Date posted: 07/12/2021

Submission on the Statutory Review of the AML/CFT Act

The Ministry for Justice called for submissions as part of its statutory review of the AML/CFT Act.

As a professional accounting body, we are committed to acting in the public interest and contributing to a robust system to prevent criminals from using New Zealand for illegal activities. We hold our members to the high ethical standards set out in our Code of Ethics and professional standards, which effectively require our members to comply with the Act and regulations promulgated under it. 

Key points from our submission include the following (the more detailed submission can be downloaded below):

Preserve the risk-based approach

The consultation document includes suggestions of significant extensions to the AML/CFT regime, mentioned in passing with brief narratives, without any substantive evidence of the benefits and costs associated with these extensions. Proposals with such significant implications should be evidence-based and subject to robust and transparent consultation.

We consider that only changes which preserve the regime’s risk-and activity-based approach should be made to the Act. We strongly object to the suggested inclusion of preparing or processing invoices and preparing annual accounts and tax statements as captured activities. We have grave concerns that extending the regime to capture these activities would ultimately bring the entire accounting profession within the scope of the Act. This would run counter to the intent of the regime, which is to focus on activities that pose undue risk.

Compliance should be easy and collaborative

Fundamentally, the current practical operation of the Act appears to result in individual entities acting alone to combat ML/FT. It is critical that compliance with the Act and the regulations promulgated under it is easier for business than it currently is. Certain aspects of the regime are unclear and ambiguous.

To increase the effectiveness of the Act and reduce compliance costs for AML/CFT reporting entities, we consider it important for there to be a collaborative approach to preventing and deterring ML/FT across the whole ecosystem within New Zealand. Effective collaboration requires a whole of government approach and mechanisms that enable entities and sectors to share effective processes and practices.

Registration and licensing

With respect to the establishment of a registration regime, most reporting entities should already be known to AML/CFT supervisors. However, we appreciate that this may not always be the case (particularly until reporting entities file their first annual return). While we understand that a registration regime could assist supervisors in fulfilling their functions more effectively, we would only support the establishment of a registration regime to the extent that it facilitates the simple administrative task of self-identification of reporting entities and does not impose fees or levies.

We do not support the establishment of a licensing regime for the accounting profession. We appreciate that there may be gaps in other sectors, but we strongly oppose the imposition of additional regulation and compliance on the accounting profession, which is robustly regulated already, in the absence of clear and compelling impact analysis and evidence to support such an approach. CA ANZ members are already subject to a Code of Ethics, professional and ethical standards, quality review oversight, fit and proper checks and a robust professional conduct/discipline process. 

Assurance regime

We have several concerns with the current assurance regime under the Act. There are no minimum requirements for both the auditor and the assurance engagement and there is no register of approved AML auditors. This lack of minimum standards and requirements has resulted in significant variations in the cost and quality of AML audits. The regime also relies on the AML/CFT reporting entity to make appropriate decisions regarding the appointment of their auditor. The guidance suggests AML/CFT reporting entities should consider the experience and qualifications of the auditors but there is no guidance as to what the supervisors consider acceptable.