Section: 11

Additional information requirement for standard customer due diligence: legal persons.

Amendment

A reporting entity must, as part of standard customer due diligence, obtain information relating to—
(a) the customer’s legal form and proof of existence; and
(b) the customer’s ownership and control structure; and
(c) any powers that bind and regulate the customer; and
(d) if the customer is a company, the existence and name of any of the following:
(i) any nominee director:
(ii) any nominee shareholder; and
(e) if the customer is a limited partnership, about the existence and name of any nominee general partner.

(a) to (c) must be verified on the basis of documents, data, or information issued by a reliable and independent source

(d) and (e) must be verified on the basis of documents, data, or information issued by a reliable source

Change to First AML Outsource Process

First AML already collect reliable and independent documents that verify (a) and (b).

First AML will add (c) (a copy of the company constitution or equivalent document) to all entities we onboard. The NZ Companies Office Company Extract outlines that the company is subject to the Companies Act.

We already fulfil (d)(i) and (ii) and (e) via our nominee confirmation task.

Section: 11A

Additional information requirement for standard customer due diligence: legal arrangements.

Amendment

A reporting entity must, as part of standard customer due diligence, obtain information relating to—
(a) the customer’s legal form and proof of existence; and
(b) the customer’s ownership and control structure; and
(c) any powers that bind and regulate the customer; and
(d) if the customer is a trust,—
(i) the settlor (or settlors) of the trust; and
(ii) any protector (or protectors) of the trust.

(a) to (c) must be verified on the basis of documents, data, or information issued by a reliable source

(d) must be verified on the basis of documents, data, or information issued by a reliable and independent source 

Change to First AML Outsource Process

We already collect reliable documents to verify (a) to (c).

For (c) the powers that bind NZ and AU Trusts are mentioned within the Trust Deed, First AML will add a new line within the Trust Deed Notes (within textexpander) to mention the Act binding the Trust.

For (d), First AML specialists will add the settlor and protector to the entity structure and add two new lines within the Trust Deed Notes (within textexpander) to identify the settlor and protector.. 

Section: 12

Enhanced customer due diligence required for companies with nominee directors

Amendment

A reporting entity must conduct enhanced customer due diligence in accordance with sections 23 and 24 of the Act if the reporting entity establishes a business relationship with a customer that is—

(a) a company with 1 or more nominee directors; or
(b) a limited partnership with a nominee general partner.

Change to First AML Outsource Process

There is no change to the First AML process as we cover this already with the nominee confirmation task. To make it clearer and more applicable for limited partnerships we will look at a potential wording change or add a new task. 

Section: 12AB

Additional enhanced customer due diligence requirements in certain cases relating to business relationships

Amendment

This regulation applies when a reporting entity is conducting enhanced customer due diligence under section 22(1)(a), (c), or (d) of the Act within a business relationship.

A reporting entity must carry out additional enhanced customer due diligence measures before establishing, and during, the business relationship if complying with sections 23(1)(a) and 24(1)(b) of the Act is not sufficient to manage and mitigate the risks of money laundering and the financing of terrorism.

The additional enhanced customer due diligence measures include—
(a) obtaining further information from the customer in relation to a transaction; or
(b) examining the purpose of a transaction; or
(c) enhanced monitoring of a business relationship; or
(d) obtaining senior management approval for transactions or to continue the business relationship.

Change to First AML Outsource Process

Sections 23(1)(a) and 24(1)(b) refer to the collection + verification of SoF/SoW of the customer.

There is no change to the First AML process as we already follow (a) if a customer decides to rework the case if they consider what we have collected is insufficient.

Section: 15G

Further requirement for AML/CFT programme: agents of reporting entity

Amendment

For the purposes of section 57 of the Act, the AML/CFT programme of a reporting entity must set out adequate and effective procedures, policies, and controls for—
(a) any functions carried out by an agent of the reporting entity as part of the programme:
(b) vetting agents who carry out functions of the reporting entity:
(c) training agents of the reporting entity on AML/CFT matters:
(d) maintaining a list of agents of the reporting entity acting in the AML/CFT programme

Change to First AML Outsource Process

First AML outsourcing specialists are considered as agents under s34 of the Act. Therefore, for (b) and (c) the compliance programme addendum has been updated to include information on how we vett and train our specialists under the outsourcing model. The standard operating procedure has been updated to include the changes to First AML's outsourcing process based on the new AML regulations

(d) is an obligation that sits with the customer.

Section: 15H

Further requirement for AML/CFT programme: source of wealth or source of funds

Amendment

A reporting entity must, in respect of enhanced customer due diligence, differentiate, between when information must be obtained under section 23(1)(a) of the Act and verified under section 24(1)(b) of the Act regarding—

(a) the source of the funds or the source of the wealth of a customer; and
(b) both the source of the funds and the source of the wealth of the customer.
Sections 23(1)(a) and 24(1)(b) refer to the collection + verification of SoF/SoW of the customer

Change to First AML Outsource

Customers will need to inform the specialists what specific type of EDD they want to conduct (SoF, SoW or both) within the notes field.

Our default position is SoW only unless otherwise instructed by the customer. If SoF needs to be collected, the customer adds a note within the case. 

Section: 15J

Further requirements relating to ongoing customer due diligence and account monitoring

Amendment

When conducting ongoing customer due diligence and undertaking account monitoring, a reporting entity must, according to the level of risk involved,—

(a) update any customer information following its review under section 31(4)(b) of the Act and take reasonable steps to verify this information; and
(b) regularly review any information about the activities described in paragraph (a) of the definition of designated non-financial business or profession in section 5(1) of the Act.

In determining the extent to which information must be updated or verified under subclause (1)(a), the reporting entity must consider when customer due diligence was last conducted in relation to the customer and the adequacy of the information held.

Change to First AML Outsource Process

The amendment makes review and re-verification mandatory for OCDD transactions.

Customers already have the option to reverify for OCDD cases. The date for last conducted CDD is also recorded within the platform as 'Date Completed'.

Therefore there is no change to the First AML process as specialists currently rerun all verifications, collect updated entity docs etc.