Anti-Money Laundering and Countering Financing of Terrorism rules apply to lawyers

From 1 July 2018 all New Zealand lawyers have had to comply with the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.

The AML/CFT Act seeks to identify and counter illegal movements of funds through lawyers’ trust accounts and otherwise illegal behaviour. It also requires us to report certain trust account transactions and any suspicious activities to the relevant authorities. The New Zealand Police have issued a guidance note on suspicious activity reporting. Please note that we are not able by law to tell you if we have filed, or propose to file, a suspicious activity report.

More generally, this means we will be required to conduct detailed Know Your Customer due diligence on new and existing clients where we are handling client funds or engaged in various types of projects (e.g. capital raising, company and trust structuring, M&A and business sales and purchases and property conveyancing). We must do this before we can start acting on the particular project. In those circumstances, we will need to collect details and keep records of at least the following, for individuals and for business or trustee owners and controllers:

  • The exact nature and purpose of the work we undertake;
  • Personal information such as a copy of an official identification document (e.g. a passport or drivers licence) that we have physically seen, full name, country of residence, date of birth, physical address, bank account(s) and tax identification numbers (whether issued by the IR here in New Zealand or by tax authorities overseas);
  • A copy of a utility bill, bank statement or other similar piece of correspondence that we have physically seen, which shows a full personal residential address;
  • Confirmation that you are not a "politically exposed person". A PEP is a person who, or is related to someone who, is or has been in a position of authority overseas (e.g. politicians, judiciary, military officers). We will conduct our own checks on this but if you know this applies, please let us know;
  • Other information about you and your business or trust including any associated persons such as directors, shareholders, trustees, beneficiaries, lenders, and those who ultimately control the business or trust and/or provide the funds that are being used; and
  • The sources of wealth and/or funds proposed to be used for any transaction, in certain circumstances.

We will need to check and update this information as necessary for each transaction and on an ongoing basis if there are ownership or structural changes or changes in the manner in which a transaction is to be conducted

AML/CFT rules are very strict, so please do not be offended if we cannot act or proceed with a transaction until we have received the above information appropriately verified or certified by a person acceptable to the authorities.

Verification or certification can take some time where you are unable to come in to see us or where we need to verify source of funds or other details, especially if this has to be done overseas. Please do not leave this until the last minute as lack of this material may interfere with the progression of the transaction and even mean that a settlement cannot proceed. We will not be liable for any such delay. This includes situations where it is decided later to use a different entity in a transaction (e.g. a trust as a nominated purchaser of a property). Any such changes and resulting AML due diligence must be actioned at least 10 working days out from settlement.

The above processes are in addition to any conflict, credit and other checks before agreeing to act for a new client.

Image courtesy of AMISOM Public Information

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