Anti-Money Laundering and
Countering the Financing of Terrorism 

INDUSTRY UPDATE

Stakeholder Briefing:
Associate Minister of Justice, Hon Clayton Cosgrove
25 March 2008

Background

The last industry update of February 2008 advised of the intention of the Associate Minister of Justice, Hon Clayton Cosgrove, to assess the compliance costs of current Anti-Money Laundering (AML) reforms. The Cost Compliance Exercise has commenced, with the appointment of Deloitte as consultant to the Ministry of Justice. Deloitte will be gathering information on compliance costs across the financial sector as well as the non-financial sector, the latter including such entities as lawyers, conveyancers, accountants, real estate agents, the racing board and jewellers. Information to be gathered includes costs of implementing a customer due diligence regime (in low through to high risk situations) record keeping, implementation of an ongoing customer due diligence programme, AML training for staff, and suspicious transaction reporting.

This update reviews a subsequent Stakeholder Briefing on this issue. The Briefing was hosted by Minister Cosgrove at Parliament on 25 March for the benefit of private sector entities affected by proposed reforms.

Update

The Briefing began with the Associate Minister highlighting two concerns:

1. Compliance with our international obligations.
2. Minimising the compliance burden on the private sector.

Associate Minister Cosgrove assured stakeholders that the AML reforms taking place in New Zealand will be implemented through an approach that seeks to minimise the impost upon industry.

Associate Minister Cosgrove pointed to the Cost Compliance Exercise being carried out by Deloitte as one of the ways by which industry could help Government achieve the optimum legislative fit for New Zealand. He noted that, while the Cost Compliance Exercise will require the development of indicative compliance obligations, these obligations are not intended to pre-empt regulation. Minister Cosgrove emphasised that the Cost Compliance Exercise will afford an opportunity for industry to provide more specific detail to Government around potential AML compliance costs and that this detail will inform subsequent consultation in the development of regulations. The Associate Minister expressed his desire to see a high level of cooperation between government and industry over the AML reforms.

Presentations by the Police, Reserve Bank and Ministry of Justice stressed the importance and benefit to New Zealand of satisfying our international obligations while reinforcing the approach of legislative "best fit" for New Zealand. It was noted that New Zealand gains a number of reputation benefits from having a well regulated financial system, such as:

• Equitable access by our financial sector to comparable financial systems;

• Enhanced law enforcement capabilities;

• New Zealand not being seen as a weak link in terms of resisting money laundering activity; and

• New Zealand maintaining its position as a good international citizen.

Minister Cosgrove noted that his concern to get a fuller picture of the ramifications to the private sector via the Cost Compliance Exercise has delayed the introduction of AML legislation. He noted that policy decisions from Cabinet are anticipated in July with legislation being introduced by the end of 2008.

FATF Interagency Working Group
Ministry of Justice
7 April 2008