- Accounting practices should register with the DIA regardless of whether they are an AML reporting entity or not.
- The DIA has issued a fact sheet on what is ‘solely ancillary’ in the context of providing an office/address.
- The DIA has confirmed that conducting tax transfers in the Inland Revenue system is a captured activity.
On 1 October, the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act 2009 (the Act) will expand to include accounting practices that provide certain services. This is to reduce the risk of your business being used by criminals for money laundering, and to protect your (and ultimately New Zealand) reputation. The AML/CFT regime provides much-needed protection against money launderers, financiers of terrorism and other criminals. It is estimated that over $1 billion a year is laundered in New Zealand, which cannot happen without legitimate businesses unwittingly being used by criminals.
Services provided by accountants can be used by criminals to hold and move assets and funds anonymously. You play an important role in preventing crime. Accountants may see red flags that are not picked up by banks or others, because you may have more information about the people or funds involved.
The Act is activities based, which means whether or not you have obligations under the Act depends on what services you provide to your clients
Guidance for accountants
If you are not sure which services are covered then refer to page 8 of the Guideline: Accountants.Read now
Register with your supervisor
The Department of Internal Affairs (DIA) is the supervisor for accountants. Although it is not a statutory requirement, the DIA is requesting accounting practices that are AML reporting entities to register with them by 26 September. The registration form also asks for information about who your AML/CFT Compliance Officer is.
If you do not provide services covered under the AML/CFT Act, the DIA would still like you to complete the registration form, but tick none of the above on page 2 to provide positive confirmation that your business is not an AML reporting entity. This will ensure you receive no further correspondence from the DIA.
Provision of a registered office or address
One of the captured activities for accountants is Providing a registered office or a business address, a correspondence address, or an administrative address for a company, or a partnership, or for any other legal person or arrangement, unless the office or address is provided solely as an ancillary service to the provision of other services (being services that do not constitute an activity listed in this subparagraph or sub-paragraphs (i), (ii), and (iv) to (vi))
We have had many questions about what solely ancillary means in the context of the accounting profession. The DIA view is that this is when an office/address is only provided to a client to support a substantive non-captured service (e.g. preparation of financial statements and tax returns). If an office/address is provided as a stand-alone service or alongside other captured activities, then it would be a captured activity.
- The provision of an office/address to a client as a standalone service, in the ordinary course of business, is a captured activity.
- The provision of an office/address to a client in conjunction with other captured activities, in the ordinary course of business, is a captured activity.
- The provision of an office/address to aclient which is solely ancillary other non-captured activities is not acaptured activity
Clarification on when the provision of an office/address is captured.Download now
The DIA has published an Explanatory Note which clarifies whether activities relating to tax transfers, payments and refunds are captured activities for the purposes of the AML/CFT Act.
The DIA’s view is that all tax transfers made within the Inland Revenue database for clients are captured activities under the AML/CFT Act as “managing client funds” because the accountant controls the flow of funds.
However, preparing and filing a client’s tax return is not captured by the AML/CFT Act.
Involvement in tax transfers, payments and refundsRead more