RFAs confused about AML rules

“Registered financial advisers are unsure of their requirements under the incoming anti-money laundering regime, the Professional Advisers Association says.”

Really?? Have heard absolutely nothing from the banks (or insurers) in terms of RFAs now having more onus placed on “themselves” to identify illegal activity of this nature.

A lot of hoopla over nothing. The PAA’s professional development manager is doing her usual song and dance though.

Those of us RFAs who do training and development of our own accord, outside the boundaries of the existing affiliations and ETITO network seem to be more aware of the barbs that come with the AML, and have been asking questions for some time now...

But apparently my qualifications and education don't count for anything!

Just saying...

I cannot say that I agree with "Amused" above, why is discussing this and seeking clarification from the FMA "a lot of hoopla over nothing"?

One of the Insurers actually sent a bulletin on this very subject the day after Amused's posting.

Actually I think the PAA should be applauded for trying to get these questions answered BEFORE a member gets themselves into trouble rather than after.

Stop being negative just for the sake of it. Personally I have no desire to fall foul of the FMA or AML laws; no doubt Amused is an expert in all of this, perhaps he/she could enlighten us?

One solution, unsurprisingly is for all RFAs to become AFAs - whereby accountability and professionalism under regulation are clearly defined.It doesn't take a rocket scientist to work out an adviser's responsibilities. Here's a tip for the PAA: life insurance is not exempt from the regime. The law has been in place since 2009 and takes effect in June 2013.

Delighted to Giles. Here is the text of the insurers email you are referring to. It doesn't take an "expert" to see reading this that absolutely nothing has changed for RFAs in terms of their duty of care under the new AML regime. Identify your client for the provider you are taking them to - Jeez, I hadn't ever thought to do that before now! So, as I said earlier making a mountain out of a molehill. More scare tactics to make us RFAs feel dependent on some organisation etc. to guide us through regulation. Anyone would think mortgage brokers and insurance advisers can't think for themselves!


Good afternoon

As you will be aware, the Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT)legislation comes into full effect on 30 June 2013. This legislation requires financial institutions to implement their own customer identification procedures.

I thought it timely to remind you of our requirements so that we can work together to provide the best possible service to our clients.

OnePath is committed to high standards of AML and CFT compliance and follows the below customer identification procedure:

1.We request verified customer identification at the time of application (refer to page 21 of the Assurance Extra Application Form).
2.If verified identification is not provided with the application, we will notify you and record it on the policy’s ‘Outstanding Requirements’ report. New Business will be issued without verified identification.
3.If one of the below triggers occur, and we do not have verified identification on file, it must be provided before funds can be released.

- Claim payment
- Refund of premiums
- Investment withdrawal

What type of identification is acceptable?

Currently any one of the following identification documents is acceptable (note - these might change in the near future to meet changes to AML legislation).

- Current and valid passport
- NZ Drivers Licence
- NZ Firearms Licence
- NZ Bank Issued Credit Card or Debit Card (provided customers name and signature are on the card)
- NZ Bank issued pre-printed deposit slip

Funds cannot be released where the Adviser Declaration of the Policy Owner Identity Verification is completed but no identification has been provided.

We strongly encourage you to supply all required information with new applications to assist clients at claim time or if a refund of premiums is sought.

If you have any questions please feel free to contact your Regional Sales Manager.

Kind regards

Jeremy Nicoll
General Manager Adviser Distribution
OnePath

I referred to the OnePath memo as you said no Insurers had said anything, well now they have, but only from their perspective.

You will also know that under the new AML rules there is a requirement for a written Risk Assessment to be carried out by all AFAs (amongst many others). Can you categorically state that this is NOT required if you are an RFA? If so where have you found this information? Or are you now an "expert" in the AML regulations yourself?

I am a member of the PAA and them asking questions on my behalf and advising me as to the answers to those questions I find quite useful. If getting this information Amused, somehow makes you feel "dependant" to the PAA, then I guess that is your prerogative.

Hi Giles,

“Common sense” dictates that RFAs will NOT be required to complete a written risk assessment when dealing with their mortgage and insurance clients. AFAs were up in riot last month (rightfully so) with the implications that they separately will now be required to report all international wire transfers and large cash transactions to the police regardless of whether the transactions are suspicious.

SIFA president Robert Oddy said it best when he described the proposal as “bureaucracy gone berserk” And I quote: “It’s just absurd. It’s a mindless increase in bureaucratic accumulation of data and you have to ask what the benefit is and who is going to look at it,” he said. “A lot of this is coming out of bureaucrats in cupboards which must be windowless and airless. No cost-benefit analysis seems to have been undertaken… someone just dreams this up and plants it on us.” This statement from Robert can easily be applied also to the logic of having RFAs complete a written risk assessment for our clients for mortgage and insurance applications. In our case though it’s not actually going to happen.

Now back to RFAs and what our core business activity is. At the end of the day it’s mainly securing mortgage finance and insurance cover for clients. The banks and insurers I have spoken to this afternoon have reconfirmed that the ultimate responsibility for the client been identified correctly is on them as the provider. Again common sense. As one lender said to me “our branch staff will always ID the customer at the branch with any new mortgage (new to bank or existing customer regardless)” The insurers (well at least the ones I deal with) nowadays want the client/policy holder identified up front when submitting applications for underwriting. Makes total sense for any potential life claim in the future and a good practice to get into regardless. OnePath’s email is just restating that it’s business as usual essentially i.e. ID your client when submitting business.

The new legislation been introduced 30th June requires financial institutions to implement their own customer identification procedures (as OnePath have stated themselves) and as far as the banks and insurers are concerned nothing is really different for their interaction with mortgage brokers and insurance advisers (as per previous paragraph)

Without sounding arrogant AFAs are quite a different beast to RFAs (as clearly spelt out in the regulatory requirements of the Financial Advisers Act) and because of this they will always have additional regulatory paper work etc. to complete for their clients. This is because they mainly specialise in investment advice and the powers that be ruled that this part of the financial services industry needed closer monitoring (we can all debate that issue to the cows come home)

So in summary Giles, relax, chill out and have a great weekend!

P.S. Not to have a go at the PAA but I don’t need them to figure out what most of us can already deduce from our own experience working in this industry. Common sense “usually” prevails!

Just a question...no mention of the QFEs on this.....I have come across some real shoddy work by them!! Who polices them?? Any comments or are we just RFA bashing. As for the PAA, money grabbing egotistical school teacher tyrants....umm just saying

RFAs (and QFE staff - Billy - Who are not AFAs)could be caught in several ways, especially with Mortgage or Finance broking/advice/services or those who deal with Deposits or KiwiSaver. Luckily if they are, most of the product providers will have requirements that would provide a suitable process, but I would suggest a risk assessment is done as the AML/CFT regulations are not clear on who is caught and who is not, and the assessment would provide the answer on if your advice business has a risk which requires a more robust process.

Wow!
Amused patronisingly suggests I "relax, chill out" etc etc. I merely mentioned I was quite happy for the PAA to investigate on my behalf and I get the above diatribe; none of it actually FACT, just lots of so called "common sense". PAA advised they were trying to establish FACTS.

You do as you wish Amused and I will do as I wish. I pay to be a member of groups like the PAA to get direction and guidance and also to advocate for Advisers as a group. I certainly DO NOT see seeking clarification as " a lot of Hoopla over nothing".

If you feel that strongly about the PAA perhaps you and "Billy The Broker" can show your disapproval and both resign together?

Giles,

Not patronising at all. As I simply said on early Friday evening this issue regarding AML legislation is NOT something you need to be getting yourself all worked up about as an RFA! There are more important issues for mortgage brokers etc. to concern themselves with when running their business.

If you think the PAA add value to your business then great. Some people like belonging to an association for direction and guidance (they seem to need it). Others who are more established in the industry may not see the need any more to pay to have information from the banks regurgitated via a third party. The advocacy role so often touted by associations is well and truly nullified by what the broker groups themselves i.e. Allied Kiwi, TNP etc. do for members nowadays in terms of negotiating commissions etc. with the providers directly.

Billy the Broker has simply said what many people are probably thinking.

Rather amusing written dialogue here. Thankfully the PAA represents the views of more than two Advisers. Being 'pro-active' is perhaps new for some Advisers who have until now been 're-active'. Congratulations Jenny on being 'pro-active'. I would rather have a ship prepared for rough seas that never come rather than not at all. Rather like going out to see fishing without a life jacket....

You advise me Amused that you were not being patronising and you do so with yet another patronising response. I was not "all worked up" last Friday and I am not so now, I just happened to disagree with you.

You state "Others who are more established in the Industry" (yet another patronising remark), by which you imply myself and anyone else in the PAA obviously are not. I started in the Finance and Insurance industry in 1980 and have been through regulation once before and have seen other people's cavalier attitudes become their undoing.

As I said before if you get nothing from the PAA fine, you are obviously not a member, allow other people to investigate legislation without having to hear your smug views hiding behind a nom de plume.

Of course you could suggest (no doubt you would demand) to Good Returns that in your humble opinion they should stop printing such arrant nonsense as anyone with a shred of "common sense" KNOWS the answer.

@ Giles.....are you at the coal face or just a manager now?? And nom de plume or not we are allowed our opinions....but very manly of you for putting your name out there, must be the old bulldog in you..enjoy the PAA and I will enjoy my non connection with them.... good luck..