Disclaimer: This article is for guidance only and does not constitute legal advice.
The changes primarily focus on risk assessments and treating online marketplaces under the Act. Here’s what you need to know to stay ahead of the changes and maintain compliance.
Starting June 1, 2025, New Zealand will enact the third and final phase of amendments to the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act 2009.
This third phase follows the first and second set of amendments enacted in July 2023 and June 2024, respectively. The upcoming third phase will be enacted on June 1, 2025.
The changes primarily focus on risk assessments and treating online marketplaces under the Act. Here’s what you need to know to stay ahead of the changes and maintain compliance. Reporting entities must have the necessary systems and procedures to comply with the updated obligations.
Key changes in Phase 3
Risk assessments: Mandatory customer risk-rating for customer due diligence
One of the most significant updates in the Phase 3 amendments is the requirement for reporting entities to risk-rate new customers when conducting customer due diligence (CDD). This means that:
- Reporting entities must assess a customer's risk level when sections 14 and 22 of the NZ AML/CFT Act apply. Specifically, this must be done when conducting standard or enhanced customer due diligence.
- If simplified due diligence applies (e.g., the reporting entity is onboarding a government body from a low-risk jurisdiction), then risk rating is not required.
- A record of the risk rating must be maintained.
- Customer risk ratings must be reviewed as appropriate, in line with section 31 of the NZ AML/CFT Act. Reporting entities will be expected to regularly review customer risk levels as part of their ongoing CDD and account monitoring obligations.
Exemptions: Changes to online marketplace transactions and internet auction providers
The treatment of online marketplaces and internet auctions will be redefined. The current exemption for providers of internet auctions will be revoked and a narrower exemption will be introduced for certain online marketplace transactions:
- The new exemption applies only if the total value of transactions between an online marketplace provider and buyers/sellers does not exceed $10,000 within a consecutive 12-month period, whether conducted as a single transaction or multiple linked transactions.
- This means that any transaction over $10,000 will be deemed as a captured activity for AML purposes.
- If a transaction exceeds the threshold or is linked to suspicious activity, it will be subject to AML/CFT obligations.
This means that online marketplace providers must be prepared to monitor transaction limits and ensure they are compliant with AML/CFT obligations for clients transacting over $10,000 when required.
What this means for reporting entities
With these new requirements coming up soon, reporting entities should take proactive steps to adapt their compliance programmes:
- Implement customer risk-rating procedures: Ensure your AML tools and systems can support the scoring and storing of risk ratings for new and ongoing customers.
- Review online marketplace transactions: If you operate an online marketplace, you must track transactions to determine whether they exceed the $10,000 threshold and start planning for how your business will onboard clients that exceed the threshold.
- Update internal policies and training: Staff should be trained on the risk assessment obligations for new and ongoing customer due diligence and how to apply them effectively.
Additional reading
The 2023 Amendment Regulations in full can be found at the following links:
Anti-Money Laundering and Countering Financing of Terrorism (Exemptions) Amendment Regulations 2023
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