Major Overhaul of Anti-Money Laundering and Countering Financing of Terrorism System

Minister McKee stressed the importance of these changes for New Zealand's international standing.


Devdiscourse News Desk | Wellington | Updated: 23-10-2024 12:59 IST | Created: 23-10-2024 12:59 IST
Major Overhaul of Anti-Money Laundering and Countering Financing of Terrorism System
The reforms follow a Financial Action Task Force (FATF) evaluation of New Zealand’s regulatory framework and a review of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009. Image Credit:
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  • New Zealand

The New Zealand Government is set to introduce a significant overhaul of the country's Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) system, according to Associate Justice Minister Nicole McKee. The changes, aimed at improving compliance efficiency and reducing regulatory burdens, include the introduction of a single supervisor model and a new sustainable funding approach.

"The Cabinet has approved a comprehensive AML/CFT reform work programme, which will streamline supervision and introduce a new funding model, ensuring the system is more responsive, agile, and risk-focused," Minister McKee announced.

Currently, AML/CFT supervision is divided between three bodies: the Reserve Bank, the Financial Markets Authority, and the Department of Internal Affairs. Under the new structure, the Department of Internal Affairs will assume full responsibility as the sole supervisor of the system. "This single-supervisor model will allow for a more coordinated and efficient approach to AML/CFT oversight," McKee said, noting that businesses have long sought regulatory relief from the burdens of the current multi-supervisor system.

The reforms follow a Financial Action Task Force (FATF) evaluation of New Zealand’s regulatory framework and a review of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.

Key Changes to the AML/CFT System

The new single-supervisor model is designed to improve system efficiency by fostering a risk-based approach and delivering quicker, more relevant guidance and support to businesses. McKee emphasized that "businesses will experience substantive regulatory relief as the system becomes more streamlined and responsive."

In addition to the supervisory changes, the Government will introduce a new industry levy to fund the AML/CFT system. The levy, part of the new funding model, aims to ensure the system remains flexible and sustainable without placing undue financial burden on small businesses. "The levy will be structured to ensure costs are fair, equitable, and reasonable for the sector," McKee explained.

The overhaul will also see the introduction of an AML/CFT National Strategy and accompanying work programme, both developed in partnership with industry stakeholders. The strategy will guide future amendments to the levy and ensure that AML/CFT regulations align with industry needs and priorities. "This collaborative approach will ensure that the AML/CFT system is focused on industry priorities, delivering better regulation, supervision, and support," McKee said.

Impact on New Zealand’s International Reputation

Minister McKee stressed the importance of these changes for New Zealand's international standing. "The reforms will ensure that our AML/CFT system meets international standards, supporting trade, investment, and economic growth by aligning with the financial sectors of our key trading partners," she said. Maintaining New Zealand’s reputation as a responsible global financial player is crucial for economic relationships and investment opportunities.

The new AML/CFT reforms, including the single-supervisor model and the industry levy, will undergo legislative processes before being implemented, with the aim of creating a more efficient and supportive regulatory environment for businesses across New Zealand. "These changes are a critical part of the Government’s commitment to improving the regulatory landscape for New Zealand businesses, while also ensuring the highest standards of financial integrity and security," McKee concluded.  

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