Sum Tree   Accounting & Business

New Zealand is one of the most attracted places in the world for starting and carrying out a business, but there will be a huge change from 1st October 2018 due to the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AMT & CFT Act, hereafter the ACT). This Act requires Anti-Money Laundering compliance for accounting firms. According to this Act, there will be some changes in the daily business of accounting firms.

We must perform mandatory Due Diligence when accepting a new client. The minimum requirements for the Due Diligence are the identification information and proof of address for the new client. We need to verify the ID by meeting the client in person and check the original ID when taking a photocopy. If we cannot complete this process, the client must provide an ID verified by a public notary or a lawyer. At the same time, the client needs to provide an utility bill, bank statement or other documents showing the address as the proof and either of these documents should be no more than three months old. In addition, we should verify the client’s information by taking additional procedures.

We will identify the high-risk client during the Due Diligence. Examples of high risk clients (not limited to), including the client is a trust, at least one shareholder is the trust, has significant wealth, or comes from one of the high-risk countries (all tax heavens and non-democratic countries), such as British Virgin Islands, China, Hong Kong, Singapore (for a full list visit the AML website). Once the clients are identified as high risk and that required Enhanced CDD, we need to inquiry with client and into the source of wealth etc.

Moreover, we will do the same Due Diligence on each existing client within a reasonable period. We will review all the existing information and documents about each client and identify the risk level of the customers individually. For those clients who are identified as high-risk, we should have the same Enhanced Customer Due Diligence. The firm can have a separate procedure or combine the CDD with daily operations to conduct the Due Diligence and be compliant with legislation.

If the firm is satisfied with the result of CDD, it can then accept the engagement and provide services. During the engagement, we are required to have an ongoing and adequate monitoring about clients’ financial activities and transactions. The firm has the obligation to report any suspicious transactions to the appropriate authorities without notifying the client.

On the contrary, the firm should reject or withdraw the engagement and report to the relevant authority without notifying the client if the client provides a fake ID, other documents or the source of client’s income/wealth is suspicious. The firm should also disclose the information provided by the client to the authorities.

For the firm, there is a mandatory requirement to review and audit its Anti-Money Laundering procedures every two years. We are also, subject to random audits by the relevant authorities. If the firm does not comply with the Act, it would be penalised by the authority

Our advice

You should be aware of these requirements and keep your financial matters and affairs honest, transparent and clear. Financial institutions, such banks and legal firms have already been required to comply with the Act before accounting firms, so you will be familiar with these requirements if you have dealt with them over the last six months. We suggest you have a comprehensive review of your financial matters and sources of your wealth to make sure that is from a legitimate source, and you have already paid and complied for all tax obligations in the relevant jurisdictions. Also, you should be aware of these additional requirements when you make a financial decision in the future. If you require our assistance in any matter, please contact us.