An exemption has been issued for registered financial advisers who arrange for a manager of a retirement scheme to provide services to a customer or an intended customer of a retirement scheme.

Authorised financial advisers are usually reporting entities.

Erin Lubowicz acting general manager, criminal justice policy, at the Ministry of Justice, said the exemption did not apply in respect of any other financial products, a discretionary investment management service, or an investment-linked contract of insurance. 

She said conditions included that the RFA had reasonable cause to believe the manager of the retirement scheme was compliant with its AML/CFT obligations.

They must act as an agent of the manager of the retirement scheme and conduct due diligence on the customer or intended customer, report suspicious activities to the manager, provide transaction records and identity verification records to the manager,  establish procedures that were consistent with the manager’s risk assessment and that were compliant with the AML/CFT Act and ensure its relevant employees were vetted and trained on the manager’s AML/CFT obligations.

“This is on the basis that there is a low anti-money laundering risk associated with KiwiSaver and other retirement schemes and, in the absence of the exemption, there would be duplication of AML/CFT obligations between registered financial advisers and the managers of the retirement schemes," Lubowicz said.

Bodies corporate and PAYE intermediaries are among other practitioners exempted.

Strategi managing director David Greenslade said it was not clear that the exemption for RFAs was needed. “All it’s going to do is antagonise a whole heap of AFAs potentially.”

The exemption expires in June 2023.

Under the Financial Services Legislation Amendment Bill, it would be the financial advice provider who carried the AML obligation, not the individual adviser, whether they were currently RFA or AFA.

Justice Minister Andrew Little rejected suggestions that the AML regime was achieving few results.

“We are making it harder for criminals to launder money as this provides a significant disincentive to carrying out the criminal activity in the first place. It is estimated that each year about $1.35 billion is generated from illegal drugs and fraud and illicit funds are often laundered through New Zealand businesses.

“The law changes put in place practical measures to protect businesses from being misused by criminals.

“New Zealand’s AML/CFT system has adopted the international standards set by the Financial Action Task Force and responds to money laundering risks identified in New Zealand. Because our system is in line with other countries, international banks and businesses are willing and able to work with New Zealand because they have confidence that serious measures to counteract money laundering and funding of terrorism are in place.”

He said as the system matured it would help to stop New Zealand being used as a money laundering destination. Through the rest of the year, lawyers and accountants will be introduced into the regime.