Recommended Action Plan to Improve Compliance with the FATF Recommendations
|Criminal Justice Measures and International Co-operation||Recommended Action|
|I—Criminalization of ML and FT||1. Give greater emphasis to money laundering prosecutions.|
2. Extend the TF offence to cover the funding of terrorists and terrorist organisations.
|II—Confiscation of proceeds of crime or property used to finance terrorism||1. Consider how to increase the efficiency and speed of the procedures for seeking restraint orders.|
2. Increase the resources of the Crown Law Office and the NZ Police to deal with proceeds of crime matters
3. Consider establishing a multidisciplinary body that could perform restraint and confiscation work in an effective and efficient manner.
4. Introduce measures that will help to ensure that organised and long term criminals (for all types of serious offences) are deprived of their proceeds including: (a) allowing confiscation with respect to the criminal activity in which the defendant has been involved in the past for all types of serious crimes, and (b) requiring the defendant to show a truly legitimate source for all his assets and any income or benefits received.
5. Consider introducing civil forfeiture provisions.
6. Allow tax information to be provided for money laundering, and confiscation and restraint cases.
7. Consider whether terrorist organisations other than those designated by the United Nations should also be designated.
8. Consider introducing a mechanism for listing assets or classes of assets that are owned or controlled by terrorist organisations.
|III—The FIU and processes for receiving, analyzing, and disseminating financial information and other intelligence at the domestic and international levels||1. The FIU should become more proactive in providing further training to reporting parties, publishing periodic reports on typologies and trends, and overall increased interaction with reporting parties.|
2. The FIU should review its guidelines and ensure they are current and meet the needs of all reporting parties.
3. The FIU’s IT capabilities should be increased as a matter of priority.
4. MOUs with counterpart FIUs should be actively pursued.
5. The FIU should implement an electronic process for receiving STRs, and should provide enhanced feedback to reporting institutions.
|IV—Law enforcement and prosecution authorities, powers and duties||1. Investigative and prosecutorial authorities need to focus more on investigating and prosecuting ML and not just predicate offences. ML investigations need to be centralized and given national priority.|
2. The IT capabilities of the investigative and prosecutorial authorities need to be expanded.
3. The development of special training and/or certification of financial investigators for investigations of ML and FT are encouraged.
4. The powers to obtain production and monitoring orders should be simplified and made easier to obtain.
5. The current review of the operational effectiveness of the POCA should examine the lack of authority under s.30 POCA to act without a warrant in order to preserve tainted property from dissipation; the lack of authority to allow tax information to be given to law enforcement under a court order or otherwise; and the lack of ML investigations relating to serious or complex fraud investigations.
|V—International co-operation||1. Improve record retention methods so as to permit more sophisticated searching.|
|Legal and Institutional Framework for Financial Institutions|
|I—General framework||1. NZ authorities should develop an effective supervisory framework to ensure compliance with AML/CFT requirements.|
|II—Customer identification||1. Introduce a requirement to identify and verify the beneficial owner of customers that are legal persons or arrangements|
2. Introduce a requirement to verify that natural persons who purport to act on behalf of legal persons are so authorised and identify such persons.
3. The verification of identity when a person acts on behalf of another person or when the person is an occasional customer should be extended to all transactions and not be limited to cash transactions.
4. Introduce a requirement to identify all parties involved in a trust, including the settlor, trustee and named beneficiaries.
5. Consider requiring the identification of all persons on whose behalf a facility is established, even if there are three or more facility holders. NZ authorities should also consider removing, or at least reducing, the prescribed amount in relation to the identification of persons on whose behalf a facility holder conducts transactions.
6. The procedures to verify identity should be reviewed, and more guidance should be given to institutions on the types of documents they can rely on.
7. The exemption from identification for deposit accounts should be reconsidered.
8. Consider additional policies and guidance for correspondent accounts, PEPs and private banking.
|III—Ongoing monitoring of accounts and transactions||1. Introduce explicit requirements for financial institutions to pay special attention to all complex, unusual large transactions, or unusual patterns of transactions, that have no apparent or visible economic or lawful purpose, and to give enhanced scrutiny to transactions involving countries that have weaker AML systems.|
2. Complete the mechanisms required to ensure full compliance with SR VII.
|IV—Record keeping||1. Consider requiring institutions to retain business correspondence relating to an account.|
|V—Suspicious transactions reporting||1. Take steps to increase the awareness of non bank financial institutions to the risks of money laundering and terrorist financing.|
2. Consider how to further enhance the effectiveness of the system, particularly with respect to reporting by institutions other than banks.
3. Provide increased feedback to reporting institutions.
4. Expand and clarify the provisions concerning the reporting of suspicions relating to terrorist financing, by covering transactions involving all suspected terrorist financing transactions, and not just those that involve entities designated under the TSA.
|VI—Internal controls, compliance and audit||1. Introduce requirements for institutions to have internal procedures to combat money laundering and terrorist financing, to designate an AML/CFT compliance officer at management level, to have on-going employee training, and to put in place screening procedures when hiring employees.|
2. Introduce requirements for institutions to ensure that foreign subsidiaries observe appropriate AML/CFT measures consistent with the home jurisdiction requirements.
|VII—Integrity standards||1. Introduce a requirement to prevent criminals taking control or acquiring a significant participation in non-bank financial institutions.|
|VIII—Enforcement powers and sanctions||1. Put in place an effective system to supervise and/or monitor the compliance by relevant financial and other institutions for AML/CFT purposes. In ensuring that this mechanism is effective and efficient, it would be highly preferable that this supervision is made by one or more financial oversight authorities rather than the FIU, which has neither the resources nor the expertise to perform this function.|
|IX—Co-operation between supervisors and other competent authorities||1. Review the capacity of the relevant authorities to provide international cooperation regarding AML/CFT for supervisory purposes.|