The new AML/CFT requirements and how they affect you

The new AML/CFT requirements and how they affect you

You’re just trying to get on with your business, and well… life, when one day, after years of not having to, your trusted accountant asks you to provide things like proof of your identity and residential address, not just for you, but for your trustees, beneficiaries and even people acting on your behalf. Especially if you’ve been our client for a long time, this may seem onerous, unnecessary and kind of ‘out-of-the-blue’.

So, if, on receiving these requests, your first thought was not one of unbridled joy – don’t worry, you are not alone! Let’s start with two pieces of good news. One is that we’re here to make this as quick and easy as it can be, and two, essentially, these ID requests and AML requirements will be the new ‘normal’ going forward, so the sooner you know what documentation to use to meet AML requirements, the better off you will be. As you may know, banks and Lawyers have already had to conform to the new requirements required by the Anti Money Laundering and Countering Financing of Terrorism Act (whew – try saying that 3 times fast. We’ll use AML/CFT from here on in)! Further, it’s going to hit the Real Estate Industry in January 2019 too. So, whether we like it or not, these AML/CFT requirements are here to stay.

You should also know that due to the huge combination of transactions, parties and entities that make up even common accounting activities, what activities constitute ‘captured activities’ is still being defined by DIA. This means that the goalposts are still moving, but generally speaking they are moving to encompass more, not less, entities and accounting activities.

If you want to know why these more stringent verification processes etc are being mandated, read below; otherwise you can skip on down to ‘How does this affect me?’

Why me? This is the Government’s approach, and represents a broad-brush policy, not targeting any particular business or industry. The AML/CFT strategy is designed to make it harder for Terrorists to finance themselves and to stop money laundering. It is estimated that over $1 billion every year comes from drug dealing and fraud, money that is being laundered through NZ businesses. So, following on from more stringent oversight of banking and legal transactions, the Government has now turned its attention to NZ businesses and their financial activity. As such, from 1 October 2018 AML/CFT laws have been applied to us in the rest of the business/accounting world.

‘How does this affect me’

Suffice to say that there is a lot of extra work required by all diligent accountants to meet the obligations of the AML/CFT laws. This means things like setting up a new business and trust takes substantially longer. You, our valued client, can expedite the process by having the appropriate ID and address verification etc ready to hand and by allowing extra time than you used to in your planning, for us to get things done for you.

Odds are good that the next time we need to complete a job for you, (even if you’re an existing client) we’ll need you to provide the following before we can complete your accounts/work:

  • Identity – ideally a Passport or NZ Firearms Licence, OR a NZ Drivers Licence plus a Credit Card embossed with your name or a recent Bank Statement OR a Birth Certificate and a Drivers Licence.
  • Certified Proof of Address – This needs to be less than 3 months old and can be a bank statement, IRD, Rates/Utilities invoice etc. These must be in your name and posted to your residential address. If original documents are not provided, we can accept copies that have been certified by a JP, MP, Chartered Accountant, etc (see us for a full list of options).
  • Source of funds may also need to be verified, particularly in the case of Trusts.

Identity and address are minimum requirements for due diligence (yep, there well may be more, so please talk to us, we’ll talk you through how it applies to you).

Important Note: This documentation will need to be provided for you personally, as well as any trustees, other company directors, persons acting on behalf of you or your entity and beneficiaries.

Can I avoid this?

Basically, this will be the new ‘normal’, so any accounting firm worth their salt will be putting processes in place to manage and adhere to AML/CFT requirements. Non-compliance can carry substantial fines and result in Trust Accounts being shut down (amongst other things), so it’s not something any responsible accountant is going to take lightly.

How is Sumpter Baughen Chartered Accountants Ltd going to make this easier?

Without professional guidance from someone familiar with the laws and how they apply to your accounting activities, wading through the requirements to get the paperwork right can indeed be pull-your-hair-out-maddening, onerous and extremely time-consuming.

At Sumpters we’re developing systems and processes including info sheets for clients to approach this systematically. Our Compliance Officer Andrea and the rest of our Client Managers are implementing these processes to streamline what is required from you, so we can all get through it as quickly as possible, and get on with doing what we love and are good at.

The best thing you can do is read any correspondence from us thoroughly. We’ll be in touch with you too as the processes and requirements that relate to you are finalised and action is required. Our goal is ‘no-surprises, no confusion’ and getting you back to life/business-as-usual as soon as possible!

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Written by Jaki George-Tunnicliffe © property of Sumpter Baughen Chartered Accountants Limited, 2018.

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