It comes after a report that highlighted a lack of impact internationally from the rules.

James Greig, head of supervision at the Financial Markets Authority, spoke at the Financial Markets Law Conference in Auckland this week.

He said AML/CFT was a “necessary evil” for New Zealand if it wanted to do its part on the international stage and create a safe environment.

“The reason we have such a strong approach to AML/CFT is about making sure New Zealand is shown to be holding up its end….this is an international regime,” he said.

He said there were significant civil and criminal penalties attached to the regime and the industry needed to give it sufficient priority.

“The gloves are off around AML/CFT. This is absolutely an area where we have very little tolerance for non-compliance. This is not a new regime. This is something where supervisors expect people to be compliant with their obligations. We’re taking it seriously. We’ve signally from the FMA point of view that we are going to be taking a stronger line.”

New Zealand is set to be subject to a mutual evaluation report by FATF which will review its AML/CFT framework. It involves a desk-based review and an on-site component.

Greig said being compliant with the requirements required reporting entities to manage a number of obligations. “They are all relatively important and you can’t have one without the other. Some things hang together like a house of cards.”

He said it was important to have a risk assessment to demonstrate compliance with other aspects. Some entities were missing the basics, he said. The FMA and other supervisors wanted to know who was tasked with ensuring compliance and who could answer questions about each entities’ processes.

“We want to know who has their eye on the ball.”

Compliance assessment programmes had been a weakness, Greig said. These had to be reviewed and audited regularly.

Greig said improvements had been made in New Zealand’s adoption of AML/CFT measures. “It’s not all doom and gloom. We’re seeing things heading in the right direction. It’s encouraging.”