A helpful guide of common terms and their definitions used throughout this site.
The use of the term “accountants” in this report refers to chartered accountants, accountants, bookkeepers, tax agents and anyone else who is providing professional services that captures them as an “accounting practice” and reporting entity under the AML/CFT Act.
Anti-money laundering and countering financing of terrorism.
The individual(s) who has effective control of a customer or person on whose behalf a transaction is conducted or owns a prescribed threshold of the customer or person on whose behalf a transaction is conducted.
Customer due diligence. Under ‘standard CDD’, a reporting entity is required to identify and verify the identity of a customer, any beneficial owner of a customer, and any person acting on behalf of a customer. Standard CDD requirements are set out in sections 15 to 17 of the Act. See also ‘enhanced CDD’ and ‘simplified CDD’.
A conveyancing practitioner or an incorporated conveyancing firm that is a reporting entity under the AML/CFT Act.
Designated non-financial business or profession. This includes law firms, conveyancing practitioners, incorporated conveyancing firms, accounting practices, real estate agents, and trust and company service providers.
Enhanced customer due diligence. A higher level of CDD, requiring additional measures to be taken. These requirements are set out in sections 22 to 30 of the Act.
Financial Action Task Force
The FATF is an intergovernmental organisation founded in 1989 on the initiative of the G7 to develop policies to combat money laundering. In the wake of the September 11 terror attacks in 2001, its mandate expanded to include terrorism financing.
FATF is now the international standard setter for countering the financing of terrorism and anti-money laundering. Over 200 jurisdictions around the world have committed to the FATF’s recommendations. New Zealand has been a member since 1991.
The Financial Intelligence Unit of the New Zealand Police.
An online tool that allows the rapid and secure exchange of information between a reporting entity and the FIU report suspicious activity and prescribed transactions.
High-value dealer. A person who is in trade and, in the ordinary course of business, buys or sells one or more articles (including precious metals and stones, jewellery, watches and cars) specified in section 5 of the Act by way of a cash transaction or a series of related cash transactions (of NZ$10,000 or more).
Amended Identity Verification Code of Practice 2013. The suggested best practice for verifying a customer’s name and date of birth. The Amended Identity Verification Code of Practice 2013 covers identity verification, document certification and electronic identity verification.
A barrister or a barrister and solicitor who is practising on the barrister’s or a barrister and solicitor’s own account in sole practice; or, two or more barrister and solicitors practising law in partnership, (i.e. a partnership); or, an incorporated law firm that is a reporting entity under the AML/CFT Act.
Mutual Evaluation (ME)
FATF mutual evaluations are in-depth country reports analysing the implementation and effectiveness of measures to combat money laundering and terrorist financing. Mutual evaluations are peer reviews, where members from different countries assess another country. A mutual evaluation report provides an in-depth description and analysis of a country’s system for preventing criminal abuse of the financial system as well as focused recommendations to the country to further strengthen its system.
Mutual evaluations are strict and a country is only deemed compliant if it can prove this to the other members. In other words, the onus is on the assessed country to demonstrate it has an effective framework to protect the financial system from abuse.
Mutual evaluations have two basic components, effectiveness and technical compliance.
The mutual evaluation report is an assessment of a country’s measures to combat money laundering and the financing of terrorism, and the proliferation of weapons of mass destruction. This includes an assessment of a country’s actions to address the risks emanating from designated terrorists or terrorist organisations. The mutual evaluation report is without prejudice to the status or justification that led to the designation of an entity as a terrorist or terrorist group or organisation. Read more here
Money laundering and terrorism financing.
Non-bank non-deposit taking lender, defined as entities that offer debt securities to the public (as defined in the Securities Act 1978) and carry on the business of borrowing and lending money, or providing financial services, or both.
Politically exposed person. An individual who holds or has held at any time in the preceding 12 months in any overseas country, a prominent public function. Immediate family members and close associates of these people are also considered PEPs. The full definition of PEP is in section 5 of the Act.
Policies, procedures and controls
An AML/CFT programme must have policies, procedures and controls to detect and deter ML/TF and mitigate the risk of it occurring. Policies set out expectations, standards and behaviours, procedures set out the day-to-day operations and controls are the tools that management use to ensure compliance with policies and procedures.
Prescribed transaction report. A reporting entity must submit a prescribed transaction report to the FIU for any domestic cash transaction valued at NZ$10,000 or over, and for any international wire transfer valued at NZ$1,000 or over. A PTR must be submitted within 10 working days of the transaction taking place.
Reporting Entity or RE
Reporting entity. Financial institutions or DNFBPs that, in the ordinary course of business, carry out one or more activities specified in section 5 of the Act. Reporting entities also include casinos, high-value dealers and the Racing Industry Transition Agency.
Risk of money laundering or terrorism financing.
Suspicious activity report. A reporting entity must submit a SAR where it has reasonable grounds to suspect that a transaction or proposed transaction, a service or proposed service, or a request or inquiry in relation to a service is suspicious. The full definition of SAR is found under section 39A of the Act.
The AML/CFT Act or the Act
The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 and its regulations.
Trust and company service provider.
Virtual asset service provider.