Money laundering and the growth of terrorist financing is a threat to our way of life. Globally, trillions of “dirty money” are laundered and routed through the financial system.
In New Zealand, authorities conservatively estimate that 1.3 billion dollars is laundered through the economy annually. Proceeds from drug dealing and fraud-related offences are primarily the source of these illicit funds. Clampdown efforts through legislative action imposed on the financial systems have to a large extent, hampered the movement of “dirty money”.
Ever ingenious and resourceful, criminals found that using professional gatekeepers such as lawyers and accountants enable them to obscure the source of their illegally obtained funds while lending a veneer of legitimacy to their transactions. The Purchase of real estate, businesses and other high-value assets are increasingly used to launder money through these professionals. Corporate structures such as trusts, companies and charitable organisations are also misused to conceal the ownership and control of illegally obtained assets.
From 1 July 2018, we as a law firm are mandated to comply with the anti-money laundering and countering financing of terrorism (AML/CFT) act. Broadly speaking, the Act requires us and other reporting entities to identify our risk exposure to money laundering and terrorist financing in the course of conducting business. Based on these identified risks, we came up with a compliance programme to address our risks as a firm and help protect New Zealand from the dangers that money laundering and terrorist financing bring.
A cornerstone of the compliance programme is customer due diligence, much like what banks have been doing since 2013. This involves obtaining identification documents from clients and in some cases we ask for the source of funds. As part of the compliance regime, we submit an annual report to our regulator, the Department of Internal Affairs (DIA). We are also obliged to monitor transactions and to report suspicious activities to the Financial Intelligence Unit (FIU). Failure to comply carries hefty fines and a prison term.
While it seemed somewhat onerous and tedious in the beginning, we are very pleased that clients understood the requirement. We continually look for ways to make the compliance process as seamless as possible for clients while ensuring we comply with our obligation as a reporting entity under the AML/CFT law. We assure that the information we collect is treated with the utmost confidence and privacy.
On the global stage, New Zealand is highly known as a great place to live, work and to do business. We like to think that we, together with our clients, are doing our very best to keep it that way.
If you have any concerns or queries about our AML/CFT compliance programme please email us at: elaine.ramsay [ at ] meareswilliams.co.nz