New Zealand's banking sector has spent roughly $90 million getting ready for a new anti-money laundering and terrorism financing law which kicks in at the end of next month.
The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT) places greater demands on banks to detect and deter money laundering and terrorism financing.
Money laundering is a method used by criminals to clean up 'dirty money' - cash obtained from illegal origins - to make it appear legitimate. Financers of terrorism use similar techniques.
Under the law, all banks in New Zealand will have to do more to confirm a customer's identity and, in some cases, account activity.
Kirk Hope, chief executive of the New Zealand Banker's Association, said banks were taking the new obligations very seriously and had spent an estimated $70 to $90 million developing and establishing systems to comply with the law.
"This has been a significant project for banks. The $70-$90 million is the estimated implementation cost for the whole industry - this is a conservative estimate."
Banks had been busy developing and establishing IT systems and dedicated teams to cope with the new reporting requirements, Hope said.
Product terms and conditions had needed to be reviewed to ensure consistency with the new requirements and staff had needed training around the law.
Hope said the $70-$90 million figure did not include the ongoing costs of maintaining the new systems and teams.
"Ongoing costs per annum are estimated to be 10 per cent of the implementation costs," he said.
Hope said everyday customers should expect to notice some changes as a result of the law.
"The new law means banks will be having more conversations with customers, not just when they are suspicious, but generally to better understand the customer and their financial activity."
Customers should not take this the wrong way as banks were just doing what they needed to manage risks, he said.
"It's important to bear in mind the bigger picture here. This is about New Zealand's international reputation and fighting very serious crime. We all have a role to play in this."
Three supervisors - the FMA, Department of Internal Affairs, and Reserve Bank - are overseeing implementation of the new law, which affect an estimated 3000 financial institutions and casinos in New Zealand.