Increases in AML Enforcement

As the anti-money laundering (AML) compliance regime evolves quickly in New Zealand, so too does the likelihood of compliance remediation project being something you’ll need to know about.

With the regime under the Anti-Money Laundering and Counter Financing of Terrorism Act 2009 (AML/CFT Act) now firmly entrenched in the New Zealand financial services industry, we can expect to see the three supervisors, Department of Internal Affairs (DIA), Financial Markets Authority (FMA), and the Reserve Bank of New Zealand (RBNZ), will concentrate more on enforcing the requirements of the regime.

To date, we have seen all three supervisors issue formal warnings to reporting entities and an escalation of enforcement activity is inevitable.

What Happens If You Get a Warning

If you receive an enforceable warning from a supervisor, you know it’s time to put a remediation plan into place. The supervisor will have told you what needs to be fixed, and the timeframe you have to fix it in. If you don’t have an AML compliance expert in-house, hiring external specialists may be your best move.

A remediation project with an external specialist like Fiducia will focus on getting you the most effective amount of change, in the quickest amount of time, within the budget you can afford. The severity of the compliance problems in your business may mean that a few “big wins” are the best way to practically embed operational change within your teams.  Too many changes, or too much new information in a short period of time, can overwhelm compliance officers and staff members quickly.  The prescribed time frames and a limited budget also may mean that only some of the compliance problems can be addressed in one project.

What Makes a Successful Remediation Project?

A successful remediation project replies on two things: senior management engagement and follow-up testing and controls.

How much a remediation project can achieve depends upon how committed the senior management team is to resolving the compliance problems in the business. A compliance team and external specialist requires adequate budget, and adequate time away from their day-to-day duties to dedicate to truly addressing the underlying compliance problems. Under-resourced teams cannot spin gold if they are given hay.

Further, we can only know if a remediation project is successful if appropriate and comprehensive testing and controls of the changes made are carried out and reported on, both within the business and to the supervisor. It’s very easy for a problematic status quo to remain in place if a compliance team and their senior management spend a week focusing on making change, and let focus drift off again.

Enforceable warnings from an AML supervisor can be made into an opportunity, rather than a problem, if they are taken sufficiently seriously by the reporting entity who is subject to them.

Have a remediation project on the horizon? Contact Fiducia to talk about it, information@fiducia.co.nz.