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FMA not happy with AML reporting (+ Special Guide)

The Financial Markets Authority is promising to adopt a stronger position on reporting entities who fail to meet their obligations under the Anti-Money Laundering and Countering Financing of Terrorism Act.

Monday, December 19th 2016, 6:00AM 3 Comments

by Owen Poland

The FMA currently supervises around 800 reporting entities (REs), of which roughly two thirds are financial advisers, and while REs have made "some progress" toward meeting their AML obligations it's planning to increase monitoring in areas such as staff training, documentation and management oversight.

According to its latest monitoring report, the FMA conducted 12 on-site visits and12 desk-based reviews and says that it's "particularly concerned" about the continued low level of filing suspicious transaction reports (STRs). Only 47 STRs were filed by FMA supervised REs compared to the 8,415 STRs filed from non-supervised REs. As a result, the FMA plans to conduct training in 2017 in conjunction with the Financial Intelligence Unit.

The FMA also examined 29 independent Section 59 AML/CFT audit reports, but says it found that "a concerning number" of REs who did not complete section 59 audits and it expects to take regulatory action against them.

The monitoring report also highlights what it sees as a continued lack of staff training effort to detect and prevent money laundering and terrorist financing activities, as well as variances in the quality and way in which REs conduct due diligence on high-risk customers.

After the release of the Panama papers, the FMA says it carried out a number of targeted visits to identify whether REs had policies and processes in pace for identifying high-risk customers and whether they had any business relationship with Mossack Fonseca and its affiliates.

Looking ahead to 2017, the FMA says it plans to increase desk-based and on-site monitoring, look at what on-going training programmes for staff and continue its focus on governance at a senior management level.

An adviser's guide to AML Compliance



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Comments from our readers

On 19 December 2016 at 8:56 am R1 said:
Is it possible that there just aren't that may suspicious transactions because there aren't many people trying to launder money investing in bonds property and shares? Perhaps they opt to invest in NZ property and gambling where there less scrutiny of transactions?

It is a bit of a shame the FMA is giving this issue so much attention but seem to be much less concerned about whether institutions are truly putting the clients' interests first.
On 19 December 2016 at 8:43 pm w k said:
the fear is that the regulator will take action against advisers for the minutest of "offence" to justify their existence.
On 20 December 2016 at 8:57 am blogger billy said:
Must be the silly season at Britomart

You can’t give advice of any value if you don’t know the client

So when a financial adviser opens his/her data collection booklet (mine is over 75 questions) and starts asking questions, the money launderers will beat a hasty exit at question 3

They don’t come near us

And I get all clients old and new to sign / provide proof of the source of their money

But if that’s not enough, us Aegis users are hounded by Aegis too to ensure the ASB complies

A double check which quite frankly is fine with me

A prominent lawyer told me money launderers buy cafés and restaurants and retailers and put their ill-gotten cash through the till as cash sales

Then they pay tax on it and whoop-de-do, its neatly laundered

How to spot money launderer? look or cafes and restaurants and retailers that have few customers but remain open year after year

I can see a couple out my office window

Sometime I wonder how all the $2 shops survive too ?

Oh, the other place they go ? Panama of course

Oh, but John Keyless said that was really a nothing for NZ. Tui.

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