Anti Money Laundering
By Frank Lieshout | 6 min read
Today, I’ve got 3 little letters on my mind.
To some, they’re ‘dirty’ letters!
Get your head out of the gutter. I’m referring to THESE 3 letters:
A, M, L
That’s right AML – Anti Money Laundering and the regulations that come with it. (If you don’t know what money laundering is, watch the series ‘Ozark’ on Netflix!)
A lot of people don’t want to know about complying with AML regulations.
‘What a pain having to deal with AML!’, they say.
Here are some of the objections we hear to having an AML policy:
- It’s a waste of time!
- It doesn’t apply to me.
- Who cares?!?
- It wouldn’t affect any of MY clients.
- It’s a waste of money to be compliant.
- I could be doing something (ANYTHING!) else.
- It’s just not a priority.
- There’s no consequence for NOT doing it, eh?
- I see no benefit from having to PAY for a bloody audit!
Over the next series of articles, we will look at these attitudes and ‘bust’ them as myths. Let’s start with: There’s no consequence for not doing it, eh?
There are in fact very serious consequences.
It is a serious crime to let criminals launder money or terrorists find funding. It will increase the risk of New Zealand being a place of illegal activity and therefore a less safe place to live. Who wants that?
According to New Zealand Police’s Financial Intelligence Unit, every year an estimated $1.35 billion from the proceeds of crime is laundered through New Zealand businesses causing harm to communities and damaging the reputation of New Zealand businesses.
The consequences for failing to comply with various obligations under the AML/CFT Act 2009 (the Act) not only affect you personally but also your firm as it is the Reporting Entity. Under the Act, you or your firm may face penalties for any non-compliance.
These range from a formal warning or steps to remedy, to serious criminal proceedings and civil penalties.
A warning may not seem like much of a penalty, but if you are given a warning, that warning can be made public in some circumstances.
The criminal proceedings and civil penalties come into play if you seriously breach the law. For breaches of civil offences, individuals can be fined up to $200,000 and firms can be fined up to $2 million.
Examples of breaches include (but are not limited to) failure to conduct customer due diligence (CDD) as prescribed, failure to establish, implement, or maintain an AML / CFT Programme, failure to keep records, failure to report suspicious activities, etc
Repeated failure to comply with AML/CFT obligations, providing false or misleading information and other criminal offences can result in fines up to $5 million for firms, while individuals can be fined up to $300,000 or sentenced to up to 2 years in prison.
It should be noted that the offences and penalties mentioned are not an exhaustive list under the Act. Refer to Part 3, ‘Enforcement’, of the Act for complete information relating to offences and penalties.
These consequences are not just threats in legislation for non- compliance with AML/CFT. Last year there was a case where a firm was fined $4 million for repeated non-compliance. Could YOUR firm withstand a $4 million penalty?
The Department of Internal Affairs (DIA) said in relation to the case: ‘When there are serious breaches and systemic non-compliance, we are willing to take strong regulatory action. It is important that we take regulatory action when there is a risk that criminals are exploiting New Zealand businesses to launder the proceeds of crime’.
Non-compliance is not worth the risk to you/your firm’s reputation, let alone the financial penalties and possible prison term. As a result, ensuring you are compliant must be a top priority.
As part of your obligations under the Act, it doesn’t stop once you have undertaken your Risk Assessment and put in place your AML / CFT Programme. From there, you are required to get it audited once every two years (or as requested by the DIA).
So, don’t think of AML as a dirty 3-letter word. The legislation is there to protect the entire NZ business community from being taken advantage of by criminals.
If you haven’t already had your AML Audit completed, get in touch with us.
