AML/CFT AT 10 YEARS OLD: Podcast + Article

GARY INTERVIEWED special guest in the OF INTEREST PODCAST (AML-CFT law 10 year retrospective)

Recently, top NZ financial journalist Gareth Vaughan approached me about doing a 10 year retrospective look back at evolution of our AML-CFT law.
To which I gave a rather flippant reply: “well, the Ministry of Justice has already tried to do that, all 248 pages and 215 recommendations of it” 📚

Turns out what Gareth had in mind was a podcast, something a little briefer, more informal and fun.
To which, having a perfect face for radio 📻, I readily agreed.

Maybe it could serve as a small civic service even, if that would avoid members of the public having to locate 🔎 let alone read the formidable official “Report on the Statutory Review of the Anti- Money Laundering and Countering Financing of Terrorism Act 2009.”

So we jumped in the studio for a chat over coffee about the rationale, aims, justifications, good and bad and future prospects of anti-financial crime systems. Here is the result, the OF INTEREST #podcast for August 2023.

N.B. unsuspecting members of the public, beware, it’s a little opinionated and forthright. But if you are new to Anti-Money Laundering in this region or want a snapshot of where New Zealand is sitting in 2023, this may be worth 42 mins out of your week ☕ 🗣 🇳🇿

GARY COMMENTS for article in specialist legal publication THE CAPITAL LETTER (AML review by Ministry of Justice)

In May, expert legal journalist Geoff Adlam ran a piece in Freeman Media’s excellent niche publication The Capital Letter (est. 1978). The aim of the article was to give updates and some insight to the massive AML-CFT Statutory Review report released by the Ministry of Justice.

At that stage we were dealing with further MOJ consultation on proposed amendments to significant regulations under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.  The first of those changes were later confirmed by Cabinet, some sets of Regs came into force by 31 July 2023, others are not in effect until 2024.

These many little and detailed reforms trace again to roughly about 1/3rd of  the 215 total recommendations made by the MOJ being actioned now, with many more outcomes yet to be determined and finalised.

12 rather important intended law changes had to be taken out and set aside at the last moment, as it was considered they actually need to be made by Parliament as amendments to the umbrella AML/CFT Act (rather than snuck through in delegated legislation).  See the MOJ table here of those ‘dirty dozen’ further changes yet to come.  An urgent amending Bill is possible early on in the new term of a new Parliament after October 2023.

Massive thanks to Geoff Adlam who, like Gareth Vaughan, knows how to ask good questions and get to the root of a complex regulatory regime.


AML/CFT review begins to tackle major issues (Geoff Adlam)

  • International Financial Action Taskforce
  • International Bar Association
  • anti-money laundering and countering financing of terrorism
  • Anti-Money Laundering and Countering Financing of Terrorism Act

Consultation on proposed amendments to significant regulations under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 closed in April, with some changes potentially in force by July.

But resolution of “many more chunky issues” could take several years, Auckland barrister and AML/CFT expert Gary Hughes says.

The consultation by the Ministry of Justice followed its major review of the Act which was tabled in Parliament on 7 November 2022. This statutory review itself followed the international Financial Action Task Force evaluation of New Zealand’s anti-financial crime regime in 2021.

Hughes is Chair of the International Bar Association’s AML & Sanctions Experts committee, and a member of the Ministry’s expert industry advisory group on this review process. Capital Letter interviewed him in the wake of his newsletter to clients on the consultation.

Recapping the Ministry’s review paper in late 2022, he says it ended up

concluding New Zealand is “fit for purpose – well, only just barely”.

The Ministry found the country has a generally sound regulatory regime which provides a solid basis to detect and deter money laundering or terrorism financing.

However, problems exist that prevent the regime from being ‘the best it can be for New Zealand’. In particular, the review felt New Zealand should be following a more risk-based approach, instead of having overly prescriptive requirements. Hughes feels that “many law firms can probably relate to that”, after experiencing five years of the Department of Internal Affairs’ “prescriptive requirements”.

The Ministry would like to see more tailored guidance to be provided to firms. Currently, some aspects of AML law require all businesses to comply to the same one-size-fits-all standard regardless of their size or risk profile, which Hughes agrees ends up “largely ignoring the FATF’s endorsement of a risk-based proportionate approach allowing an element of discretion.”

He says the proposed regulatory changes start the first of a three-phase review process by “filtering out from 215 recommendations a first package of ‘early’ law changes – with a multiplicity of changes to existing regulations, and adding new ones”.

This current short-term package is for issues where the review was able to make a clear or generally agreed recommendation for what change is needed and how.

“These things can be implemented (or squashed into shape) by new or amended regulations, bypassing the need to go back to Parliament. For example, we are trying hard to obtain some regulatory relief for low-risk trusts, although there are many different opinions around how the Ministry might delineate what types of trust are genuinely less risk, without opening up a loophole that others may exploit.”


AML/CFT AT 10 YEARS OLD: Podcast + Article
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