AML/CFT REQUIREMENTS

New rules affect all client-lawyer relationships

New rules are upon us that mean, as lawyers, we’re now obliged to seek specific information from all clients before we’re legally able to provide support and services to them.

The changes are the result of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 – or “AML”, as it’s more commonly known.

The special requirements are already in force for banks and financial advisers, and apply to law firms as of July 1, 2018. Come October 1, your accountant will also have to comply with these new rules, as will any real estate agent you deal with from January 1, 2019.

What will we need from you?

Lawyers must now undertake prescribed background checks before being able to take instructions from a client – whether we have an existing relationship with you, or not. In short, we need to be able to demonstrate we know who you are.

As part of the new, mandatory “customer due diligence” process, we must take reasonable steps to ensure the information you provide us about yourself is true and correct. The information required will depend on the nature of the work you would like us to undertake for you.

For starters, we’ll need:

  • Your full name
  • Your date of birth
  • Your address

Under the new rules, we’ll now require documents, such as a birth certificate, passport or driver’s licence, to prove your identity, and the likes of a current bank statement, rates bill or electricity account that confirms your usual, residential address.

If you’re seeing us about company, offshore or trust business, we’ll need specific information about the entity in question, including the people associated with it – such as directors and shareholders, trustees and beneficiaries. We’re now required to ask you about the nature and purpose of the proposed work you’re asking us to do, and might also need you to confirm the source of funds for any transactions.

In all cases, we must, by law, keep a copy of documentation gathered as part of our customer due diligence obligations on your client file.

What if we don’t receive the required information?

These new requirements apply to all of our client relationships – whether you’re new to our firm, or even if we’ve known you for years.

Before we start working for you, we’ll let you know what information we require, and what documents you need to show us and let us photocopy.

For existing clients, we might already have some, if not all, of the necessary information on file already. We’ll only ask you for what we don’t already have.

Under the new law, until we have the required information and documentation, we cannot act for you.

Why the change?

AML is part of a worldwide initiative to crack down on illegal activities, including money laundering and terrorism.

New Zealand is held in high regard internationally as one of the least corrupt countries, and also a great place to do business. The new rules have been introduced to safeguard that reputation, play our part in combating global crime, and help protect all Kiwis from it.

In some cases, criminals try to use the likes of banks, lawyers and accountants to help hold and move assets. These new customer due diligence measures are aimed at, ideally, deterring criminals in the first place, and, secondly, detecting them if they do try.

What next?

If you’re new to our firm, conducting the required “customer due diligence” will now be part of our client engagement process. So, once we’ve established the nature of support and services you need, we’ll provide you a list, specifying the information and documentation needed.

For existing clients, the next time we take instructions from you, we’ll check what we already have from you on file that satisfies the new AML rules, and let you know if there is anything else needed before we can start working on your new matter.

It’s really important you understand that it is against the law for us to start any work whatsoever for you until you’ve supplied the AML-specific information and documentation we now must ask for.

We’ll provide you a clear list at the outset of what’s needed, and the deadline for providing it. Please do give it your urgent attention, so we can get started on your matter.

If you have any questions, please don’t hesitate to raise these with your lawyer, or contact our in-house AML Compliance Officer, Director Janice Hughes, who can be reached on 03 443 0900, or by emailing janice@aspiringlaw.co.nz.