AML/CFT: NZ Securities Commission's "risk assessment" under new AML law

New Zealand's Anti-Money Laundering and Countering the Financing of Terrorism Act 2009 is broadly modelled on Australia's current law. And that's a disaster. More than three years into implementation of Australia's ridiculously convoluted law, AUSTRAC is still releasing a stream of explanatory notes, guidelines and clarifications.

New Zealand's law will, like that in Australia, be phased in - full implementation is due in 2013.

Under the legislation the Commission will supervise issuers of securities, sharebrokers, financial advisers, trustee corporations, collective investment schemes and futures dealers for counter-money laundering purposes.

The assessment highlights the possible risk of money laundering in each sector, for example, low risk for issuers of securities, medium risk for sharebrokers and medium to high risk for financial advisers.

At least that's what they say. It is not a view which is universally held: Nigel Morris-Cotterill, Head, The Anti Money Laundering Network (ultimate owner of BankingInsuranceSecurities.Com) says "the risk of money launderers in share issues is one which is under-recognised in most countries. Yet it is a remarkably simple form of laundering using a system which is tailor made for abuse. The stock market is widely used for laundering in other countries: it is odd that New Zealand would consider itself partially insulated from these risks."

The Sector Risk Assessment can be found on the Commission's website at www.seccom.govt.nz (PDF 230KB).

The Reserve Bank of New Zealand and the Department of Internal Affairs have also published sector risk assessments for the entities they will be responsible for, and these can be found at www.rbnz.govt.nz and www.dia.govt.nz.