The Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill (Bill) had its first reading in Parliament last week, to (at least at this stage) broad cross-party support, and was referred to the Justice Select Committee. This follows the relevant Cabinet Paper released last year, which we discussed at the time.

Public submissions on the Bill are now being called, with a closing date of Friday, 28 March 2025. The Associate Minister’s release on the Bill can be found on the Beehive website.

Who needs to read it? Why?

All reporting entities should be aware of the amendments proposed in the Bill, both for what they cover and for what they do not – for instance, other changes such as around address verification are found in the separate Statutes Amendment Bill. While some are narrow and technical proposals, others apply to core obligations within the regime.

What does it cover?

The Bill is intended to “make 26 changes [to the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 and its Regulations] to improve the effectiveness, efficiency and consistency of the AML/CFT regime”, as part of Workstream 1 of the Government’s three part work programme for reforms (which we discussed earlier this month).

In particular, the Explanatory Note of the Bill explains that the amendments:

• “clarify existing obligations, which will help businesses apply rules with greater certainty”;

• “strengthen enforcement provisions, which will ensure New Zealand can increase its compliance with international standards”;

• “provide relief for businesses”;

• “reduce compliance costs”; and

• “support the maintenance and continuous improvement of the AML/CFT regime, making it more efficient and effective at addressing organised crime”.

Our view

We will not step through the changes here, but we recommend that reporting entities look over them and consider if they wish to make any suggestions as to drafting.

As we noted with the Cabinet Paper, the headline amendment for this set of proposals is around enhanced customer due diligence (CDD) requirements for trusts. Enhanced CDD will technically still be required, but the need to verify source of wealth and/or funds information will no longer apply if the reporting entity is satisfied that any risks have been mitigated by other CDD.

This change will be widely welcomed among reporting entities, as this verification requirement was a blunt and onerous obligation that impeded a true risk-based approach. We expect reporting entities will need to be able to show a sufficiently rigorous approach to deciding whether they are satisfied risks have been otherwise mitigated, but that kind of risk assessment and mitigation is a central part of compliance with the regime.

What next?

We recommend that any reporting entity who wishes to express support for the Bill, or to suggest alternative drafting, to make a submission. The nature of the Bill means that anything not currently contemplated in it is very unlikely to be included, although many other changes are planned to come through the further parts of this reform Workstream 1 and the subsequent workstreams.

Submissions on the Bill are open until 28 March 2025, and can be made on the Parliament website.

If you would like assistance in producing a submission, or have any questions on the Bill, the broader AML/CFT reforms, or the AML/CFT regime more generally, please contact one of our experts who would be happy to assist. 

This article was co-authored by Senior Solicitor Sam Short and Solicitor Leanne Chew.