Late last month, the Anti-Money Laundering and Countering Financing of Terrorism (Class Exemptions) Amendment Notice 2024 (Amendment Notice) was made by the Associate Minister of Justice Nicole McKee.

This will extend the suite of class exemptions under the anti-money laundering and countering financing of terrorism (AML/CFT) regime that were due to expire at the end of this month. 

Who needs to read it? Why?

This will be very relevant to all reporting entities currently relying on a class exemption, including in particular money or value transfer service operators which receive special treatment in relation to specified managing intermediaries.

What does it cover?

13 of the 19 class exemptions under the Anti-Money Laundering and Countering Financing of Terrorism (Class Exemptions) Notice 2018 (Class Exemptions Notice) are currently due to expire on 31 December 2024. These expiry dates will all be extended to 31 December 2026.

A further two class exemptions (those for tax pooling intermediaries and barristers sole) will seemingly be revoked and replaced, but with exemptions that are the same. The expiry date for these has also been set as 31 December 2026.

The one substantive change to the Class Exemptions Notice will be to the specified managing intermediaries (SMI) exemption. While the exemption generally has its expiry date extended to 31 December 2026, for non-bank operators of money or value transfer services the component that applies in respect of customers who are SMI customers will cease to apply from 31 December 2024. With much of that exemption having already ceased to apply on 31 December 2023, little of it will remain in effect.

The remaining four class exemptions already have expiry dates after 31 December 2026, and have remained unchanged.

Our view

Many reporting entities rely on these class exemptions to operate practicably, so the rapidly-approaching expiry date of 31 December 2024 has been a common cause for concern.

We welcome the Associate Minister’s extension for these reporting entities. There has been some uncertainty around the ongoing relevance of some of the class exemptions given other changes to the regime (for instance, around the definition of beneficial owners). However, until that is settled, we agree that a blanket extension is the best way to avoid the exemptions dropping away where they are still important and introducing much unnecessary friction into the regime.

The Amendment Notice is the latest step in the long-running reform programme to the AML/CFT regime. We have previously discussed September’s Cabinet Paper and proposed Bill and October’s statements on the wider reform programme and the intended changes to supervisory and funding models.

What next?

As the class exemptions will remain mostly unchanged in their effects, reporting entities should have little they need to do to align with the Amendment Notice. Their focus should remain on staying on top of the other active and proposed changes to the AML/CFT regime.

If you have any questions about the Amendment Notice, the Class Exemptions Notice, or the AML/CFT regime more generally, please contact one of our experts. 

This article was co-authored by Sam Short (Senior Solicitor) and Ivan Zhang (Summer Clerk) in our Financial Services team.