It might sound strange for us, AML/CFT consultants, to say this but it’s true. New Zealand businesses are paying too much to comply with their AML/CFT obligations.
What’s The Biggest Cost?
In 2016, the Ministry of Justice (MoJ) hired the consulting firm Deloitte to help them answer a question: how much does AML/CFT compliance cost in New Zealand?
At that time, MoJ were preparing for lawyers, accountants, real estate agents, and high-value dealers to become reporting entities under “Phase 2” of the AML/CFT Act.
In its report, Deloitte described the lessons MoJ could learn from “Phase 1” of the AML/CFT regime for financial institutions and made predictions for the compliance costs Phase 2 businesses should expect to pay.
One of their conclusions was –
The most significant cost for businesses to become compliant is in the start-up costs (creation of a risk assessment and work programme and putting these processes and procedures in place for the first time).
How Much Are You Spending?
In estimating what these Phase 2 businesses would need to spend in creating risk assessments, programmes, and embedding these processes, they predicted the following:
Source: Ministry of Justice, Phase II Anti-money laundering reforms Business Compliance Impacts, September 2016
Deloitte estimated that the 1,572 lawyers and conveyancers in New Zealand with AML/CFT compliance obligations would spend between $10,242 and $51,463 each in creating a risk assessment, programme, and putting these processes in place for the first time.
Given the majority of these 1,572 businesses are small ventures with less than ten staff and one office, this is a significant new cost. If someone told us at Fiducia that we might need to spend a minimum of $10k on a new expense this year, we’d be stressed.
How Can You Reduce the Cost of Compliance?
MoJ has provided some guidance on how to work with other businesses to reduce your costs of compliance. In our experience, this is relevant to a small minority of businesses and does little to reduce the overall financial cost of AML/CFT risk assessments and programmes.
At Fiducia, we have turned our attention to how we can use our years of experience in the New Zealand AML/CFT compliance industry to make life easier for you and your compliance budget.
Stay tuned in June 2019 for more. If you just can’t wait to find out, email email@example.com and we’ll give you the inside word.