AML duplication causes concern

Double-handling and layers of regulatory complexity are being blamed for adding to the compliance burden of advisers who are reporting entities under the AML/CFT Act.

Monday, March 16th 2015, 6:00AM

by Susan Edmunds

Adviser Meredith Cornelius, who also runs a business helping others with their AML/CFT obligations, said some businesses felt they were doing customer due diligence (CDD) many times over for the various parties involved with each client.

An adviser who dealt with wrap provider Aegis would need to provide CDD in the format Aegis’ supervisor, the Reserve Bank, wanted and conduct their own CDD for their own regulator, the FMA.

She said Aegis had indicated they would ask for a selection of client accounts to make sure her CDD processes were correct for their requirements. She also had to report to the FMA, with an audit from another firm, and once a year fill out an online report for the FMA. “Let me get on with it,” she said.

Adviser Robert Oddy said there were too many different groups with their own approaches to how the regulation should be handled. “It’s like pouring sand in the engine room of the economy.”

He said the level of regulation advisers had to deal with and the duplication in the system meant extra costs that were passed on to clients. “When you’re faced with so many difficulties people say forget it and go and buy property.”

The FMA said it was correct that in many situations a financial adviser business using a platform would find the business and their wrap provider reporting to different AML/CFT supervisors.

Spokesman Andrew Park said: “The requirements for all the relevant reporting entities, whether the supervisor is FMA, RBNZ or DIA are exactly the same - it’s the same law for everyone. All supervisors do active monitoring of their populations, provide education and we work together on publishing user guides.”

The FMA has been unconcerned about transactions being reported twice because supervisors are required to monitor AML risks at an individual reporting entity level rather than the risk of sectors as a whole.

A Ministry of Justice spokesman said an upcoming review of the AML/CFT Act would focus on extending its provisions to a wider set of businesses and professions. “However it will also be an opportunity to address any issues arising from the implementation of the AML/CFT Act. The Government has not made any decisions about the timing.”

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