Financial advisers ‘low risk’ for money laundering

The government’s new anti-money laundering regulations are a “bureaucratic impost” on advisers that will probably do little to deter the criminals being targeted, a financial adviser says.

Friday, August 3rd 2012, 6:02AM

by Niko Kloeten

The government has recently released a final consultation document on the implementation of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009, which comes into effect next year.

Under the new regime ‘reporting entities’ including Authorised Financial Adviser businesses, are required to have a programme in place to reduce the likelihood of their businesses being used as vessels for money-laundering or terrorism financing.

The document features the proposed layout of both the annual report each reporting entity must file and the suspicious transaction report they must make when they spot individual instances of dodgy behaviour.

But according to Norman Stacey of Diversified, these regulations are just another round of bureaucracy being “foisted” on advisers, who are already on the lookout for suspicious transactions.

He said Diversified had a number of systems in place to prevent the business being used by people wishing to conduct illegal activity.

“We require a primary ID from all clients and we don’t do any transactions in cash; we don’t even accept cheques… this is all part of the planning process. If an adviser is doing their work they will know if there are any changes in the client’s situation.

“With large clients in particular the advisers know them very well; it’s inconceivable their clients are living in Abbottabad without them knowing.”

Stacey said New Zealand’s financial adviser industry didn’t seem a particularly high-risk industry for terrorism and money-laundering and would-be money launderers would simply find ways around the new rules.

“I’m not remotely convinced these regulations are going to inconvenience terrorists one bit.”
Submissions on the government’s consultation document are due by August 17.

Niko Kloeten can be contacted at niko@goodreturns.co.nz

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