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Next phase of AML might mean more work for advisers

Advisers are being warned phase two of the introduction of anti-money laundering legislation could bring more compliance obligations for them.

Wednesday, June 21st 2017, 6:00AM 3 Comments

by Susan Edmunds

Claire Piper, director of compliance firm Fiducia

Investment advisers were caught by the first round of AML rules, which came into force in 2013.

But phase two this year, via the AML/CFT Amendment Bill, expands the rules to cover real estate agents, lawyers and accountants and some betting businesses.

It also introduces new “suspicious activity reports” on top of the existing “suspicious transaction reports”.

The Government said that was because people might notice something that was amiss even if the customer did not make a transaction.

Claire Piper, director of compliance firm Fiducia, said that could affect advisers because their AML obligations could begin the minute they picked up the phone to talk to a potential client, and remain even if the person did not become a client.  “It could be suspicious right from the get go and they might be required to report that to police.”

Piper said many advisers still seemed not to understand what AML rules were trying to achieve.

“There’s so little information available about what is money laundering and why you should care. [Many] don’t fully understand the actual money laundering risk. To protect yourself you need to know what are the risks and what you need to do because the risks of not doing it are too great. But some people don’t know what they are even looking for.”

She said the law required advisers to identify the actual risks within their business but many were still not doing that well.  Supervisors were becoming less tolerant with those who had not kept up with their obligations, she said.

But in some cases, it did not need to be as hard as some businesses made it, she said.

Many spent a lot of time photocopying ID and keeping hard copies but it was possible to satisfy ID verification requirements using online databases such as Centrix, she said.  “That’s a best-kept secret.”

The Government expects to pass the law over the next few months.

Piper said it had been mooted that the next phase would introduce an element of information sharing, which could help advisers cut their compliance costs.

Tags: AML

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Comments from our readers

On 21 June 2017 at 12:52 pm Cattyb said:
Interesting to look at the sample report from Centrix, the disclaimer states that "Centrix cannot and does not warrant the accuracy of the information or that it is free from errors and defects"... not sure how that goes with the FMA. Also won’t work when trying to verify the ID of a non-face to face client & to verifying signatures etc.

Photocopies of ID are a pain but at least when certified correctly the presenter has been linked to the identity documents reducing the risk of identity theft.…
On 21 June 2017 at 1:24 pm AFA Muggins said:
" To protect yourself you need to know what are the risks and what you need to do because the risks of not doing it are too great "

Interesting isn't it. We have to protect ourselves because of draconian legislative requirements imposed on us through the creation of a global I.D. system.

We have to make sure we comply and protect ourselves in case someone else is a criminal and we don't notice it. If so, we become the criminal.
On 28 June 2017 at 11:13 pm RiskAdviser said:
In relation to AFA Muggins, how does this work when we're presented with a NZ Drivers Licence, issued by the appropriate authority, yes the genuine license card, but the licence was predicated on a fraudulent document?

It's possible to buy a Licenced overseas, arrive here and have the NZ licensing authority issue a 'valid' license without any further verification than the fraudulent document.

We already have one insurer that does not accept a NZ drivers license as verification of age at claim time, who else is going to run with this integrity issue or will they have a crack at fixing it?

Also part of the reason we have so many poor immigrant drivers on the road.

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