Five businesses warned for Anti-Money Laundering/Countering Financing of Terrorism failures
The Financial Markets Authority (FMA) has issued formal warnings to five reporting entities under Section 80 of the Anti-Money Laundering and Countering Financing of Terrorism Act (AML/CFT Act).
Entities are required by law to have their risk assessment and AML/CFT programme audited by an independent auditor every two years.
For this year’s review the FMA selected 64 entities to inspect their audit report files and the details of any action, or planned activity, resulting from their last audit report. As a result of this review:
Five formal warnings were issued to reporting entities for failing to have their risk assessment and AML/CFT programme audited within the last two years.
The FMA has also issued compliance letters to five reporting entities requesting follow up action by the entity or further information.
A further six monitoring visits will be carried out in response to this work.
Liam Mason, FMA Director of Regulation said, “Our monitoring in this space shows the vast majority of entities we supervise meet their legal requirements to tackle money laundering and the financing of terrorism. It is only fair to take action against those who don’t.”
The regulatory regime to tackle money laundering and the financing of terrorism has now been in place for a number of years. All reporting entities are obliged to meet these requirements so New Zealand can maintain its Financial Action Taskforce obligations.
The FMA’s role, as one of the three AML supervisors, is to ensure the entities it is responsible for have risk assessment programmes in place to meet the legal requirements.
The names of the five entities have not been published. They are either small businesses or individuals and to do so would be disproportionate.
In February last year, the FMA warned 12 reporting entities under the AML/CFT laws after requesting information from 77 reporting entities.
The FMA will take further steps against the reporting entity that failed to provide its audit report if it does not respond to this warning.
Background to Article
The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 and associated regulations came into full effect on 30 June 2013. Its purpose is to deter and detect money laundering and terrorist financing.
The FMA is one of three supervisors under the Act, along with the Reserve Bank of New Zealand and Department of Internal Affairs. The FMA currently supervises around 800 reporting entities (REs) who are required to comply with the Act. Roughly two thirds define themselves as financial advisers, but REs also include: issuers of securities, licensed supervisors, derivatives issuers, providers of discretionary investment management services, fund managers, brokers and custodians as well as equity crowdfunding and peer-to-peer lending platform providers.
The FMA expects every reporting entity that it supervises to have an audit of its AML/CFT programme completed every two years or on request. A copy of the audit report must also be provided when specifically requested, as required under section 59(7) of the Act.
All reporting entities must also complete an annual AML/CFT report with a due date of the end of August.