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The Financial Markets Authority is responsible for financial advisers under the regime.
It carried out a risk-based assessment of independent audit reports for reporting entities it supervises in February this year, targeting 69 reporting entities. The FMA supervises around 800 reporting entities, of whom roughly two-thirds define themselves as advisers.
It gave five formal warnings to reporting entities for failing to have their risk assessment and AML/CFT programme audited every two years. Another five formal warnings were given to reporting entities who had their risk assessment and AML/CFT programme audited, but where the audit was not done in a timely manner, occurring months after its due date.
Another 14 desk-based reviews and four monitoring visits will be carried out in response to this work.
The FMA also issued a compliance letter to one additional reporting entity requesting follow-up action.
The regulator said the entities involved were all either small businesses or individuals and naming them would be a disproportionate penalty given the nature of the issues involved.
The FMA has previously said it expects to see more robust AML/CFT policies and procedures in place, given that AML/CFT laws have been in force for more than five years.
Last month, the FMA highlighted that in future, there would be an increased focus on reviewing independent audit reports on AML/CTF processes.
Liam Mason, FMA director of regulation, said: “The FMA is now requiring more entities to take remedial action following our monitoring of their AML/CFT processes. Entities we supervise should understand that independent audit reports every two years are a legal requirement.
“The FMA carries out these assessments every year, looking at 64 files in 2018 and 77 in 2017. Entities we supervise should understand that if we didn’t examine your report this year, there is a strong possibility we will be looking at your report next year. Get ahead of this issue, and ensure you are meeting your AML/CFT responsibilities.”
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