NZ AML/CFT Compliance Officer key terms

New Zealand's principal statute imposing obligations on reporting entities to detect and deter money laundering and terrorism financing, administered across several supervisory agencies. It sets out customer due diligence, reporting, record keeping and compliance programme duties.

A person or business listed in the Act as subject to AML/CFT obligations, such as financial institutions, casinos, high-value dealers, trust and company service providers, and certain other captured activities. Reporting entities must comply with the full range of duties.

The government agency that monitors a sector's compliance with AML/CFT obligations and can assess, investigate and enforce. In New Zealand these include the Reserve Bank, the Financial Markets Authority, and the Department of Internal Affairs.

The national centre, in New Zealand the Financial Intelligence Unit within the police, that receives, analyses and disseminates suspicious activity reports and prescribed transaction reports. It is the counterpart to supervisors, which focus on compliance.

A documented set of internal policies, procedures and controls a reporting entity must maintain and keep current to detect and manage money laundering and terrorism financing risk. It must be risk-based, accessible to staff, and independently audited.

The designated individual within a reporting entity responsible for administering and maintaining its AML/CFT programme and reporting to senior management. The role carries day-to-day oversight of CDD, monitoring and reporting obligations.

A documented evaluation of how a reporting entity's products, customers, delivery channels and countries could be used for money laundering or terrorism financing. It informs the design of the AML/CFT programme and the intensity of controls.

The principle that controls and due diligence intensity should be proportionate to the assessed money laundering and terrorism financing risk. Higher-risk situations attract enhanced measures, while lower-risk situations may qualify for simplified measures.

A classification assigned to a customer, such as low, medium or high, reflecting assessed money laundering and terrorism financing risk based on factors like occupation, source of funds and geography. It determines the level of due diligence and monitoring applied.

The process of identifying and verifying a customer's identity, understanding the nature of the business relationship, and assessing risk before establishing the relationship. It is the core preventative obligation under the Act.

The baseline level of identity verification and relationship understanding required for ordinary customers assessed as normal risk. It includes obtaining identifying information, verifying it, and determining beneficial ownership.

Additional scrutiny applied when risk is assessed as high, such as for politically exposed persons or complex ownership structures. It may include extra identity evidence, source of wealth checks and senior management sign-off.

Reduced due diligence permitted only where a documented assessment shows genuinely low risk, for example certain low-risk products or publicly listed customers. It never removes the need to identify and verify the customer.

Confirming that a customer is who they claim to be using reliable, independent documents, data or electronic methods. Verification must occur before the relationship is established or a transaction is completed, subject to limited exceptions.

A copy of an identity document confirmed as a true copy by an approved person such as a lawyer, justice of the peace or notary. It supports verification when the original cannot be sighted in person.

Confirming identity remotely through electronic data sources or digital identity services rather than physical documents. The method must be reliable and appropriate to the risk before it can be relied upon.

The natural person who ultimately owns or controls a customer or the person on whose behalf a transaction is conducted. This includes individuals holding a specified ownership or control threshold, and those exercising effective control.

The process of identifying and confirming the natural persons who ultimately own or control a legal entity customer. It requires understanding the ownership and control structure, not merely recording the entity's name.

An entity such as a company or incorporated society recognised by law as having its own legal identity. When it is a customer, its ownership and control structure must be understood and its beneficial owners identified.

A structure such as a trust or partnership that is not itself a legal person but holds or manages assets. Identifying its controllers, trustees and beneficiaries is central to beneficial ownership due diligence.

A business that forms companies or trusts, or acts as trustee or nominee, for clients. Such providers are reporting entities and face elevated risk because they can obscure true ownership.

An individual entrusted with prominent public functions, or a close family member or associate of such a person. Relationships with them require enhanced due diligence and, in some cases, senior management approval.

The origin of the money used in a particular transaction or relationship, such as salary, savings or sale proceeds. Understanding it helps test whether activity is consistent with the customer's profile.

The origin of a customer's total accumulated assets and income over time, as distinct from the funds in a single transaction. It is typically examined for higher-risk customers and politically exposed persons.

The continuing duty to keep customer information current, monitor the relationship and ensure activity remains consistent with the customer's risk profile. It includes periodic reviews and updating identity data when it changes.

The systematic review of customer transactions and activity against expected patterns to identify unusual or suspicious behaviour. It may be automated or manual and feeds into suspicious activity reporting decisions.

A change in circumstances, such as a large unusual transaction or a change in beneficial ownership, that requires a reporting entity to review or refresh customer due diligence. It prompts reassessment of the customer's risk.

A report a reporting entity must file with the Financial Intelligence Unit when it has reasonable grounds to suspect activity may involve money laundering or terrorism financing. It must be filed promptly and kept confidential.

A state of mind where a person has reasonable grounds to believe, beyond speculation, that activity may be linked to money laundering or terrorism financing. It is the threshold for filing a suspicious activity report.

Disclosing to a person that a suspicious activity report has been or may be made, or that an investigation is underway, in circumstances that could prejudice detection. It is generally an offence.

A mandatory report of certain transactions, such as international wire transfers or large cash transactions above a threshold, filed with the Financial Intelligence Unit regardless of suspicion. It supports intelligence gathering rather than expressing suspicion.

A type of prescribed transaction report triggered when a physical cash transaction meets or exceeds the prescribed threshold. It is filed as a matter of course and does not require suspicion.

The monetary amount specified in regulations that triggers a prescribed transaction report, such as for cash or international wire transfers. Transactions at or above it must be reported automatically.

The obligation to retain customer due diligence records, transaction records and reports for the period required by law. Records must be readily retrievable and available to supervisors on request.

A periodic review of a reporting entity's AML/CFT programme and its implementation by a suitably qualified person independent of the programme's operation. It tests effectiveness and identifies gaps for remediation.

Formal sign-off by an organisation's senior managers for higher-risk decisions, such as establishing a relationship with a politically exposed person or accepting a high-risk customer. It evidences accountability for risk acceptance.

The duty not to disclose information about suspicious activity reports or related investigations except as permitted by law. It protects the integrity of reporting and investigations and underpins the tipping-off prohibition.