26.11.2021

COVID-19 AML/CFT Guidance and Annual Report Extension

In a recent statement by the Financial Markets Authority, the Department of Internal Affairs (DIA) and the Reserve Bank of New Zealand (together, the Supervisors), it was agreed that the submission date for reporting entities to submit their annual anti-money laundering and countering financing of terrorism (AML/CFT) reports by 31 August 2021 should be extended.  The new deadline is 30 September 2021.  In their statement, the Supervisors also provided a reminder that the “Guidance: Complying with AML/CFT verification requirements during COVID-19 Alert Levels” (COVID-19 Verification Guidance), issued in March 2020, remains applicable.

Annual AML/CFT Reporting

Each reporting entity under the AML/CFT Act 2009 (Act) is required to prepare an annual report on its risk assessment and AML/CFT programme, and provide that report to its respective Supervisor.  As New Zealand is in COVID-19 Alert Level 4 again, the Supervisors have acknowledged that the Alert Level restrictions may result in some reporting entities being unable to access information required to complete their Annual AML/CFT Report.  Therefore, they have agreed to extend the submission deadline, for this year, from 31 August 2021 to 30 September 2021.

As there are serious consequences for failing to comply with the Act, this will be of great relief for those reporting entities that have yet to submit their annual reports.

COVID-19 Verification Guidance 

While subject to COVID-19 Alert Levels 3 and 4, reporting entities are required to change how they operate their businesses.  For example, at Alert Level 4, only reporting entities that provide essential services can continue to operate at their premises and at Alert Level 3, reporting entities generally cannot allow customers or clients to enter the premises.  Therefore, under these Alert Levels, verification policies that reporting entities may typically use, such as face-to-face verification, may be unavailable. 

As a response to these challenges, the Supervisors have provided a reminder that their COVID-19 Verification Guidance, issued for the first COVID-19 lockdown, remains applicable for reporting entities in the current climate.  The COVID-19 Verification Guidance does not introduce new verification exemptions or alternatives, but rather highlights existing methods that may assist reporting entities with AML/CFT compliance under COVID-19 Alert Level restrictions.  These include:

Delayed Verification 

Under the Act, reporting entities may delay identity verification for new business relationships but delay the verification component of customer due diligence (CDD) until later, subject to the following conditions:

  • it is essential not to interrupt normal business practice;
  • money laundering and financing of terrorism risks are effectively managed through specific procedures; and
  • verification of identity is completed as soon as is practicable once the business relationship has been established.

Remote Verification

Under the Amended Identity Verification Code of Practice 2013 (IVCOP), reporting entities may use electronic verification options with a linking mechanism or additional measures to ensure the person being dealt with online is the genuine holder of the identity they claim to be.

Exception Handling Provisions

Under IVCOP, reporting entities are required to have exception handling provisions for circumstances where a customer is unable to provide their original identity documents.  The COVID-19 Verification Guidance provides that with COVID-19 Alert Levels in place, this is a time when exception handling measures would be suitable.  

For Ongoing Due Diligence and Account Monitoring

Under the Act, for ongoing CDD and account monitoring requirements, reporting entities following the prescribed risk-based approach may elect to not sight certain documents in certain circumstances or may accept scanned copies of documents as an interim measure.

Conclusion 

With the increased restrictions of the higher Alert Levels, reporting entities will again have to rely on other methods for identity verification.  The consequences of non-compliance are severe, so reporting entities must proceed with further caution in these times.  Even though we are in an unusual environment under COVID-19 Alert Levels, the Supervisors still expect the AML/CFT regime to be complied with as it would under any other circumstances.

If you have any questions about the AML/CFT Regime or how it may apply to your reporting entity, please get in touch with Sarah Gibbs, Christine Leung or the Business Advice team.

 

Disclaimer:  The information contained in this article is current at the date of publishing and is of a general nature.  It should be used as a guide only and not as a substitute for obtaining legal advice.  Specific legal advice should be sought where required.

 

Do you need expert legal advice?
Contact the expert team at Hesketh Henry.
Kerry
Media contact - Kerry Browne
Please contact Kerry with any media enquiries and with any questions related to marketing or sponsorships on +64 9 375 8747 or via email.

Related Articles / Insights & Opinion

Supreme Court Confirms Commissions Within Weekly Holiday Pay
The Supreme Court has upheld the Court of Appeal’s decision (although for different reasons) in A Labour Inspector of the Ministry of Business, Innovation and Employment v Tourism Holdings Limited w...
21.12.2021 Posted in Business Advice & Employment
Hesketh Henry ranked in the latest Asia-Pacific Chambers Legal Directory 2022
Henry has received the following recommendations and commentary in the high-profile Asia-Pacific Chambers Legal Directory for 2022
2021 Maritime Arbitration Enforcement Series.
The Hesketh Henry Trade and Transport team are proud contributors of the SCMA (Singapore Chamber of Maritime Arbitration) 2021 Maritime Arbitration Enforcement Series.  Authors Simon Cartwright, Part...
20.12.2021 Posted in Trade and Transport
Incorporated Societies – A Major Shake Up is on the Way
The Incorporated Societies Bill (Bill) had its second reading on 17 November 2021.  The Bill seeks to repeal and replace the 113 year old Incorporated Societies Act 1908 (1908 Act), in a well overdue...
07.12.2021 Posted in Business Advice
Are you ready for the new Covid-19 Protection Framework?
Parliament has been racing through COVID-19 legislation in preparation for New Zealand entering the COVID-19 Protection Framework (CPF) at midnight tonight, Thursday 2 December.   Employers operating...
02.12.2021 Posted in Business Advice & COVID-19 & Employment & Health & Safety
Covid-19 Risk Assessment – Vaccines only part of the solution
Vaccine mandates have been the “hot topic” in the news recently.  However, it has become clear that vaccines are not a silver bullet and relying on vaccination alone to address the risk of Covid-...
01.12.2021 Posted in COVID-19 & Employment & Health & Safety
Final changes to the overseas investment regime now in force
The Overseas Investment Amendment Act 2021 came into force on 5 July 2021.
24.11.2021 Posted in Business Advice & Foreign Investment & Property
Send us an enquiry
For expert legal advice, please complete the form below or call us on (09) 375 8700.
  • This field is for validation purposes and should be left unchanged.
-->