Annual Report Webinar Transcript

Welcome to the first webinar of a webinar series produced by DIA. My name is Kariba and I'm a Senior Advisor in our Engagement and Innovation team within the AML group.

This webinar will be focusing on the annual AML/CFT report for designated non-financial businesses or professions or DNFBPs. In other words the report that Lawyers, Conveyancers, Accountants, Bookkeepers, Real Estate Agents and Trust and Company Service Providers who provide captured services must complete.

Let's get started. So what is the Annual Report? The Annual Report is a confidential report that you must submit to the Department of Internal Affairs or DIA as part of your AML/CFT obligations. There are six parts of the annual report which we will go through later.

It’s important to note, there are actually two types of Annual Reports. One for Financial Institutions and one for DNFBP's. These differ slightly in questions. Today we are focusing on the DNFBP report as for most of this group this will be their first Annual Report.

You should also be aware of what your reporting period is for the report. This will be different for each sector. For Lawyers, Conveyancers and TCSPs your reporting period is 1 July 2018 to 30 June 2019. For Accountants 1 October 2018 to 30 June 2019 and for Real Estate Agents 1 January 2019 to 30 June 2019. Next year everyone's reporting period will be 1 July 2019 to 30 June 2020.

So why do the DIA need the report?

We need to understand businesses and the risk they face to determine where we target our resources as an AML/CFT supervisor. And for businesses you must complete the report as it is an obligation under the AML/CFT Act. Information you give is used to determine money laundering and terrorism financing risk and help the Department better understand the businesses we supervise.

You can submit your Annual Report via a new online tool called AML Online. If you have registered as a reporting entity with the Department in the past you should have received an email with an activation link to create your AML online account. As you will have registered as either a Financial Institution or a DNFBP which report you complete will be generated for you automatically in AML online. If you have not registered with the Department you can find the link to AML Online via our website. Please note, AML Online requires a verified Real Me account. This is different to a standard Real Me login which you may use for IRD in the Company's Office. A verified Real Me, means you have verified your identity on your logon using a passport, a birth or citizenship certificate or an immigration document. If you are not able to have a Real Me account please let us know.

So now we'll be looking at the 6 parts of the Annual Report. Part 1 covers your contact details and your structure. Part 2, your risk assessment and programme. Part 3, your products services and customers. Part 4, your captured activities. Part 5, whether you have a Ministerial exemption and part 6, the declaration and signature.

First up part 1. The screenshots on the screen have been taken from AML online. You can see that the first question relates to the reporting period this will be automatically generated for you. Your contact details should also be auto-generated using the information already in AML online about your business. If these are incorrect please go back to AML online and update your business details. Section 3 asks about your organisation structure including weather you are a subsidiary or branch of an offshore parent and what country is your largest owner based. Largest owner means a person or entity that owns the largest proportion of your business. How many people work for your reporting entity. This includes staff members employed by your business in New Zealand and overseas. How many branches or office locations in New Zealand there are if any. How many New Zealand subsidiaries there are, if any and again questions relating to branches and subsidiaries but whether there are any outside of New Zealand. If these questions don't apply to your business meaning you don't have any branches or subsidiaries or offices in or outside New Zealand then please put a numerical zero.

Part two is about designated business group or DBG memberships and your risk assessment and programme. Section 4 of the report asks if you're a member of the DBG, if you answer yes you'll be asked whether you're completing part two of the report on behalf of the group. If you are not completing the report on behalf of the DBG please note which member is, leave the rest of part two blank and proceed to part three.

Section five asks, starts off asking about your risk assessment 5.1 asks whether it meets the requirements of the Act next to this question you can see a small question mark click this and it will provide an explanation on what the question is asking of you as seen on the screen in blue. In this case it is asking whether your risk assessment considers specific factors as set out in section 58 of the Act. The answers are drop-down which asks you to put meets all, meets some or meets none. If you select meet some you'll be prompted to answer which subsections it is not fully compliant with. For example maybe you haven't considered the countries you deal with.

5.3 asks you when you last internally reviewed your risk assessment and 5.4 asks whether it has been independently audited. An internal review is where you ensure your risk assessment and programme are up to date and make changes as necessary. We recommend that you do this annually or when triggered to do so. A trigger could be that you are dealing with a new country not already considered in your risk assessment.

If you have had to a risk assessment audited the report will ask you for the date of the audit and if any deficiencies were identified by your auditor. If deficiencies were identified you'll be asked whether you have made changes as a result. As DNFBPs have only been captured for a year or less than a year it is unlikely that you have had your first audit as your obligation is to have an independent audit every two years. But just to remind on that, that if you are captured in July 2018 then your first audit should be conducted by July 2020.

In question 5.8 asks if you have had if you have introduced a new service or activity during the year that is captured by the act that isn't considered in your risk assessment.

Section 6 of the report asks you similar questions to section 5 but about your AML/CFT programme. It also asks about what procedures you have in place for customer due diligence. 6.8 asks if you have procedures to identify a new customer including any beneficial owner or person acting on behalf, a person who wants to conduct an occasional activity or transaction and an existing customer where you have determined that there has been a material change to your business relationship and you do not hold sufficient information on them.

6.9 asks if you have an exception handling procedure in place. The code of practice for identity verification requires that you have a process for when customers are unable to provide the documents and meaning they have no password or driver's license or other identity document as required by the code.

6.10 asks you if you outsource CDD to third parties such as an agent or another reporting entity. This does not include other DBG members.

6.11 asks if you have an electronic process for account monitoring meaning do you rely on automated systems to monitor your accounts.

Part 3a asks if you a few questions about the products and services you offer. These questions relate directly to which activities you provide that result in your business being captured under the AML/CFT Act.

If you answer yes to any questions from 7.1 to 7.4 you will be prompted to answer a couple of other questions relating to that service.

Question 7.6 relates to services where you engage in or give instructions for certain transactions. There are many options for this so you'll need to open add existing activity and select what is relevant to your business.

Question 7.7 asks you to estimate the total value of the transactions for question 7.6. Do not include your professional fees and this estimation As you can see when you click the drop down for 7.7 it asks you to select between certain values $1 to $999,000 then $1 million to a $9,999,999 and so on.

Part 3b is optional and asked about supplementary activities you may provide click the button to add activities and select any you offer from the provided list. Part 3C contains supplementary questions and is not optional.

Question 7.9 asks if you accept cash if yes, you will be prompted to estimate what percentage of your business involves cash.

7.10 asks if you've send or receive funds from other countries, if you answer yes you'll be asked to estimate the total value of transactions in the last year. Again there'll be a drop-down with options to choose between values. You are then asked to list your three most common products and services.

Part three section eight relates to your customers or your clients. Question 8.1 asks you to estimate how many clients or customers you have conducted customer due diligence on in the reporting period in relation to captured activities. In question 8.2 then ask you to estimate out of those customers or clients how many of a certain type of client you've had. For example did you complete CDD on a politically exposed person if so how many or did you complete CDD on a trust if so how many and so on.

8.3 relates the method you use to carry out CDD on new customers and clients you are asked to rate the methods from one most common to five least common. If you do not use a particular method then please select not applicable. Please note that electronic methods come under non face-to-face as will using a trusted referee to certify documents. Part four of the report relates to information about particular activities that are captured by the Act.

9.1 to 9.9 are for all DNFBPs to answer and 9.11 to 9.13 only relate to you if you're a Real Estate Agent, Conveyancing practitioner or Lawyer carrying out conveyancing activities.

Part five of the report is about Ministerial Exemptions. If you select yes to question 10.1 you'll be asked to provide a description of your compliance with the conditions of the exemption. You should know if you have an exemption but if you aren't sure there is a list of AML/CFT Ministerial exemption decisions on the Ministry of Justice website.

Part 6 is the final part of the annual report and asks you to declare that you have the authorities to submit the report that you have reviewed the answers and information and to confirm that to the best of your knowledge the answers are true and correct. It then asked for your name and date. You can then submit your annual report to the AML group.

So that's the annual report completed. If you have any questions about the annual report the Department has created a user guide which has each question in the annual report and guidance which sits alongside each question.

This can be found on our website under information for businesses. If you still have any questions please email us at amlcft@dia.govt.nz or call us on 0800 257 887

If you have a question about your Real Me for AML online please contact the Real Me team via their website.