Government to overhaul anti-money laundering regime

The Government will introduce a single supervisor and a new funding model in a major overhaul of New Zealand's Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) system, Associate Justice Minister Nicole McKee says.

"Cabinet has approved an AML/CFT reform work programme which will change the supervisor structure that monitors AML/CFT compliance and introduce a new funding model for the system. These reforms will allow the system to be more responsive to industry and community needs, more agile, and more focused on the real risks posed by anti-money laundering to New Zealand businesses.

"The changes will deliver a critical Government priority to reform key sectors where the cost of regulation is overly burdensome for businesses and improve the efficiency and effectiveness of the AML/CFT system to meet international standards."

The Government is introducing the changes following a Financial Action Task Force evaluation of New Zealand's regulatory regime and a subsequent review of the Anti-Money Laundering and Counter Financing of Terrorism Act 2009.

A single-supervisor model will replace the current three-supervisor model and will establish the Department of Internal Affairs as the sole supervisor of the AML/CFT system. Currently, supervision of different parts of the AML/CFT system are overseen by the Reserve Bank, Financial Markets Authority, and Internal Affairs.

"The Government is very aware of the risks money-laundering and financing of terrorism poses to New Zealand businesses and moving to a single supervisor will improve the efficiency of the system, establish a more risk-based approach, and enable more timely provision of guidance and support. I have heard from businesses that this will provide substantive regulatory relief," Mrs McKee says.

"In considering how to improve the supervisory model, I will be focusing on how the positive effects can be felt as soon as possible, such as ensuring work on industry guidance and codes of practice starts promptly."

"The Government will also introduce a new sustainable funding model for the AML/CFT system as part of the reforms. The funding model will establish an industry-levy to support a flexible and coordinated system that will deliver sector benefits. The levy will be designed to ensure that costs are equitable and reasonable for the sector and will not place undue burden on small businesses."

An AML/CFT National Strategy and work programme will be introduced as part of the funding model. Legislation will require any amendments to the levy to be informed by the National Strategy and work programme.

"This work programme will be developed in partnership with industry and agreed by Cabinet to ensure that the AML/CFT system is focussed on industry priorities. The new funding model will mean better and more efficient regulation, supervision, and support for industry.

"The changes will ensure New Zealand maintains its international reputation and will align our AML/CFT system with the financial sectors of our key trading partners to support trade, investment and economic growth."