Associations take AML concerns to FMA
Associations representing financial advisers have held meetings with the Financial Markets Authority to discuss their concerns about the new AML/CFT reporting requirements.
Wednesday, July 2nd 2014, 6:00AM 
10 Comments
by Susan Edmunds
From this year, reporting entities are required to complete an annual return each year for the period from July 1 to June 30. The report has to be completed by August 30.
It asks for details of the business, including the number of transactions done each year, the gross value of transactions, details of clients and how those clients were signed up.
There are concerns that if every transaction has to be detailed, and an adviser has a lot of clients and contributions or withdrawals being made, each report could take a long time.
It has been suggested that a better option would be to monitor individual higher-risk clients rather than each transaction.
Murray Weatherston, of SiFA, confirmed there had been meetings with the FMA but said he could not say what had been discussed.
He said the AML reporting requirements could be onerous. “Our view is that the AML risk presented by financial advisers doesn’t seem to be anywhere near as large as the officials’ perception... many of us were surprised advisers got caught in the regime at all when lawyers don’t.”
Financial advisers had earlier been given a structural risk assessment by the regulator of medium/high.
A Securities Commission document said: “They are the contact point between investment product providers and customers. They have knowledge of, and opportunity to question, a customer, when product providers, who typically have limited or no customer contact, do not.”
The FMA is believed to have been open to discussion on the requirements.
Departing IFA president Nigel Tate had previously suggested the AML reporting be tied in with other financial adviser regulatory requirements, such as licensing. but Weatherston said that was not a solution because AML reporting is done by each reporting entity, not each individual adviser.
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Comments from our readers
This would be a huge task if it were true. For advisers who use a wrap platform I would expect that the wrap platform would be able to produce the data for you ( although I personally don't use a wrap platform at present) but from past wrap platform use I would be able to get the platform to produce a report of ins and outs etc. If anyone needs some help with this let me know.
To date none of my encounters with these entities have been AFAs or financial advisors.
Where a substantial amount of KiwiSaver business is involved it would be a nightmare trying to work out what has been invested over the reporting period.
KiwiSaver being subject to AML is ridiculous in my opinion.
There has already been an article on the ongoing churn in the risk space - let's not go there
If we look at service then if your Kiwisaver providers IT systems can't provide the adviser the data for AML it begs the question as to the quality of it's IT and therefore the ability to provide Kiwisaver members with a reasonable quality of service.
So I'd stick to my point that if all other things ie fees and returns are equal (or better) then switching to a provider that can provide an adviser this service is a good thing. It's not churn but putting your clients interest first as I believe your interests( a n efficient,compliant and profitable business) are aligned to your clients interests. So I'd hope there are Kiwisaver Providers out there that would agree with this and are providing the appropriate level of support to its advise distribution network. It would be great to hear some comments form the Warp and Kiwisaver providers on this issue.
BTW - in response to a query about this the following response from FMA was "When counting the number of transactions, the relevant information we need relates to the number of transactions that financial advisers have arranged for their clients. Where fees and commission relate to existing transactions (that have already been counted for the purposes of the annual AML/CFT report) there is no need to count these as additional transactions. The fees/commissions would obviously be added to the ‘value of transactions’ recorded in the annual AML/CFT report.". They have focused on "the number of transactions that financial advisers have arranged for their clients" which by extension the transactions an AFa does for client with wraps using a DIMS service where the adviser signs of the TAF.
I agree with your thoughts but we'll wait and see if FMA wants to clarify this further.
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Then the FMA will presumably focus on couriers & cab-drivers because they too have "opportunity to question, a customer, when product providers, who typically have limited or no customer contact, do not"
Why is the FMA so petrified of Banks & Lawyers, which is where the real money-laundering goes on?