Anti-Money Laundering and Counter Financing of Terrorism Act 2009

By Emily Merrill, Law Clerk, Holland Beckett

Money laundering is the method by which people attempt to disguise the proceeds of their criminal activities. Usually this is achieved by intertwining the proceeds of criminal activities into the financial system through integrating the laundered funds into the legitimate economy by entering into numerous and complex financial transactions with the purpose of disguising the true origins of the funds.

One method money launderers are able to achieve this, is through using the services provided by solicitors, accountants and real estate agents. Therefore, these professionals have been referred to as ‘gatekeepers’, as they provide services which can be used to assist the entry of illegal funds into the legitimate economy and provide the impression of legitimacy. Real estate is particularly prone to be used by money launderers  to move large amounts of funds in a single transaction without alerting any suspicion through the purchase of real estate. Real estate also offers criminals a legitimate income to mix with illegal proceeds. This means that the ‘gatekeepers’ can assist criminals to create a façade of legitimate wealth.

In response to criminals using the ‘gatekeepers’ as a way to create a legitimate appearance of wealth, the Anti-Money Laundering and Counter Financing of Terrorism Act 2009 (“AML/CFT Act”) has now been introduced to require certain professions, including real estate agents,  to verify the identity of their clients before providing their services.

From 1 January 2019, real estate agents will be required to complete Client Due Diligence (“CDD”) to verify the identity of their clients in accordance with the AML/CFT Act once a ‘business relationship’ begins. For real estate agency work, the business relationship commences when the vendor signs an agency agreement with the agent.  If the real estate agent is not able to verify the identity of their client through CDD, they will be unable to act for them in relation to their real estate.  As a client, the information you will be required to provide depends upon whether you are entering into an agency agreement as an individual, trust or a company.

For individuals, the agent must collect the full name of the client, date of birth and proof of residential address. Therefore, as a client you will need to provide either your Passport, New Zealand Firearms Licence or New Zealand Driver’s Licence.  Along with your proof of ID you will need to provide the agent with an original document with your residential address such as a bank statement or utility bill.

For companies, the agent will need to gather the above information for all individuals that have an effective control of the company and those who are acting on behalf of the company. Therefore, each Director of the company will need to provide the above information as well as every individual with more than a 25% shareholding in the company.

In circumstances where Trusts are involved, all trustees and settlors will need to provide the above information as well as a copy of the Trust Deed. The agent will also need to record the trust’s source of wealth or funds. Therefore, to aid your agent with this, you should advise your agent who the trust’s accountant is. Additional information may also be required for the beneficiaries and appointers of the trust.

In cases where the client is a trust, company or if individuals are overseas, the CDD process can sometimes take weeks to complete. Therefore, we recommend that if you are planning to engage real estate agency work, you should contact your agent as soon as possible to have the CDD process completed.

Disclaimer: This article is general in nature and should not be treated as professional advice. The above list is not exhaustive and is indicative only. Your agent will assist you with the specific CDD requirements in relation to your situation.  

  • Associated Realty

    Working as a team to give you a better result! Tauranga's commercial property specialists.
BDO

June 1, 2013
by: admin • Uncategorized

BNZ

June 1, 2013
by: admin • Uncategorized

Holland Beckett Lawyers

June 1, 2013
by: admin • Uncategorized

Kale Print

June 1, 2013
by: admin • Uncategorized

BDO

June 1, 2013
by: admin • Uncategorized

BNZ

June 1, 2013
by: admin • Uncategorized

Holland Beckett Lawyers

June 1, 2013
by: admin • Uncategorized

Kale Print

June 1, 2013
by: admin • Uncategorized