Government to make it easier for parents to open bank accounts for children

Parents will soon be able to open a bank account for their child with just a birth certificate, thanks to reforms to anti-money laundering regulations.

Acting Prime Minister David Seymour announced the changes with Associate Justice Minister Nicole McKee on Monday afternoon.

New Zealand has relatively strict anti-money laundering laws, which were mostly introduced during the John Key government.

They were designed to stop organised criminal and terror groups from using New Zealand to launder money. However, the rules have copped criticism for being excessively strict when it comes to fulfilling easy tasks.

McKee said that under the current rules, “a parent who wants to open an account for their eight-year-old child needs to gather and verify a long list of information, including their child’s address, date of birth, name, and their own authority to act on their child’s behalf.

“The Act also requires banks to obtain the nature and purpose of the business relationship, evaluate whether further due diligence is required, and monitoring the child’s transactions on an ongoing basis,” she said.

Under the new rules, “banks will be allowed to apply a simplified processes when risk is low”, McKee said.

“This means that if a bank puts measures in place to make a child’s bank account low-risk (e.g. by setting appropriate transaction limits) all that could be required is a birth certificate to confirm the child’s name and date of birth, and prove the relationship to the parent,” she said.

The bank can also skip questions about the “nature and purpose” of the account, and reduce or forego ongoing monitoring of a child’s banking activity, until the account’s settings are changed, for example the removal of transaction limits when a child turns 18.

The announcement was made during what is usually the Prime Minister’s post-Cabinet press conference.

Prime Minister Christopher Luxon is away and there was no Cabinet meeting on Monday as is usually the case in the second week of a Parliamentary recess, but Seymour held a press conference anyway.