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Two banks and an insurer are under investigation by the Reserve Bank over compliance issues and one of the banks is facing enforcement action.
The investigations were revealed as part of a new section of its six monthly Financial Stability Report on regulatory compliance and enforcement released Wednesday morning.
In it the RBNZ states that it is investigating ongoing non-compliance by an unnamed insurer with its regulatory reporting, disclosure and notification requirements.
It is also looking into two banks' compliance with the Anti-Money Laundering and Countering-Financing of Terrorism Act one of which is TSB Bank.
A Reserve Bank spokesman said it issued a formal warning to TSB in November 2016 over failures by the bank to review and update its risk assessment under section 59 of the AML/CFT Act 2009.
"Following an on-site inspection in 2019, the Reserve Bank is currently finalising enforcement action against TSB for alleged compliance failures relating to its AML/CFT programme and risk assessment required under the AML/CFT Act 2009."
The spokesman said the potential action related to alleged compliance failures under the AML/CFT Act, and did not imply any concerns relating to the soundness of TSB.
"We will make a further statement on this matter once our enforcement action has been determined."
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Advertise with NZME.In a statement TSB Chairman John Kelly said the issues related to obligations regarding its AML/CFT Risk Assessment and Compliance Programme – its internal policies, procedures and controls.
"I want to reassure customers that they have not been put at risk. Importantly, it is not alleged that any money laundering has occurred through the bank.
"TSB acknowledges that it has needed to address some areas of its AML/CFT compliance, and a significant programme of work has been in place for some time to achieve this."
Kelly said the bank was committed to co-operating with the Reserve Bank to ensure it made improvements to address these issues, many of which had been self-identified by TSB.
"There has been an intense period of organisational change at TSB since July 2018 and the board is pleased with the significant progress that has been made on proactively improving our risk maturity and compliance."
TSB was involved in constructive discussions with the Reserve and as a result was not able to provide any more details at this stage.
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TSB CEO Donna Cooper, who took the helm in July 2018, said the bank was firmly focused on improving its regulatory compliance programme, while continuing to ensure TSB delivers excellent customer care.
She said TSB was increasing its investment in resources and expertise to advance the bank's maturity with reporting, control testing and assurance.
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Advertise with NZME."This programme is a critical priority for us," Cooper said.
The RBNZ spokesman said it had named TSB in its report because the bank had disclosed the issues and they were publicly known.
"The other matters are at the investigation stage and may or may not result in a regulatory response. The bank will consider publishing further information when an appropriate regulatory response is determined."
The report also reveals the Reserve Bank is still working with the ANZ, the country's largest bank, to address areas of non-compliance.
In June 2019 the RBNZ requested two reports from ANZ Bank NZ under section 95 of the Reserve Bank Act.
This followed the identification of issues with ANZ's compliance with capital adequacy requirements, and its director attestation and assurance framework.
ANZ engaged Deloitte to prepare the reports the first of which was released in December 2019.
As a result of the first report the Reserve Bank issued a further section 95 notice, requiring ANZ to engage an external party to confirm before the end of 2021 that it had implemented all the recommendations set out in the December 2019 report.
The second report was released in April and found there had been insufficient rigour in ANZ's processes when it came to compliance with the capital adequacy requirements which led to a failure to identify the issues.