Change on the horizon: AML/CFT updates from now to 2027

Over the last 18 months, the one constant in AML/CFT has been “change”. We’ve seen new regulations, a constant flow of updates to guidance, and now there are some future significant changes on the horizon. Reporting Entities, and the AML/CFT industry overall, are set to be busy for some time as these new requirements, changes and updates are rolled out over the next two to three years.

The Associate Minister of Justice, Nicole McKee, has announced significant changes to the regulatory and supervisory system of AML/CFT in New Zealand. The reform programme has been approved by Cabinet, which “will allow the system to be more responsive to industry and community needs, more agile, and more focused on the real risks posed by money laundering to New Zealand businesses.”

Alongside this significant change are a series of smaller but no less significant changes, aiming to provide compliance relief and streamline regulatory practices.

The Minister spoke at the ACAMS/FIU conference in late October and outlined a three-part strategy to getting these changes in place between now and 2027.

The first part of the strategy is two Bills that are currently in Cabinet to amend the current legislation. These amendments will address sticking points relevant to all sectors, such as the ability to truly risk rate trusts, identify trusts which present low risk from a money laundering and financing of terrorism risk perspective, and eliminate the need for address verification. March 2025 is projected to be the conclusion of this process, providing regulatory relief and enabling New Zealand to meet some of the recommendations of the Financial Action Task Force (FATF) mutual evaluation review. There will also be enhancements to fines and penalties for non-compliance.

The second part is a structural reform of supervision, with the appointment of the DIA as the supervisor for AML/CFT across all industries. It is not quite clear as to when this will take place, however, consultation is planned.

The final part is an introduction of an industry levy which is forecast to be in place from 2027. The levy aims to ensure that the cost burden is spread fairly across the industries and does not overly impact smaller Reporting Entities, while also providing economic benefits to the Crown. Alongside the levy’s introduction, an AML/CFT National Strategy and work programme will be introduced as a part of that funding model. A similar levy model is in operation in Australia under the AUSTRAC regime.

These changes are additional to the ones we already knew about – such as the new regulations in place from 1 June 2024, the requirement to risk-rate new clients from 1 June 2025, and significant updates to guidance from all the sector supervisors over the last 12 months. This makes it a busy time for what are already-stretched compliance teams.

If you need assistance in your AML/CFT, contact our team who are happy to help.

 

Louise Coad, Senior Consultant, MA, CAMS

Louise originally started her career in IT Managed Services and transitioned into the AML space in 2018. She has worked in other AML consultancy firms in New Zealand, and was a Senior Regulator at the Department of Internal Affairs. In her time in the AML sector, Louise has carried out consultancy for Phase 2 entities, undertaken audits and inspections, training, and written AML/CFT documentation for all types of reporting entities.

Louise undertakes audits, health checks, and development of compliance documentation, looking for pragmatic and clear ways towards compliance that bear the business’s needs in mind. She has a Master of Arts, specialising in Defence and Security, and also holds a CAMS qualification.