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The number of Kiwi businesses that need to comply with Anti-Money Laundering and Combating the Financing of Terrorism (AML / CFT) legislation will quadruple overnight, says one New Zealand insurtech start-up.
Starting July 01, legislative requirements will be imposed on the legal, real estate, sports betting, and high-value goods industries. Brokers that offer cover to clients in these sectors may want to ensure they are well informed as failure to comply with this global legislation can have severe consequences including hefty fines or a jail term.
According to Vallum, the task of combating money-laundering is now more urgent than ever. The cost of AML is estimated to be US$800 billion to US$2 trillion globally.
“Businesses must know who their clients are and where their funds have come from,” Vallum said. “It is not enough to park the funds in a trust account without inquiring about the origins.
“One of the most effective means of managing the compliance risks associated with AML/ CFT and any other data management regulations is to work with partners who incorporate the highest levels of data quality management into their business model by design,” it added.
The start-up also noted that many NZ businesses do not comply with AML. It mentioned several incidents, which included five Kiwi businesses who were formally cautioned by the Financial Markets Authority (FMA) for anti-money laundering failures. These businesses will now face further monitoring visits and serious repercussions if they don’t improve. During the past year, one financial services group working in New Zealand was fined NZ$5.3 million for multiple breaches of the AML/CFT Act, while the Department of Internal Affairs (DIA) has brought a NZ$2.6 million fine against another NZ company.
The estimated amount of money laundered globally in one year is 2-5% of global GDP, or US$800 billion – US$2 trillion. And while the New Zealand Police Financial Intelligence Unit (FIU) estimates that the size of financial fraud in NZ is NZ$1.35 billion, Vallum warns that the actual transactional value is thought to be several times higher.
