FATF Highlights the Gaps in New Zealand’s AML Measures

Financial Action Task Force (FATF) has issued a report on New Zealand’s measures to combat money laundering. The financial watchdogs said that the country has done an effective job in taking measures against money laundering and terrorist financing but there are still some gaps that need to be addressed.

The Financial Action Task Force is responsible for monitoring laws and regulations regarding money laundering and terror financing. They carried out an investigation on New Zealand’s regulatory measures against financial crimes. Despite having found good results, the regulators also highlighted some of the gaps including transparency of the beneficial ownership, weak supervision in some of the industries reporting suspicious activity, and lack of compliance with financial sanctions to avoid terrorist financing. 

“The report recommends increasing the scope and depth of the Reserve Bank’s [Anti-Money Laundering/Combating the Financing of Terrorism] supervision of the banking sector,” a spokesman for the Reserve Bank of New Zealand, another supervising agency, said in a statement. “To the extent feasible the Bank is addressing this within the scope of its five-year funding agreement approved last year.”

The global regulator, FATF, also complimented the country on many aspects of its anti-money laundering and counter-terrorist financing system. The law enforcement unit of the country frequently uses financial intelligence to capture potential criminal activities and further investigate the wrongdoing. They also prosecute the crime especially in recovering the loss from the criminal activity. 

The regulators also called out for the country to take adequate measures to strengthen the monitoring of some of the sectors including lawyers, accountants and real estate agents. These sectors have been recently brought under the country’s anti-money laundering radar. A system must now be set up to tackle the financial crime in these sectors. 

FATF also recommended that the country must improve the transparency of the current true beneficial ownership information of the businesses including the limited liability companies and partnerships that are being misused to launder illegal funds. 

The law enforcement in the country also remains vigilant of the funds being misused for domestic terrorist attacks after a mass shooting at two mosques in 2019. FATF said that the measures to investigate terrorist funding have also been well-coordinated. FATF highlighted that New Zealand has a strong legal framework to enforce financial sanctions such as asset freezing. However, the report also highlights that no asset has been frozen under the financial sanction regime.