- This guidance aims to generate knowledge and understanding about the reporting of suspicious activity by AML reporting entities.
- It also provides examples of suspicious behaviour regarded internationally as indicators of money laundering and terrorism financing.
- The guide should be used when designing policies, procedures and controls for reporting suspicious activities in the entity’s AML/CFT programme.
A key purpose of the AML/CFT Act is to detect criminal activity. Therefore one of the obligations for reporting entities under the AML/CFT Act is to report suspicious activities to the New Zealand Financial Intelligence Unit (FIU). To help reporting entities meet this obligation, the FIU has released a Suspicious Activity Reporting Guideline. It aims to increase awareness of indicators of suspicious activity and inform reporting entities about the technical requirements to report suspicious activities. Reporting entities should consider this guidance document in developing internal policies, procedures, and controls on reporting suspicious activities in their AML/CFT programme.
A suspicious activity is defined in section 39A of the Act and includes an activity where there is reasonable grounds to suspect that the transaction or proposed transaction, the service or proposed service, or the enquiry, may be relevant to the investigation of prosecution of an offence (within the meaning of section 243(1) of the Crimes Act 1961 – “an offence (or any offence described as a crime) that is punishable under New Zealand law, including any act, wherever committed, that would be an offence in New Zealand if committed in New Zealand).” Once reasonable grounds for suspicion exist, a reporting entity must submit a Suspicious Activity Report (SAR) to the FIU as soon as practicable, but no later than three working days after forming a suspicion.
Auditors may also report suspicious activities under section 43 of the Act. The use of the word “may” here means it is not mandatory (where the auditor’s business is not a reporting entity), but it is suggested best practice and encouraged by the FIU.
Usually, compliance officers are responsible for submitting SARs, although there is no barrier to other employees submitting SARs. The vast majority of reports are made to the FIU electronically using an online portal called goAML. If your business has not already registered for goAML, we highly recommend you do so now so that you are ready to go on day 1. Upon registration you will get an invitation to attend a free training session with the FIU on how to use goAML. The same system is used for Prescribed Transaction Reports (PTRs) and Suspicious Property Reports (SPRs).
Alerting the client that they are or may be the subject of a SAR constitutes “tipping off” which is an offence under section 46 of the Act. Reporting of suspicious activities to the FIU is permitted under section 225.53 of the Code of Ethics, and as such it is not considered a breach of confidentiality under section 140 of the Code of Ethics.
Under the AML/CFT Act a number of protections exist for people reporting suspicious activities. For example; section 44 of the Act gives protection provided the SAR is made in good faith and is reasonable in the circumstances, and section 45 of the Act gives immunity from liability for disclosure of information.
Due to the sensitivity of the information provided in SARs, the FIU is usually unable to give direct feedback to reporting entities about whether a SAR has been useful in detecting criminal activity. Therefore after submitting a SAR it is unlikely you will hear anything back from the FIU.
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In other news
The first tranche of regulations were released in December 2017 and included the form and content of the annual report and a suspicious activity report. The Ministry of Justice has recently consulted on the second tranche of regulations where the impact is limited to the real estate profession and the New Zealand Racing Board. The three week consultation period closed on 12 June. The proposals included:
- Setting the timing of customer due diligence for real estate agents.
- Removing the exclusion for licensed and registered auctioneers.
- Clarifying the definition of ‘customer’ for real estate agents.
- Excluding property management activities from the Act.
New Zealand Racing Board
- Setting the occasional transaction threshold for the New Zealand Racing Board at $6,000 or more.
- Prescribing that New Zealand Racing Board betting vouchers are a Stored Value Instrument if they have a value of $6,000 or more.
Proposals for regulations under the AML/CFT ActRead more