Clean-up of money laundering and financial terrorism battle after businesses called for reform

Justice Minister Kiri Allan said existing rules about money-laundering weren't working for many businesses, so changes would be made immediately. Photo / File

The Government says it will soon be easier for small businesses and consumers to comply with laws tackling money laundering and financial terrorism.

Changes will relax the requirement on relevant businesses to verify the address of most customers.

And registered charities providing small loans will be exempt from anti-money laundering and counter-terror rules.

“Money laundering can threaten our international reputation. Because New Zealand is one of the least corrupt countries in the world, it also makes us more attractive for international money launderers,” Justice Minister Kiri Allan said today.

She said the Financial Action Task Force (FATF) found New Zealand was highly effective at pursuing money laundering globally, but had room for improvement.

The FATF is an inter-governmental body aimed at combating money laundering and terrorist financing.

Allan said the Government was introducing changes aimed at improving New Zealand’s strategy in these areas after the Anti-Money Laundering and Counter Financing of Terrorism Act (AML-CFT) was reviewed.

That review was in turn part of Government responses to the 2019 Christchurch mosque attacks.

Allan said the AML-CFT act aimed to disrupt serious and organised crime and terrorism.

It did so by imposing obligations on businesses providing specific financial and non-financial services.

These businesses in the AML-CFT context were known as reporting entities. But feedback showed the current laws weren’t working for them, Allan said.

“Broadly, these obligations require reporting entities to assess their money laundering and terrorism financing risks, identify and know their customers, report suspicious activities and transactions, and maintain various records.”

The Justice Minister said after listening to businesses and agencies, the Government was taking action to improve the regime’s effectiveness.

Apart from the address verification and charity loan changes, business will get an extended timeframe to submit prescribed transactions reports.

Prescribed transactions are international wire transfers and physical cash transactions over certain amounts.

According to the Ministry of Justice, businesses covered by the AML-CFT Act must report these transactions to the Police Financial Intelligence Unit.

Allan said other upcoming changes would reduce compliance costs, and improve adherence to international money laundering standards.