Understanding anti-money laundering and countering financing of terrorism (AML/CFT) obligations in New Zealand

Summary

The Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Amendment Act 2017 received royal assent on 10 August 2017. It put in place Phase 2 of New Zealand's AML/CFT laws, extending its coverage to include real estate agents, conveyancers, lawyers, accountants, and some businesses that deal in expensive goods.

From 1 October 2018, accountants who provide certain types of business services have been required to comply with the AML/CFT Act.

Auditor appointments

CPA Australia members wishing to conduct AML audits must comply with the requirements below.

Section 59 of the Anti-Money Laundering and Counter Financing of Terrorism Act 2009 (AML/CFT) (the Act) requires a reporting entity to have its risk assessment and AML/CFT programme audited every two years (or at any other time at the request of the relevant AML/CFT supervisor). ‘Independent’ means the individual must not be involved in the development of the risk assessment, or the establishment, implementation or maintenance of the AML/CFT programme.

Whilst the legislation does not specify who may be appointed as the auditor, any member of CPA Australia Ltd (CPA Australia) who conducts an audit engagement is required to apply the relevant NZ Audit and Assurance Standards Board (NZAuASB) Standards which requires the auditor to be independent of the entity. In addition, the Code of Ethics for Professional Accountants imposes stringent independence requirements on auditors. Consequently, we recommend that you appoint an external auditor or assurance practitioner to undertake the audit. Or you may put in place reciprocal audit arrangements with another accounting practice provided any conflicts of interest are managed appropriately.

‘Qualified’ means the person has the relevant skills and experience to conduct the audit, including knowledge of the AML/CFT legislation. The person is not required to be “qualified auditor” under s.59B(2) of the Act to undertake financial audits. The Act does not specify how these audits are conducted, e.g. it is silent on the level of assurance, but the Financial Markets Authority (FMA) provides is a Guideline for Audits of Risk Assessments and AML/CFT Programmes. 

The Act does not require the engagement to be conducted in accordance with the assurance standards issued by the External Reporting Board (XRB). However, where a New Zealand resident member of CPA Australia Ltd is appointed to conduct such an engagement, they are required by CPA Australia to comply with the applicable assurance standards issued by the XRB, be a CPA, and hold a Public Practice Certificate (PPC) in accordance with Part 9 of the CPA Australia ByLaws. Please note that these requirements are not set out in the Act but set by CPA Australia only.

Requirements checklist

The following requirements must be satisfied before you can conduct AML/CFT audits in New Zealand:

1. Be a CPA Australia member.
2. Hold a PPC and have adequate Professional Indemnity Insurance. Note: Check with your insurance provider that you are covered for audit activities.
3. Be aware that you must comply with the applicable assurance standards issued by the XRB.
4. Demonstrate at least 3 years’ experience in auditing.
5. Demonstrate experience working within AML/CFT legislation since it took effect in October 2018. This can be demonstrated by providing a current CV, LinkedIn profile information, or a letter from an employer.

 

Email signature template

You may wish to add the below statement to your email signature:

From 1 October 2018, all New Zealand accounting practices became subject to New Zealand's Anti-Money Laundering and Countering Financing of Terrorism Act 2009. Where we are required to conduct customer due diligence, this Act does not allow us to act, or continue to act, for our clients unless we have conducted that due diligence. Please see the Ministry of Justice website for more information.