Anti-Money Laundering and Countering Financing of Terrorism Act 2009
New regulations relating to Verification of a Client’s Identity under the Anti Money Laundering and Countering Financing of Terrorism Act 2009
What is the purpose of this requirement?
As from the 1st of July 2018 all lawyers and law firms in NZ are required by law to verify the identity of clients (specific reference to new clients) and be satisfied of the authenticity of any transaction before entering into professional engagement.
The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 also referred to as the AML/CFT Law makes it compulsory on all New Zealand lawyers to follow these new regulations. This law has been brought in by New Zealand to give force to its International Commitments to counter the impact that criminal activity has on people and countries all over the world.
Apart from verifying a client’s identity lawyers are now legally required to adopt various other procedures to help prevent money laundering and terrorist financing. These procedures to an extent help Police bring financial fraudsters and criminals to justice. Lawyers and law firms are required to adopt measures because finances tainted with illegality could go through law firms for illegal purposes with the “illegality” masked in perfect legality.
Lawyers and law firms in NZ are now required to assess the possible risks of transactions and the credibility of parties to transactions as money launderers and people who finance terrorism could be coming in as everyday clients for a perfectly legal looking transaction. Therefore, lawyers are now legally required to identify potentially suspicious activity and potentially suspicious individuals. To make that assessment, lawyers must obtain and verify information from all new clients, and in some instances from existing clients, about a range of things. This is part of what the AML/CFT law identifies as “Customer Due Diligence” (CDD).
What involves Customer Due Diligence?
All lawyers and law firms in NZ are required to carry out background checks on all new clients and sometimes even on existing clients prior to providing any work. Lawyers are now required to adopt prescribed procedures by the Department of Internal Affairs to make sure the information obtained from clients is authenticated. Therefore, to fulfil our obligations under the law we need to ask clients for documents through which we are able to verify the authenticity of the client and the transaction they seek to get done through us.
From now on we would need to confirm your details such as your name, date of birth and address. For this purpose, the best form of identification will be:
• New Zealand or overseas passport
• NZ Driver’s Licence and birth certificate
• Documents proving your address such as a bank statement or rates statement dated within the last three months.
Work involving a company/business or trust
In the event of any work you require done through us having anything to do with any company or trust, then we will have to verify particulars about such company or trust. This would include verifying details of all directors and shareholders of that company. If it’s a trust, then details of all the trustees and beneficiaries will be required.
Depending on the nature of the transaction, specially if it involves international fund transfers NZ$1000 or more or domestic cash NZ$10,000 or more or companies or businesses in a country other than New Zealand, we very likely will need to authenticate information of those companies and the source of funds. We will need to authenticate particulars of the nature and purpose of the proposed work you are seeking to get done through us and you might be required to provide information for that purpose so that we fulfil our obligations under the new rules.
What if any information required is not available?
In the event of any information required to proceed with the work, not being available or unknown to the client or if the client is reluctant to provide any information, in all likelihood we will have to decline acting for you.
For any further clarifications in this regard please contact us or click on