The Department of Internal Affairs has issued a public formal warning to Equity Trust International, an Auckland-based company, for failing to comply with anti-money laundering rules.
Equity Trust provides trust and company services to clients based overseas, DIA said. It's the second formal warning to a company made public by the department, which has issued 21 non-public formal warnings since the Anti-Money Laundering and Countering Financing of Terrorism Act (AML/CFT Act) came into force in June 2013.
An on-site inspection in April this year showed the company "had failed to establish, implement and maintain an adequate AML/CFT programme," DIA said in a statement. "In particular Equity had failed to conduct customer due diligence as required, failed to adequately monitor accounts and transactions, and failed to keep adequate records in accordance with the AML/CFT Act."
The department said it required Equity Trust to take immediate action in areas of non-compliance, and "will continue to monitor Equity and consider further enforcement action if it engages in conduct that does not comply with the act."
DIA said the decision to publish the formal warning naming Equity Trust was taken because of the seriousness of the compliance issues, which it described as ongoing and extensive.
"It sends a strong message to this sector and others about how the department responds to serious non-compliance," it said, adding that civil penalties for non-compliance could be up to $200,000 for an individual, or $2 million for a body corporate, while the criminal penalties are imprisonment for up to two years or a fine of up to $300,000 for individuals and $5m for a body corporate. DIA is currently seeking financial penalties against two reporting entities in the High Court, it said.