suspicious activity reports:

5 Section 5 amended (Interpretation)

(1)

In section 5, insert in their appropriate alphabetical order:

accounting practice means—

(a)

an accountant in public practice on his or her own account:

(b)

in relation to 2 or more accountants in public practice, and practising in partnership, the partnership:

(c)

an incorporated accounting practice

conveyancing practitioner has the meaning given to it by section 6 of the Lawyers and Conveyancers Act 2006

designated non-financial business or profession means—

(a)

a law firm, a conveyancing practitioner, an incorporated conveyancing firm, an accounting practice, a real estate agent, or a trust and company service provider who, in the ordinary course of business, carries out 1 or more of the following activities:

(i)

acting as a formation agent of legal persons or arrangements:

(ii)

acting as, or arranging for a person to act as, a nominee director or nominee shareholder or trustee in relation to legal persons or arrangements:

(iii)

providing a registered office or a business address, a correspondence address, or an administrative address for a company, or a partnership, or for any other legal person or arrangement, unless the office or address is provided solely as an ancillary service to the provision of other services (being services that do not constitute an activity listed in this subparagraph or subparagraphs (i), (ii), and (iv) to (vi)):

(iv)

managing client funds (other than sums paid as fees for professional services), accounts, securities, or other assets:

(v)

providing real estate agency work (within the meaning of section 4(1) of the Real Estate Agents Act 2008) that involves the representation, as an agent, of a vendor or purchaser in connection with the sale or purchase, or the proposed sale or purchase, of real estate or any business:

(vi)

engaging in or giving instructions in relation to—

(A)

any conveyancing (within the meaning of section 6 of the Lawyers and Conveyancers Act 2006) on behalf of a customer in relation to the sale or purchase, or the proposed sale or purchase, of real estate; or

(B)

transactions on behalf of any person in relation to the buying or selling of real estate or transferring the title in, or beneficial ownership of, real estate; or

(C)

transactions on behalf of any person in relation to the buying, transferring, or selling of businesses or legal persons (for example, companies) and other legal arrangements; or

(D)

transactions on behalf of a customer in relation to creating, operating, and managing legal persons (for example, companies) and other legal arrangements; and

(b)

includes a person or class of persons declared by regulations to be a designated non-financial business or profession for the purposes of this Act; but

(c)

excludes a person or class of persons declared by regulations not to be a designated non-financial business or profession for the purposes of the Act

high-value dealer

(a)

means a person who is in trade and in the ordinary course of business, buys or sells all or any of the following articles by way of a cash transaction or a series of related cash transactions, if the total value of that transaction or those transactions is equal to or above the applicable threshold value:

(i)

jewellery:

(ii)

watches:

(iii)

gold, silver, or other precious metals:

(iv)

diamonds, sapphires, or other precious stones:

(v)

paintings:

(vi)

prints:

(vii)

protected foreign objects (within the meaning of section 2(1) of the Protected Objects Act 1975):

(viii)

protected New Zealand objects (within the meaning of section 2(1) of the Protected Objects Act 1975):

(ix)

sculptures:

(x)

photographs:

(xi)

carvings in any medium:

(xii)

other artistic or cultural artifacts:

(xiii)

motor vehicles (within the meaning of section 6(1) of the Motor Vehicle Sales Act 2003):

(xiv)

ships (within the meaning of section 2(1) of the Maritime Transport Act 1994); and

(b)

includes any person who carries out the activities referred to in paragraph (a) as a registered auctioneer (within the meaning of section 4(1) of the Auctioneers Act 2013); but

(c)

does not include any person, to the extent that the person is engaged in providing services other than the buying or selling of articles referred to in paragraph (a), including the following services:

(i)

mining precious metals or precious stones:

(ii)

manufacturing jewellery:

(iii)

crafting or polishing precious stones; and

(d)

does not include any person to the extent that the person is engaged in the buying or selling of precious metals or precious stones for industrial purposes

incorporated conveyancing firm has the meaning given to it by section 6 of the Lawyers and Conveyancers Act 2006

incorporated law firm has the meaning given to it by section 6 of the Lawyers and Conveyancers Act 2006

law enforcement purposes includes—

(a)

intelligence gathering and analysis:

(b)

national security and defence purposes:

(c)

the prevention, disruption, detection, investigation, and prosecution of—

(i)

any offence under this Act; or

(ii)

a money laundering offence; or

(iii)

any offence within the meaning of section 243(1) of the Crimes Act 1961:

(d)

the enforcement and administration of—

(i)

this Act:

(ii)

the Criminal Proceeds (Recovery) Act 2009:

(iii)

the Misuse of Drugs Act 1975:

(iv)

the Terrorism Suppression Act 2002:

(v)

the Mutual Assistance in Criminal Matters Act 1992:

(vi)

the Customs and Excise Act 1996:

(vii)

any other enactment prescribed in regulations:

(e)

any purpose or action referred to in paragraphs (a) to (d) relating to, or taken in respect of, legislation of an overseas jurisdiction that is broadly equivalent to the enactments listed in those paragraphs

law firm means—

(a)

a barrister or solicitor practising on the barrister’s or solicitor’s own account:

(b)

in relation to 2 or more lawyers practising law in partnership, the partnership:

(c)

an incorporated law firm

lawyer has the meaning given to it by section 6 of the Lawyers and Conveyancers Act 2006

non-bank deposit taker has the meaning given to NBDT by section 5 of the Non-bank Deposit Takers Act 2013

real estate agent has the same meaning as the definition of agent in section 4(1) of the Real Estate Agents Act 2008

regulator

(a)

means a professional body responsible under any New Zealand enactment for enforcing the regulatory obligations of a particular industry or profession whose members are subject to this Act; and

(b)

includes any other body prescribed in regulations

regulatory purposes includes—

(a)

the work involved in AML/CFT supervision:

(b)

the enforcement and administration of Acts prescribed in regulations:

(c)

any purpose or action referred to in paragraph (b) relating to, or taken in respect of, legislation of an overseas jurisdiction that is broadly equivalent to the enactments listed in those paragraphs

search warrant means a warrant issued under section 117

suspicious activity report

(a)

means a report made under section 40:

(b)

includes—

(i)

a suspicious transaction report made under this Act; and

(ii)

a suspicious transaction report made under the Financial Transactions Reporting Act 1996

trust and company service provider or TCSP means a person (other than a law firm, a conveyancing practitioner, an incorporated conveyancing firm, an accounting practice, or a real estate agent) who carries out any of the activities described in paragraphs (a)(i) to (vi) of the definition of designated non-financial business or profession

(2)

In section 5, replace the definition of designated business group with:

designated business group means a group of 2 or more persons in which—

(a)

each member of the group has elected, in writing, to be a member of the group and the election is in force; and

(b)

each election was made in accordance with regulations (if any); and

(c)

no member of the group is a member of another designated business group; and

(d)

each member of the group is—

(i)

related to each other member of the group within the meaning of section 2(3) of the Companies Act 1993 and is—

(A)

a reporting entity resident in New Zealand; or

(B)

a person that is resident in a country that has sufficient AML/CFT systems and is supervised or regulated for AML/CFT purposes; or

(ii)

providing a service under a joint venture agreement to which each member of the group is a party; or

(iii)

a government department named in Schedule 1 of the State Sector Act 1988, a State enterprise under the State-Owned Enterprises Act 1986, or a Crown entity under section 7 of the Crown Entities Act 2004; or

(iv)

related to 1 or more of the entities referred to in subparagraph (iii) through the provision of common products or services; or

(v)

a body corporate that is—

(A)

either a company (within the meaning of section 2(1) of the Companies Act 1993) or an overseas company within the meaning of that section; and

(B)

related (within the meaning of section 12(2) of the Financial Markets Conduct Act 2013) to every body corporate in the designated business group or proposed designated business group; and

(C)

either a reporting entity resident in New Zealand or a person who is resident in a country that has sufficient AML/CFT systems and that is supervised or regulated for AML/CFT purposes; or

(vi)

a related law firm, or a subsidiary of a law firm, that is a reporting entity in New Zealand (or the equivalent body in another country that has sufficient AML/CFT systems and that is supervised or regulated for AML/CFT purposes); or

(vii)

a related conveyancer, or a subsidiary of a conveyancer, that is a reporting entity in New Zealand (or the equivalent body in another country that has sufficient AML/CFT systems and that is supervised or regulated for AML/CFT purposes); or

(viii)

a related accounting practice, or a subsidiary of an accounting practice, that is a reporting entity in New Zealand (or the equivalent body in another country that has sufficient AML/CFT systems and that is supervised or regulated for AML/CFT purposes); or

(ix)

a related trust and company service provider, or a subsidiary of a TCSP, that is a reporting entity in New Zealand (or the equivalent body in another country that has sufficient AML/CFT systems and that is supervised or regulated for AML/CFT purposes); or

(x)

a related real estate agent, or a subsidiary of a real estate agent, that is a reporting entity in New Zealand (or the equivalent in another country that has sufficient AML/CFT systems and that is supervised or regulated for AML/CFT purposes); or

(xi)

a related high-value dealer, or a subsidiary of a high-value dealer, that is a reporting entity in New Zealand (or an equivalent person resident outside New Zealand in a country that has sufficient AML/CFT systems and that is supervised or regulated for AML/CFT purposes); or

(xii)

a group of reporting entities, if the entities are each money transfer agents or sub-agents and each entity is related to every other entity in the designated business group or proposed designated business group in either of the following ways:

(A)

one of those entities is a money transfer agent and the other entities are the sub-agents of those agents:

(B)

those entities are each sub-agents of the same money transfer agent; or

(xiii)

an entity or a class of entities prescribed by regulations; and

(e)

each member of the group satisfies any conditions in subsection (3) that apply to that member

(3)

In section 5, replace the definition of existing customer with:

existing customer means a person who was in a business relationship with a reporting entity immediately before any provisions of this Act began to apply to the entity

(4)

In section 5, definition of financial institution, paragraph (a)(vii), replace “for the person’s own account or for the accounts of customers in any of the following:” with “for, or on behalf of, a customer in any of the following using the person’s account or the customer’s account:”.

(5)

In section 5, definition of occasional transaction, paragraph (a), replace “over” with “equal to or above”.

(6)

In section 5, definition of prescribed transaction, paragraphs (a) and (b) (as inserted by section 5(1) of the Anti-Money Laundering and Countering Financing of Terrorism Amendment Act 2015), replace “value greater than” with “value equal to or above”.

(7)

In section 5, definition of reporting entity, replace paragraph (a) with:

(a)

means—

(i)

a casino:

(ii)

a designated non-financial business or profession:

(iii)

a financial institution:

(iv)

a high-value dealer:

(v)

the New Zealand Racing Board; and

(8)

In section 5, repeal the definition of suspicious transaction report.

(9)

In section 5, definition of transaction, replace paragraph (c) with:

(c)

excludes the following:

(i)

the placing of any bet unless authorised under the Racing Act 2003:

(ii)

participation in gambling (as defined in section 4(1) of the Gambling Act 2003) unless authorised under the Racing Act 2003):

(iii)

a transaction or class of transactions declared by regulations not to be a transaction for the purposes of this Act

(10)

In section 5, insert as subsections (2) to (4):

(2)

For the purposes of paragraph (d)(xii) of the definition of designated business group in subsection (1),—

money transfer agent, in relation to a money transfer provider, means a reporting entity that has a representation agreement with a money transfer provider

money transfer provider means a person who, under a representation agreement, authorises a money transfer agent to carry on money transfer services on behalf of the money transfer provider and to engage sub-agents for the purpose of carrying on those services in New Zealand

money transfer services means the provision of remittance services that are carried on, otherwise than by a bank, under a single brand, trade mark, or business name

representation agreement means a written agreement between a money transfer provider and a money transfer agent, or between a money transfer agent and a sub-agent, that states the terms on which the money transfer agent, or the sub-agent, carries on money transactions for customers relating to creating, operating, and managing companies

sub-agent means a reporting entity that has a representation agreement with a money transfer agent.

(3)

For the purposes of paragraph (e) of the definition of designated business group in subsection (1), a condition of membership is that the contact person of a designated business group must notify the relevant AML/CFT supervisor, in writing within 30 days, of any of the following:

(a)

the withdrawal of a member from the designated business group:

(b)

the termination of the designated business group:

(c)

any other change in the details previously notified to any AML/CFT supervisor in respect of the designated business group.

(4)

For the purpose of applying the definitions of designated non-financial business or profession and designated business group, a reporting entity must take into account guidance on the application of those definitions issued by the relevant AML/CFT supervisor.

6 Section 6 replaced (Application of this Act to reporting entities)

Replace section 6 with:

6 Application of this Act to reporting entities

(1)

Subject to subsection (2), this Act applies to any reporting entity that is in existence at the close of 30 June 2017 or that comes into existence on or after 1 July 2017.

(2)

This Act—

(a)

does not apply to a law firm, a conveyancing practitioner, or an incorporated conveyancing firm until a date (not later than 1 July 2018) set by the Governor-General by Order in Council:

(b)

does not apply to an accounting practice until a date (not later than 1 October 2018) set by the Governor-General by Order in Council:

(c)

does not apply to a real estate agent until a date (not later than 1 January 2019) set by the Governor-General by Order in Council:

(d)

does not apply to the New Zealand Racing Board or a high-value dealer until a date (not later than 1 August 2019) set by the Governor-General by Order in Council:

(e)

in the case of a trust and company service provider that immediately before the commencement of this section was a reporting entity under regulation 17 of the Anti-Money Laundering and Countering Financing of Terrorism (Definitions) Regulations 2011, applies on and after the date on which this section comes into force:

(f)

in the case of a trust or company service provider to which paragraph (e) does not apply, applies on a date (not later than 1 July 2018) set by the Governor-General by Order in Council.

(3)

This Act applies to a reporting entity only to the extent that,—

(a)

in the case of a reporting entity that is a financial institution, the financial activities undertaken by that entity fall within the activities described in the definition of financial institution in section 5(1):

(b)

in the case of the New Zealand Racing Board, it carries out the following:

(i)

the conduct of betting under section 50 of the Racing Act 2003:

(ii)

the operation of accounts or provision of vouchers:

(c)

in the case of a law firm, conveyancer, incorporated conveyancing firm, accounting practice, real estate agent, or other designated non-financial business or profession, the activities carried out by that reporting entity are activities described in the definition of designated non-financial business or profession in section 5(1):

(d)

in the case of a high-value dealer,—

(i)

the high-value dealer carries out activities described in the definition of high-value dealer in section 5(1); and

(ii)

if subparagraph (i) applies, the high-value dealer—

(A)

must conduct standard customer due diligence under sections 14(1)(b), 15, and 16:

(B)

may rely on third parties under sections 32 to 34:

(C)

must comply with the prohibitions under section 37 if the high-value dealer is unable to conduct standard customer due diligence:

(D)

may report suspicious activities to the Commissioner under section 40(5) (in which case sections 44 to 46 (which relate to suspicious activities) apply to the high-value dealer):

(E)

must report prescribed transactions equal to or above the applicable cash threshold under sections 48A and 48B:

(F)

must keep records of any suspicious activity reports under section 49A:

(G)

must keep identity and verification records under section 50 when standard customer due diligence is conducted:

(H)

must keep records of any audits under section 51(1)(b), (2), and (3):

(I)

must audit its AML/CFT compliance obligations under section 59A if requested by an AML/CFT supervisor:

(e)

in the case of a casino, the casino carries out activities that may give rise to a risk of money laundering or financing of terrorism.

7 Section 7 amended (Amounts not in New Zealand currency)

In section 7(1)(a), replace “exceeds” with “is equal to or above”.

8 Section 14 amended (Circumstances when standard customer due diligence applies)

(1)

Replace section 14(d) with:

(d)

any other circumstances specified in subsection (2) or in regulations.

(2)

In section 14, insert as subsections (2) and (3):

(2)

For the purposes of subsection (1)(d), as soon as practicable after a reporting entity becomes aware that an existing account is anonymous, the reporting entity must conduct standard customer due diligence in respect of that account.

(3)

Despite subsections (1) and (2), a real estate agent must conduct standard customer due diligence at the times, and with any other modifications, specified in regulations.

9 Section 18 amended (Circumstances when simplified customer due diligence applies)

(1)

Replace section 18(2) with:

(2)

The following are customers for the purposes of subsection (1):

(a)

a listed issuer (within the meaning of section 6(1) of the Financial Markets Conduct Act 2013) that is the issuer of quoted voting products (within the meaning of that Act):

(b)

a government department named in Schedule 1 of the State Sector Act 1988:

(c)

a local authority, as defined in section 5(2) of the Local Government Act 2002:

(d)

the New Zealand Police:

(e)

a State enterprise (within the meaning of section 2 of the State-Owned Enterprises Act 1986) and a new State enterprise (as listed in Schedule 2 of that Act):

(f)

a body that—

(i)

corresponds to a State enterprise or a new State enterprise (as defined in paragraph (e); and

(ii)

is located in a country that has sufficient AML/CFT systems:

(g)

the New Zealand Security Intelligence Service:

(h)

a person licensed to be a supervisor or statutory supervisor under the Financial Markets Supervisors Act 2011, when the person acts for itself:

(i)

a trustee corporation, within the meaning of section 2(1) of the Administration Act 1969, when the trustee corporation acts for itself:

(j)

a Crown entity, as defined in section 7(1) of the Crown Entities Act 2004:

(k)

an organisation named in Schedule 4 of the Public Finance Act 1989:

(l)

a company named in Schedule 4A of the Public Finance Act 1989:

(m)

a government body that—

(i)

corresponds to a government department named in Schedule 1 of the State Sector Act 1988; and

(ii)

is located in an overseas jurisdiction that has sufficient AML/CFT systems:

(n)

a registered bank within the meaning of section 2(1) of the Reserve Bank of New Zealand Act 1989:

(o)

a licensed insurer within the meaning of section 6(1) of the Insurance (Prudential Supervision) Act 2010:

(p)

a company, or a subsidiary (within the meaning of section 5(1) of the Companies Act 1993) of that company,—

(i)

whose equity securities are listed in New Zealand or on an overseas stock exchange that has sufficient disclosure requirements; and

(ii)

that is located in a country that has sufficient AML/CFT systems in place:

(q)

any other entity or class of entities specified in regulations.

(2)

After section 18(3), insert:

(3A)

Despite subsections (1) to (3), a real estate agent must conduct simplified customer due diligence at the times, and with any other modifications, specified in regulations.

10 Section 22 amended (Circumstances when enhanced customer due diligence applies)

After section 22(5), insert:

(6)

Despite subsections (1) to (5), a real estate agent must conduct enhanced customer due diligence at the times, and with any other modifications, specified in regulations.

11 Section 23 amended (Enhanced customer due diligence: identity requirements)

(1)

Replace section 23(b) with:

(b)

the additional information referred to in subsection (2) and any additional information prescribed by regulations.

(2)

In section 23, insert as subsection (2):

(2)

For the purposes of subsection (1)(b), a reporting entity must obtain,—

(a)

in the case of a trust other than a trust to which paragraph (b) applies, the name and the date of birth of each beneficiary of the trust:

(b)

in the case of a customer that is a discretionary trust or a charitable trust or a trust that has more than 10 beneficiaries, a description of—

(i)

each class or type of beneficiary:

(ii)

if the trust is a charitable trust, the objects of the trust.

12 Section 27 amended (Wire transfers: identity requirements)

(1)

In section 27(1), replace “over” with “equal to or above”.

(2)

In section 27(5)(b), replace “suspicious transaction” with “suspicious activity”.

13 Section 31 amended (Ongoing customer due diligence and account monitoring)

In section 31(2)(b), replace “suspicious transaction” with “suspicious activity”.

14 Section 32 amended (Reliance on member of designated business group)

(1)

In section 32(1)(a)(ii), replace “, but no later than 5 working days,” with “on request by the reporting entity, but within 5 working days of the request,”.

(2)

In section 32(1)(d), replace “suspicious transaction” with “suspicious activity or prescribed transaction”.

15 Sections 33 amended (Reliance on other reporting entities or persons in another country)

(1)

In section 33(2)(c)(ii), replace “, but no later than 5 working days, after the business relationship is established or the occasional transaction is conducted” with “on request by the reporting entity, but within 5 working days of the request”.

(2)

After section 33(3), insert:

(3A)

However, a reporting entity relying on a third party to conduct the customer due diligence procedure is not responsible for ensuring that customer due diligence is carried out in accordance with this Act if the following conditions are met:

(a)

the reporting entity is acting in good faith when relying on a third party; and

(b)

the reporting entity has reasonable cause to believe the reporting entity that is relied on has conducted relevant customer due diligence procedures to at least the standard required by this Act and regulations; and

(c)

the reporting entity being relied on is an approved entity or is within an approved class of entities; and

(d)

any other conditions prescribed by regulations are complied with.

16 Section 36 amended (Protection of personal information and designated business groups)

(1)

In section 36(5)(a), replace “suspicious transactions report” with “suspicious activity report”.

(2)

In section 36(5)(b), replace “suspicious transaction” with “suspicious activity”.

17 Section 37 amended (Prohibitions if customer due diligence not conducted)

(1)

In section 37(d), replace “suspicious transactions report” with “suspicious activity report”.

(2)

In section 37(e), replace “suspicious transaction” with “suspicious activity”.

18 Subpart 2 of Part 2 replaced

Replace subpart 2 of Part 2 with:

Subpart 2—Suspicious activity reports

39A Interpretation

For the purposes of this subpart,—

service

(a)

means an activity that is carried out by a reporting entity; but

(b)

does not include an activity unless section 6 applies to the activity

suspicious activity means an activity undertaken in circumstances—

(a)

in which—

(i)

a person conducts or seeks to conduct a transaction through a reporting entity; or

(ii)

a reporting entity provides or proposes to provide a service to a person; or

(iii)

a person requests a reporting entity to provide a service or makes an inquiry to the reporting entity in relation to a service; and

(b)

the reporting entity has reasonable grounds to suspect that the transaction or proposed transaction, the service or proposed service, or the inquiry, as the case may be, is or may be relevant to—

(i)

the investigation or prosecution of any person for a money laundering offence; or

(ii)

the enforcement of the Misuse of Drugs Act 1975; or

(iii)

the enforcement of the Terrorism Suppression Act 2002; or

(iv)

the enforcement of the Proceeds of Crime Act 1991 or the Criminal Proceeds (Recovery) Act 2009; or

(v)

the investigation or prosecution of an offence (within the meaning of section 243(1) of the Crimes Act 1961).

40 Reporting entities to report suspicious activities

(1)

Subsections (3) and (4) apply to reporting entities other than high-value dealers.

(2)

Subsection (5) applies to high-value dealers.

(3)

If this subsection applies, the reporting entity must, as soon as practicable but no later than 3 working days after forming its suspicion, report the activity, or suspicious activity, to the Commissioner in accordance with section 41.

(4)

Nothing in subsection (3) requires any lawyer to disclose any privileged communication (as defined in section 42).

(5)

A high-value dealer may report a suspicious activity, or proposed activity, to the Commissioner.

41 Nature of suspicious activity report

(1)

Except as provided in subsection (2), a report under section 40 must—

(a)

be in the prescribed form (if any); and

(b)

contain the details prescribed by regulations; and

(c)

contain a statement of the grounds on which the reporting entity holds the suspicions referred to in paragraph (b) of the definition of suspicious activity in section 39A; and

(d)

be signed by a person authorised by the reporting entity to sign suspicious activity reports (unless the report is forwarded by electronic means); and

(e)

be forwarded, in writing, to the Commissioner—

(i)

by way of secure electronic transmission by a means specified or provided by the Commissioner for that purpose; or

(ii)

by another means (including, without limitation, by way of transmission by fax or email) that may be agreed from time to time between the Commissioner and the reporting entity concerned.

(2)

If the urgency of the situation requires, a suspicious activity report may be made orally to any Police employee authorised for the purpose by the Commissioner, but in any such case the reporting entity must, as soon as practicable but no later than 3 working days after forming its suspicions, forward to the Commissioner a suspicious activity report that complies with the requirements in subsection (1).

(3)

The Commissioner may confer the authority to receive a suspicious activity report under subsection (2) on—

(a)

any specified Police employee; or

(b)

Police employees of any specified rank or class; or

(c)

any Police employee or Police employees for the time being holding any specified office or specified class of offices.

42 Privileged communication defined

(1)

For the purposes of sections 40(4) and 48A(2), a communication is a privileged communication if—

(a)

it is a confidential communication (oral or written)—

(i)

that passes between—

(A)

a lawyer and another lawyer in their professional capacity; or

(B)

a lawyer in his or her professional capacity and his or her client; or

(C)

any person described in subparagraph (i) or (ii) and the agent of the other person described in that subparagraph (or between the agents of both the persons described) either directly or indirectly; and

(ii)

that is made or brought into existence for the purpose of obtaining or giving legal advice or assistance; or

(b)

it is a communication that—

(i)

is subject to the general law governing legal professional privilege; or

(ii)

is specified in section 54(1), 56(1) and (2), or 57 of the Evidence Act 2006.

(2)

However, a communication is not a privileged communication—

(a)

if there is a prima facie case that the communication or information is made or received, or compiled or prepared,—

(i)

for a dishonest purpose; or

(ii)

to enable or aid the commission of an offence; or

(b)

if, where the information wholly or partly consists of, or relates to, the receipts, payments, income, expenditure, or financial transactions of any specified person, it is contained in (or comprises the whole or a part of) any book, account, statement, or other record prepared or kept by the lawyer in connection with a trust account of the lawyer within the meaning of section 6 of the Lawyers and Conveyancers Act 2006.

(3)

For the purposes of this section, references to a lawyer include a firm in which the lawyer is a partner or is held out to be a partner.

43 Auditors may report suspicious activities

(1)

Despite any other enactment or any rule of law, this section applies to a person who, in the course of carrying out the duties of that person’s occupation as an auditor, has reasonable grounds to suspect, in relation to any activity, that the activity is relevant to—

(a)

the investigation or prosecution of any person for a money laundering offence; or

(b)

the enforcement of the Misuse of Drugs Act 1975; or

(c)

the enforcement of the Terrorism Suppression Act 2002; or

(d)

the enforcement of the Proceeds of Crime Act 1991 or the Criminal Proceeds (Recovery) Act 2009; or

(e)

the investigation or prosecution of an offence (within the meaning of section 243(1) of the Crimes Act 1961).

(2)

A person may report an activity referred to in subsection (1) to the Commissioner.

44 Protection of persons reporting suspicious activities

(1)

Subsection (2) applies to a person who—

(a)

discloses or supplies any information in any suspicious activity report; or

(b)

supplies any information in connection with any suspicious activity report, whether at the time the report is made or afterwards.

(2)

No civil, criminal, or disciplinary proceedings lie against a person to whom subsection (1) applies—

(a)

in respect of the disclosure or supply, or the manner of the disclosure or supply, by that person of the information referred to in that subsection; or

(b)

for any consequences that follow from the disclosure or supply of that information.

(3)

If any information is reported under section 43 to any Police employee by any person, no civil, criminal, or disciplinary proceedings lie against that person—

(a)

in respect of the disclosure or supply, or the manner of the disclosure or supply, of that information by that person; or

(b)

for any consequences that follow from the disclosure or supply of that information.

(4)

However, subsections (2) and (3) do not apply if the information was disclosed or supplied in bad faith.

(5)

Nothing in this section applies in respect of proceedings for an offence under any of sections 92 to 97.

45 Immunity from liability for disclosure of information relating to money laundering transactions

(1)

This section applies if—

(a)

a person does any act that would constitute, or that the person believes would constitute, an offence against section 243(2) or (3) of the Crimes Act 1961; and

(b)

in respect of the doing of that act, that person would have, by virtue of section 244 of the Crimes Act 1961, a defence to a charge under section 243(2) or (3) of that Act; and

(c)

that person discloses to any Police employee any information relating to a money laundering transaction (within the meaning of section 243(4) of the Crimes Act 1961), being a money laundering transaction that constitutes (in whole or in part), or is connected with or related to, the act referred to in paragraph (a); and

(d)

that information is so disclosed, in good faith, for the purpose of, or in connection with, the enforcement or intended enforcement of any enactment or provision referred to in section 244(a) of the Crimes Act 1961; and

(e)

that person is otherwise under any obligation (whether arising by virtue of any enactment or any rule of law or any other instrument) to maintain secrecy in relation to, or not to disclose, that information.

(2)

If this section applies, then, without limiting section 44 and despite the fact that the disclosure would otherwise constitute a breach of that obligation of secrecy or non-disclosure, the disclosure by that person, to that Police employee, of that information is not a breach of that obligation of secrecy or non-disclosure or (where applicable) of any enactment by which that obligation is imposed.

46 Disclosure of information relating to suspicious activity reports

(1)

This section and section 47 apply in respect of the following information:

(a)

any suspicious activity report:

(b)

any information the disclosure of which will identify, or is reasonably likely to identify, any person—

(i)

as a person who, in his or her capacity as an officer or employee of a reporting entity, has handled a transaction in respect of which a suspicious activity report was made; or

(ii)

as a person who has prepared a suspicious activity report; or

(iii)

as a person who has made a suspicious activity report:

(c)

any information that discloses, or is reasonably likely to disclose, the existence of a suspicious activity report.

(2)

A reporting entity must not disclose information to which this section relates to any person except—

(a)

a Police employee who is authorised by the Commissioner to receive the information; or

(b)

the reporting entity’s AML/CFT supervisor; or

(c)

an officer or employee of the reporting entity, for any purpose connected with the performance of that person’s duties; or

(d)

a lawyer, for the purpose of obtaining legal advice or representation in relation to the matter; or

(e)

another member of a designated business group of which the reporting entity is a member, to the extent necessary for the reporting entity to decide whether to make a suspicious activity report; or

(f)

another member of a group of reporting entities authorised by regulations made under this Act to receive that information for the purpose of detecting and preventing money laundering and terrorism financing.

(3)

A Police employee may disclose information to which this section applies only for law enforcement purposes.

(4)

An AML/CFT supervisor may disclose information to which this section applies only to the Police for law enforcement purposes.

(5)

A person to whom a function or power has been delegated under section 134 may disclose information to which this section applies only to the AML/CFT supervisor that made the delegation.

(6)

A person (person A) referred to in subsection (2)(c) to whom disclosure of any information to which that subsection applies has been made must not disclose that information except to another person of the kind referred to in that subsection for the purpose of—

(a)

the performance of person A’s duties; or

(b)

obtaining legal advice or representation in relation to the matter.

(7)

A person referred to in subsection (2)(d) to whom disclosure of any information to which that subsection applies has been made must not disclose that information except to a person of the kind referred to in that subsection for the purpose of giving legal advice or making representations in relation to the matter.

(8)

Any other person who has information to which this section applies may disclose that information only to the Police for law enforcement purposes.

47 Disclosure of information in proceedings

(1)

No person may disclose, in any judicial proceeding (within the meaning of section 108(4) of the Crimes Act 1961), any information contained in a suspicious activity report unless the Judge or, as the case requires, the person presiding at the proceeding is satisfied that the disclosure of the information is necessary in the interests of justice.

(2)

Nothing in this section prohibits the disclosure of any information for the purposes of the prosecution of any offence against section 93 or 94.

19 New section 49A inserted (Obligation to keep reports of suspicious activities)

After section 49, insert:

49A Obligation to keep reports of suspicious activities

(1)

If a reporting entity reports a suspicious activity to the Commissioner, the reporting entity must keep a copy of that report.

(2)

The reporting entity must keep a copy of the report for—

(a)

a period of at least 5 years after the report is made; or

(b)

any longer period that the AML/CFT supervisor for the reporting entity, or the Commissioner, specifies.

20 Section 51 amended (Obligation to keep other records)

(1)

In section 51(1)(c), after “the business relationship”, insert “; and”.

(2)

After section 51(1)(c), insert:

(d)

any other records prescribed by regulations made under section 153.

(3)

Replace section 51(2) with:

(2)

The records relating to risk assessment, AML/CFT programmes, and audits must be kept for a period of at least 5 years after the date on which they ceased to be used on a regular basis.

21 Section 57 amended (Minimum requirements for AML/CFT programmes)

(1)

In section 57, after “programme must”, insert “be in writing and”.

(2)

In section 57(d), replace “suspicious transactions” with “suspicious activities”.

(3)

In section 57, insert as subsection (2):

(2)

In developing an AML/CFT programme, a reporting entity must have regard to any applicable guidance material produced by AML/CFT supervisors or the Commissioner relating to AML/CFT programmes.

22 Section 59 replaced (Review and audit of risk assessment and AML/CFT programme)

Replace section 59 with:

59 Review and audit of risk assessment and AML/CFT programmes

(1)

A reporting entity (other than a high-value dealer) must review its risk assessment and AML/CFT programme to—

(a)

ensure that the risk assessment and AML/CFT programme are up to date; and

(b)

identify any deficiencies in the effectiveness of the risk assessment and the AML/CFT programme; and

(c)

make any changes to the risk assessment or AML/CFT programme identified as being necessary under paragraph (b).

(2)

A reporting entity (other than a high-value dealer) must ensure that its risk assessment and AML/CFT programme are audited every 2 years or during a different time period prescribed by regulations, or at any other time at the request of the relevant AML/CFT supervisor.

59A Audit of compliance with AML/CFT obligations

A high-value dealer must ensure that its compliance with its AML/CFT obligations under section 6(3)(d)(ii), and any regulations, is audited when the relevant AML/CFT supervisor requests.

59B Who carries out audit

(1)

An audit under section 59 or 59A must be carried out by an independent person, appointed by the reporting entity, who is appropriately qualified to conduct the audit.

(2)

A person appointed to conduct an audit is not required to be—

(a)

a chartered accountant within the meaning of section 19 of the New Zealand Institute of Chartered Accountants Act 1996; or

(b)

qualified to undertake financial audits.

(3)

A person appointed to conduct an audit must not have been involved in—

(a)

the establishment, implementation, or maintenance of the reporting entity’s AML/CFT programme (if any); or

(b)

the undertaking of the reporting entity’s risk assessment (if any).

(4)

The audit of a risk assessment under section 59 is limited to an audit of whether the reporting entity’s risk assessment fulfils the requirements in section 58(3).

(5)

A reporting entity must provide a copy of any audit to its AML/CFT supervisor on request.

23 Section 68 amended (Reports about movement of cash into or out of New Zealand)

In section 68(1)(a), replace “more than” with “equal to or above”.

24 Section 69 amended (Reports about receipt of cash from outside New Zealand)

In section 69(a), replace “more than” with “equal to or above”.

25 Section 70 amended (Reporting requirements)

(1)

In section 70(a), replace “the prescribed form” with “the appropriate prescribed form”:

(2)

Replace section 70(d) with:

(d)

be provided to a Customs officer or any other prescribed person,—

(i)

in the case of accompanied cash, at the time prescribed for the purposes of this subparagraph; and

(ii)

in the case of unaccompanied cash, at the time prescribed for the purposes of this subparagraph.

26 Cross-heading above section 92 amended

In the cross-heading above section 92, replace transaction with activity.

27 Section 92 amended (Failing to report suspicious transaction)

(1)

In the heading to section 92, replace transaction with activity.

(2)

In section 92(a), replace “a transaction” with “an activity”.

(3)

In section 92(b), replace “the transaction or the proposed transaction” with “the activity or the proposed activity”.

(4)

In section 92(c), replace “the transaction or the proposed transaction” with “the activity or the proposed activity”.

28 Section 93 amended (Providing false or misleading information in connection with suspicious transaction report)

(1)

In the heading to section 93, replace transaction with activity.

(2)

In section 93, replace “suspicious transaction” with “suspicious activity”.

29 Section 94 amended (Unlawful disclosure of suspicious transaction report)

(1)

In the heading to section 94, replace transaction with activity.

(2)

In section 94(2)(b), replace “any transaction or proposed transaction that is the subject of a suspicious transaction report” with “any activity or proposed activity that is the subject of a suspicious activity report”.

30 Section 95 amended (Failure to keep or retain adequate records relating to suspicious transaction)

(1)

In the heading to section 95, replace transaction with activity.

(2)

In section 95, replace “suspicious transaction” with “suspicious activity”.

31 Section 96 amended (Obstruction of investigation relating to suspicious transaction report)

(1)

In the heading to section 96, replace transaction with activity.

(2)

In section 96, replace “suspicious transaction” with “suspicious activity”.

32 Section 99 amended (Time limit for prosecution of offences relating to civil liability act and suspicious transaction reports)

In the heading to section 99, replace transaction with activity.

33 Section 106 amended (Failure to report cash over applicable threshold values moved into or out of New Zealand)

(1)

In the heading to section 106, replace over with equal to or above.

(2)

In section 106, replace “over” with “equal to or above”.

34 Section 107 amended (Failure to report cash over applicable threshold value received by person in New Zealand from overseas)

(1)

In the heading to section 107, replace over with equal to or above.

(2)

In section 107, replace “over” with “equal to or above”.

35 Section 117 amended (Search warrant)

In section 117(4), after “3,”, insert “4,”.

36 Section 130 amended (AML/CFT supervisors)

Replace section 130(1)(c) with:

(c)

for designated non-financial businesses or professions and high-value dealers, the Department of Internal Affairs, or another AML/CFT supervisor prescribed for the purpose, is the relevant AML/CFT supervisor:

(d)

for the New Zealand Racing Board, casinos, non-deposit-taking lenders, money changers, and other reporting entities that are not covered by paragraphs (a) and (c), the Department of Internal Affairs is the relevant AML/CFT supervisor.

37 Section 137 amended (Power to use information obtained as AML/CFT supervisor in other capacity and vice versa)

(1)

In section 137(2), after “Reserve Bank of New Zealand Act 1989”, insert “, the Insurance (Prudential Supervision) Act 2010, and the Non-bank Deposit Takers Act 2013”.

(2)

In section 137(3), after “Reserve Bank of New Zealand Act 1989”, insert “, the Insurance (Prudential Supervision) Act 2010, and the Non-bank Deposit Takers Act 2013”.

(3)

In section 137(6), after “the Gambling Act 2003”, insert “, the Racing Act 2003, and the Charities Act 2005”.

(4)

In section 137(7), after “the Gambling Act 2003”, insert “, the Racing Act 2003, and the Charities Act 2005”.

38 Section 139 replaced (Power to disclose information supplied or obtained as AML/CFT supervisor)

Replace section 139 with:

139 Power to disclose information

(1)

The Commissioner, the New Zealand Customs Service, or an AML/CFT supervisor may disclose any information supplied or obtained by it in the exercise of its powers or the performance of its functions and duties under this Act to any other government agency or to any regulator.

(2)

However, a disclosure may be made only if—

(a)

the disclosure of the information is for law enforcement purposes or regulatory purposes; and

(b)

the disclosing entity is satisfied that the recipient of the information has a proper interest in receiving the information.

(3)

If not authorised under subsections (1) and (2) or any other enactment, disclosure of any information between a government agency, a regulator, the Commissioner, the New Zealand Customs Service, an AML/CFT Supervisor, or reporting entities, or to or from any of those parties, may be made for law enforcement purposes or regulatory purposes—

(a)

in accordance with regulations made under section 139A or 153; or

(b)

in the absence of regulations, in accordance with a written agreement (that contains the matters specified in section 140A(3)) between the relevant parties.

(4)

The parties to a written agreement that involves the disclosure of personal information must,—

(a)

before entering into or amending such an agreement, consult the Privacy Commissioner; and

(b)

review the agreement if there is a material change in circumstances.

(5)

Subsection (4)(a) does not apply if an agreement is being amended and the proposed amendments are minor or technical in nature.

(6)

An agreement under subsection (3)(b) must be published on, or linked to by, at least one Internet site maintained by a party to whom the agreement applies.

(7)

This section does not apply to any information that may be disclosed or shared under an agreement specified in section 140A.

139A Regulations relating to information sharing

(1)

The Governor-General may, by Order in Council made on the recommendation of the Minister, make regulations for the purpose of section 139

(a)

specifying the type of information that may or may not be disclosed:

(b)

prescribing the conditions under which the information may be disclosed and the conditions applying to the use of that information (for example, conditions relating to storage, copying, access, and the return of information).

(2)

Before recommending the making of regulations under this section, the Minister must consult—

(a)

the agencies and regulators that may be affected by the proposed regulations; and

(b)

the Privacy Commissioner; and

(c)

any other person or body that the Minister considers may be affected by the proposed regulations.

39 Section 140 amended (Power to use and disclose information supplied or obtained under other enactments for law enforcement or regulatory purposes)

Replace section 140(2) with:

(2)

The enactments referred to in subsection (1) are—

(a)

the Charities Act 2005:

(b)

the Companies Act 1993:

(c)

the Criminal Proceeds (Recovery) Act 2009:

(d)

the Customs and Excise Act 1996:

(e)

the Financial Advisers Act 2008:

(f)

the Financial Markets Authority Act 2011:

(g)

the Financial Markets Conduct Act 2013:

(h)

the Financial Service Providers (Registration and Dispute Resolution) Act 2008:

(i)

the Financial Transactions Reporting Act 1996:

(j)

the Gambling Act 2003:

(k)

the Goods and Services Tax Act 1985:

(l)

the Income Tax Act 2007:

(m)

the Insurance (Prudential Supervision) Act 2010:

(n)

the Lawyers and Conveyancers Act 2006:

(o)

the New Zealand Institute of Chartered Accountants Act 1996:

(p)

the Non-bank Deposit Takers Act 2013:

(q)

the Proceeds of Crime Act 1991:

(r)

the Racing Act 2003:

(s)

the Real Estate Agents Act 2008:

(t)

the Reserve Bank of New Zealand Act 1989:

(u)

the Tax Administration Act 1994:

(v)

the Terrorism Suppression Act 2002:

(w)

any other Act prescribed by regulations.

40 New section 140A inserted (Data access for law enforcement purposes)

After section 140, insert:

140A Data access for law enforcement purposes

(1)

The purpose of this section is to facilitate access to data holdings between government agencies for law enforcement purposes.

(2)

For the purposes of this section, the chief executive of a government agency may, in accordance with a written agreement,—

(a)

disclose any relevant information to the chief executive of another government agency; or

(b)

allow the chief executive of another government agency access to 1 or more databases; or

(c)

disclose any relevant information to an agency in another country that is authorised to receive the information in accordance with regulations.

(3)

The agreement must specify—

(a)

the information that may be disclosed:

(b)

the databases and type of information that may be accessed:

(c)

how the information may be used to facilitate law enforcement and regulatory purposes:

(d)

the positions or designations of the persons who may handle the information or access the databases:

(e)

the records to be kept in relation to each occasion on which the information is handled or the databases accessed:

(f)

the safeguards that are to apply for protecting personal information or commercially sensitive information that is disclosed:

(g)

the requirements relating to storage and disposal of information that may be disclosed:

(h)

the circumstances (if any) and manner in which the information may be disclosed to another government agency:

(i)

the requirements for reviewing the agreement.

(4)

Before entering into or amending the agreement, the chief executive must consult the Privacy Commissioner.

(5)

Subsection (4) does not apply if the chief executive considers that the proposed amendments to the agreement are minor.

(6)

An agreement under this section must be published on an Internet site maintained by or on behalf of the relevant government agencies.

41 Section 142 amended (Financial intelligence functions of Commissioner)

(1)

Replace section 142(a) with:

(a)

receive suspicious activity reports:

(ab)

carry out, to the extent permitted under section 139 or any other enactment, the following tasks:

(i)

refer financial intelligence to AML/CFT supervisors to assist those supervisors in the supervisory functions:

(ii)

receive, analyse, and refer financial intelligence to and from government agencies and regulators:

(iii)

co-operate and share information and advice related to money laundering and terrorism financing with AML/CFT supervisors, government agencies, and regulators:

(iv)

share information and advice related to money laundering, terrorism financing, and predicate offending with reporting entities:

(2)

Replace section 142(d) with:

(d)

enforce requirements to provide suspicious activity reports:

(3)

In section 142(e), replace “suspicious transaction” with “suspicious activity”.

(4)

In section 142(f), replace “suspicious transaction” with “suspicious activity”.

(5)

In section 142(g), replace “suspicious transaction reports” with “financial intelligence reports”.

(6)

In section 142(h), replace “suspicious transaction” with “suspicious activity” in each place.

42 Section 143 replaced (Powers relating to financial intelligence functions of Commissioner)

Replace section 143 with:

143 Powers relating to financial intelligence functions of Commissioner

(1)

The Commissioner may order production of or access to all records, documents, and information from any reporting entity that are relevant to analysing the financial information and intelligence received by the Commissioner, with or without a court order.

(2)

The Commissioner may, to the extent permitted under section 139 or any other enactment,—

(a)

share suspicious activity reports, cash reports, suspicious property reports, and other financial information and intelligence with government agencies for law enforcement or regulatory purposes:

(b)

co-operate and share financial intelligence with reporting entities, in accordance with the functions of the Commissioner in section 142.

43 Section 144 amended (Delegation of powers of Commissioner)

In section 144(1), after “inspector”, insert “or an equally senior Police employee”.

44 Section 145 amended (Guidelines relating to reporting of suspicious transactions)

(1)

In the heading to section 145, replace transactions with activities.

(2)

In section 145(1)(a),—

(a)

replace “a transaction” with “an activity”:

(b)

replace “the transaction” with “the activity”.

(3)

In section 145(1)(b), replace “suspicious transaction report relating to such a transaction” with “suspicious activity report relating to such an activity”.

(4)

In section 145(2), replace “transaction” with “activity”.

(5)

In section 145(3), replace “transaction” with “activity”.

(6)

In section 145(4),—

(a)

replace “transaction” with “activity”:

(b)

replace “transactions” with “activities”.

45 Section 146 amended (Consultation on proposed guidelines)

(1)

In section 146(1), replace “transaction” with “activity”.

(2)

In section 146(2), replace “transaction” with “activity”.

(3)

In section 146(3), replace “transaction” with “activity”.

46 Section 147 amended (Availability of guidelines)

In section 147, replace “transaction” with “activity”.

47 Section 148 amended (Review of guidelines)

(1)

In section 148(1), replace “transaction” with “activity”.

(2)

In section 148(2), replace “transaction” with “activity”.

48 Section 153 amended (Regulations)

(1)

Replace section 153(d) with:

(d)

prescribing amounts or thresholds that are required to be prescribed for the purposes of this Act (and 1 or more amounts or thresholds may be prescribed for the purposes of different provisions of this Act):

(2)

After section 153(i), insert:

(ia)

authorising and regulating the sharing of information between reporting entities in different groups:

(ib)

authorising and regulating the sharing of information between the Commissioner, the New Zealand Customs Service, AML/CFT supervisors, and international authorities:

49 Section 154 amended (Regulations relating to application of Act)

(1)

After section 154(1)(a), insert:

(ab)

exempting or providing for the exemption of any financial activity or class of financial activities described in the definition of financial institution in section 5 from all or any of the provisions of this Act:

(ac)

declaring an entity or a class of entities to be an approved entity or approved class of entities for the purposes of section 33(3A):

(2)

In section 154(2)(a), delete “and the Financial Transactions Reporting Act 1996”.

(3)

Repeal section 154(3)(c) and (5).

50 New section 156A and cross-heading inserted

After section 156, insert:

Review provision

156A Review of operation of Act

(1)

The Minister of Justice must, not later than 1 July 2021, refer to the Ministry of Justice for consideration the following matters:

(a)

the operation of the provisions of this Act since the commencement of this section; and

(b)

whether any amendments to this Act are necessary or desirable.

(2)

The Ministry must report on those matters to the Minister of Justice within 1 year of the date on which the reference occurs.

(3)

The Minister of Justice must present a copy of the report provided under this section to the House of Representatives as soon as practicable after receiving it.

51 Sections 157 to 159 and cross-heading above section 157 replaced

Replace sections 157 to 159 and the cross-heading above section 157 with:

Exemptions

157 Chief executive may grant exemptions

(1)

The chief executive may, in the prescribed form, exempt either of the following from the requirements of all or any of the provisions of this Act:

(a)

a reporting entity or class of reporting entities:

(b)

a transaction or class of transactions.

(2)

The chief executive may grant the exemption—

(a)

unconditionally; or

(b)

subject to any conditions that the chief executive thinks fit.

(3)

Before deciding to grant an exemption and whether to attach any conditions to the exemption, the chief executive must have regard to the following:

(a)

the intent and purpose of this Act and any regulations:

(b)

the risk of money laundering and the financing of terrorism associated with the reporting entity, including, where appropriate, the products and services offered by the reporting entity and the circumstances in which the products and services are provided:

(c)

the effects on prevention, detection, investigation, and prosecution of offences:

(d)

the level of regulatory burden to which the reporting entity would be subjected in the absence of an exemption:

(e)

whether the exemption would create an unfair advantage for the reporting entity or disadvantage third party reporting entities:

(f)

the overall effect that the exemption would have on the integrity of, and compliance with, the AML/CFT regulatory regime.

(4)

An exemption under this section is a disallowable instrument for the purposes of the Legislation Act 2012 and must be presented to the House of Representatives under section 41 of that Act.

(5)

A class exemption under this section must be published under section 6 of the Legislation Act 2012 and, for that purpose, class exemption

(a)

means an exemption of general application that applies to a class of reporting entities or transactions; but

(b)

does not include an exemption granted in relation to a particular reporting entity or transaction.

(6)

An exemption under this section that is not a class exemption under subsection (5) must, as soon as practicable after it is granted, be—

(a)

published on an Internet site maintained by or on behalf of the chief executive; and

(b)

notified in the Gazette; and

(c)

made available in printed form for purchase on request by members of the public.

(7)

A notification in the Gazette for the purpose of subsection (6)(b) does not have to incorporate the exemption.

158 Chief executive must consult before granting exemption

Before granting an exemption under section 157, the chief executive must consult—

(a)

the AML/CFT supervisors; and

(b)

any other persons that the chief executive considers appropriate having regard to the matters listed in section 157(3).

159 Requirements relating to exemptions

(1)

The exemption must include an explanation of the reason for granting the exemption.

(2)

The exemption—

(a)

must be granted for a period specified by the chief executive, but that period must not be more than 5 years; and

(b)

may, at any time, be varied or revoked by the chief executive.

52 Sections 162 and 163 repealed

Repeal sections 162 and 163.

Part 2 Amendments to other enactments and repeal

53 Amendments to Anti-Money Laundering and Countering Financing of Terrorism (Definitions) Regulations 2011

(1)

This section amends the Anti-Money Laundering and Countering Financing of Terrorism (Definitions) Regulations 2011.

(2)

Revoke regulations 8 and 9.

(3)

Replace regulation 20(1) with:

(1)

A person is not a reporting entity, for the purposes of the Act, by reason only that the person carries out a relevant service in the ordinary course of the person’s business as an executor, an 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.

54 Amendments to Anti-Money Laundering and Countering Financing of Terrorism (Requirements and Compliance) Regulations 2011

(1)

This section amends the Anti-Money Laundering and Countering Financing of Terrorism (Requirements and Compliance) Regulations 2011.

(2)

Revoke regulations 4 to 7 and the cross-headings above regulations 4, 5, and 5A.

55 Amendments to Financial Transactions Reporting Act 1996

(1)

This section amends the Financial Transactions Reporting Act 1996.

(2)

Repeal section 3(1)(g).

(3)

Repeal section 3(1)(j).

(4)

Repeal section 3(1)(l) and (la).

(5)

Repeal section 3(1)(m).

56 Financial Transactions Reporting Act 1996 repealed

The Financial Transactions Reporting Act 1996 (1996 No 9) is repealed.