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FMA: Gloves are off on AML

The Financial Markets Authority is warning the “gloves are off” when it comes to its expectations of New Zealand’s adoption of AML/CFT rules.

Thursday, June 28th 2018, 6:00AM 2 Comments

by Susan Edmunds

It comes after a report that highlighted a lack of impact internationally from the rules.

James Greig, head of supervision at the Financial Markets Authority, spoke at the Financial Markets Law Conference in Auckland this week.

He said AML/CFT was a “necessary evil” for New Zealand if it wanted to do its part on the international stage and create a safe environment.

“The reason we have such a strong approach to AML/CFT is about making sure New Zealand is shown to be holding up its end….this is an international regime,” he said.

He said there were significant civil and criminal penalties attached to the regime and the industry needed to give it sufficient priority.

“The gloves are off around AML/CFT. This is absolutely an area where we have very little tolerance for non-compliance. This is not a new regime. This is something where supervisors expect people to be compliant with their obligations. We’re taking it seriously. We’ve signally from the FMA point of view that we are going to be taking a stronger line.”

New Zealand is set to be subject to a mutual evaluation report by FATF which will review its AML/CFT framework. It involves a desk-based review and an on-site component.

Greig said being compliant with the requirements required reporting entities to manage a number of obligations. “They are all relatively important and you can’t have one without the other. Some things hang together like a house of cards.”

He said it was important to have a risk assessment to demonstrate compliance with other aspects. Some entities were missing the basics, he said. The FMA and other supervisors wanted to know who was tasked with ensuring compliance and who could answer questions about each entities’ processes.

“We want to know who has their eye on the ball.”

Compliance assessment programmes had been a weakness, Greig said. These had to be reviewed and audited regularly.

Greig said improvements had been made in New Zealand’s adoption of AML/CFT measures. “It’s not all doom and gloom. We’re seeing things heading in the right direction. It’s encouraging.”


« AML laws 'waste of time, money'Fewer direct retail investors in NZX »

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Comments from our readers

On 28 June 2018 at 1:23 pm John Milner said:
I have a robust AML/CFT process in place and can’t say I have encountered any issues onboarding new clients. Whether it be individuals, Trusts or company structures.
However, you do have to ask the question of why, when you see the stats from Ron Pol of 0.2% of criminal funds were stopped globally , considering the time and cost involved by all parties. Gives the FMA something to do I guess.
On 29 June 2018 at 1:29 pm R1 said:
A cynical person might say it keeps us all very busy on unimportant things while the regulator looks after its future/current/past employers.

Why is the regulator not prosecuting the bad/possibly criminal behaviour of the VIOs which directly impacts a large no. of Kiwis? Why is the regulator investing so much time in avoiding a Royal Commission on this side of "the ditch"? What actions by the regulator would most impact people's confidence in the financial system in this country?

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