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Acronyms and AML/CFT terminology explained in plain English

Annual report2017-06-22T15:52:06+12:00
All reporting entities in New Zealand must complete an Annual Report by August of every year. This Annual Report is submitted through your supervisor’s website in the form they provide you, and asks you to record and describe data relating to the ML/TF risks in your business.
AML / CFT2017-06-22T10:42:54+12:00

Anti-Money Laundering and Countering Financing of Terrorism. This is how the New Zealand government refers to the suite of requirements relating to managing and mitigating the risks of money laundering and terrorist financing. It’s often referred to as simply AML.

AML/CFT Act2017-06-22T10:41:26+12:00

Anti-Money Laundering and Countering Financing of Terrorism Act 2009. This came into effect in New Zealand in 2013.

AML/CFT CO2017-06-22T10:44:34+12:00

Anti-Money Laundering and Countering Financing of Terrorism Compliance Officer. Every reporting entity in New Zealand is required to have one. Find out more here.

APG – Asia/Pacific Group on Money Laundering2017-06-22T15:50:59+12:00

Asia/Pacific Group on Money Laundering is a regional body that provides evaluations, technical assistance, and research for its member countries in complying with the Financial Action Task Force (FATF) requirements. New Zealand is a member of both APG and FATF.

Beneficial Owner2017-06-23T11:02:27+12:00

A beneficial owner is an individual who

  • ultimately owns more than 25{37bdd4c223d4a7cf5f55956567c78ad3335a9798c1f68f1890044a4577de9da9} of a customer; or
  • controls the customer such as Directors or Senior Management; or
  • on whose behalf a transaction is being conducted

A individual on whose behalf a transaction is being conducted include those individuals who are central to the transaction even where the transaction has been deliberately structured for individuals to avoid control or ownership but to retain the benefit of the transaction.

CDD – Customer Due Diligence2017-06-22T14:47:05+12:00

Customer due diligence. Used to describe the policies and procedures a reporting entity needs to identify and verify the identity details, and nature and purpose of their customer’s dealing with them. This can be used as a general term, but can also be used to mean standard due diligence. Fiducia sees standard customer due diligence as part of a reporting entity’s KYC obligations.

DIA – Department of Internal Affairs2017-06-22T14:47:32+12:00
EDD – Enhanced Due Diligence2017-06-22T14:47:53+12:00

Enhanced due diligence. Used to describe the additional identity and verification information needed for customers who might be high risk. EDD requires that a customer’s source of wealth or funds are specified and verified, along with any other measures that manage and mitigate a customer’s ML/TF risk. EDD is part of a reporting entity’s KYC obligations.

FIU – Financial Intelligence Unit2017-06-23T11:03:08+12:00

Financial Intelligence Unit. This is part of the New Zealand Police who receive and process STRs.

FMA – Financial Markets Authority2017-06-22T14:46:42+12:00

The Financial Intelligence Unit web portal that all reporting entities are required to register with to and file STRs through.

Independent Audit2017-06-22T13:53:13+12:00

See Independent Audit in our Services section.

Internal Audit2017-06-22T13:57:54+12:00

An often overlooked part of your “business as usual” AML/CFT regime is your internal AML/CFT audit. Internal audits are a crucial part of what your supervisors require of your programme assurance measures. They are the centre point of your control to say how your procedures are

  1. meeting your policies in order to keep you and your business safe.
  2. It’s the best way to prepare for an independent AML/CFT audit to catch any gaps before your auditors or supervisors do.


KYC – Know Your Customer2017-06-22T14:45:26+12:00

Know Your Customer. Sometimes used interchangeably with CDD, KYC refers to the policies and policies and procedures a reporting entity needs to identify and verify the identity details, and nature and purpose of their customer’s dealing with them. Fiducia used KYC to refer to the group of requirements covering CDD, EDD, SDD, ODD, and PEP checking.

ML/TF – Money Laundering / Terrorist Financing2017-06-22T14:45:43+12:00

Money Laundering and Terrorist Financing.  Money laundering is an activity criminals undertake in order to hide money they make from illegal activities. Terrorism financing is activity that provides financing or financial support to individual terrorists or terrorist groups. Generally, ML takes place after illegal activity has taken place, and TF takes place before terrorist activity has taken place.

MoJ – Ministry of Justice2017-06-22T15:57:31+12:00

The Ministry of Justice is the government agency that creates AML/CFT related policy in New Zealand and controls what rules are put in place. You contact the MoJ if you are seeking a Ministerial Exemption or want to comment on the types of AML/CFT rules that you must comply with.

Nature and Purpose2017-06-22T14:05:52+12:00

A Reporting Entity (R.E) must understand the purpose and intended nature of the business relationship or transaction to assess whether the proposed business relationship is in line with the R.E’s expectation and to provide the R.E with a meaningful basis for ongoing monitoring.

In some instances, this will be self-evident, but in many cases the R.E may have to obtain information from the customer at time of on-boarding.

NTA – National Risk Assessment2017-06-22T16:00:07+12:00

Published by the Financial Intelligence Unit (FIU) gives a broad picture of the money laundering and terrorist financing risk within New Zealand at a national level. The NRA was published in 2010 however the FIU also publish quarterly typology reports updating the evolving methods and risks of ML/TF occurring within New Zealand.

ODD – Ongoing Due Diligence2017-06-22T14:44:43+12:00

Ongoing due diligence. A statutory requirement of the AML/CFT Act, and used to describe the requirement of a reporting entity to be consistently aware of the KYC information of a customer as it changes over time.

PEP – Politically Exposed Person2017-06-22T14:45:11+12:00

Politically exposed person. PEPs are defined in the AML/CFT Act, and all reporting entities must check their customers to determine if they are PEPs.


See Programme in our Services section.

Reasonable assurance2017-06-22T15:54:05+12:00

Reasonable assurance is the level of assurance Fiducia’s AML/CFT Independent Audits provide. This means we state we are reasonably sure that your AML/CFT compliance regime is free from material failures to comply.


A term used to generally refer to the government bodies in charge of AML/CFT in New Zealand. Regulator is occasionally used interchangeably with supervisor.

RBNZ – Reserve Bank of New Zealand2017-06-22T14:46:01+12:00
R.E. – Reporting Entity2017-06-22T14:44:17+12:00

Reporting Entity

This is the term used for a business whose activities require them to comply with the requirements of the AML/CFT Act.

Risk Assessment2017-06-22T13:48:57+12:00

See Risk Assessment in our Services section.

Source of Funds and Wealth2017-06-22T14:06:32+12:00

‘Source of wealth’ refers to the origin of the customer’s entire body of wealth – their total assets. This will give a reporting entity an idea of both the volume of wealth the customer would be expected to have and how the customer acquired that wealth.

‘Source of funds’ refers to the origin of the particular funds or assets which are used in the transaction between the customer and the reporting entity

SRA – Sector Risk Assessment2017-06-22T16:00:22+12:00

A SRA is published by the three New Zealand supervisors relevant to the Financial Sectors caught under the Act. They are designed to help Reporting Entities better understand their own exposure to money laundering and terrorist financing risks within their sector. The potential risks included in the SRA are expected to be included when R.E’s produce their own individual Risk Assessment.

STR – Suspicious Transaction Report2017-06-22T14:46:18+12:00

Suspicious transaction report. For information about STR’s see the FIU section on Who Makes The Rules?


This is the government department that monitors your compliance with the AML/CFT Act in New Zealand. You will have one of three supervisors, they each monitor different industries. The New Zealand government supervisors are the Department of Internal Affairs, the Financial Markets Authority, and the Reserve Bank of New Zealand. More information can be found here.


Typology refers to the various techniques used by money launderers and terrorists to obtain funds and conceal their origin. The FIU provide extensive information on New Zealand ML/TF typologies in their National Risk Assessment and Quarterly Reports.

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