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Anti-Money Laundering and Countering Financing of Terrorism Act 2009

AML/CFT requirements and compliance - Customer due diligence - Enhanced customer due diligence

22: Circumstances when enhanced customer due diligence applies

You could also call this:

"When extra checks are needed to stop money laundering"

Illustration for Anti-Money Laundering and Countering Financing of Terrorism Act 2009

You need to know when a reporting entity must do extra checks on customers. This happens when they start a business relationship with a customer who is a trust or has shares in a company that are not in their own name. It also happens when a customer is from a country that does not have good systems to stop money laundering. You will have extra checks if you want to do a big or unusual transaction with a reporting entity. This is because the entity wants to make sure you are not laundering money. They must also do extra checks if they think there is a high risk of money laundering. A reporting entity must do extra checks on a customer who is a politically exposed person. This means someone who has a important role in a government. They must also do extra checks when they are involved in a wire transfer or have a special banking relationship. If a reporting entity is dealing with new technology that could help people hide their identity, they must do extra checks. Real estate agents have special rules they must follow when doing extra checks on customers.

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This page was last updated on

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM2333613.

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21: Simplified customer due diligence: other requirements, or

"Learning more about a company when you start working with them"

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22A: Enhanced customer due diligence required for certain activities requiring suspicious activities report, or

"Do extra checks when you suspect something fishy and have to report it"

Part 2AML/CFT requirements and compliance
Customer due diligence: Enhanced customer due diligence

22Circumstances when enhanced customer due diligence applies

  1. A reporting entity must conduct enhanced customer due diligence in accordance with sections 23 and 24 in the following circumstances:

  2. if the reporting entity establishes a business relationship with a customer that is—
    1. a trust or another vehicle for holding personal assets:
      1. a non-resident customer from a country that has insufficient anti-money laundering and countering financing of terrorism systems or measures in place:
        1. a company with nominee shareholders or shares in bearer form:
        2. if a customer seeks to conduct an occasional transaction or activity through the reporting entity and that customer is—
          1. a trust or another vehicle for holding personal assets:
            1. a non-resident customer from a country that has insufficient anti-money laundering and countering financing of terrorism systems or measures in place:
              1. a company with nominee shareholders or shares in bearer form:
              2. if a customer seeks to conduct, through the reporting entity, a complex, unusually large transaction or unusual pattern of transactions that have no apparent or visible economic or lawful purpose:
                1. when a reporting entity considers that the level of risk involved is such that enhanced due diligence should apply to a particular situation:
                  1. any other circumstances specified in section 22A or regulations.

                    1. A reporting entity must conduct enhanced customer due diligence in accordance with section 26 if—

                    2. it establishes a business relationship with a customer who it has determined is a politically exposed person; or
                      1. a customer who it has determined is a politically exposed person seeks to conduct an occasional transaction or activity through the reporting entity.

                        1. A reporting entity must conduct enhanced customer due diligence in accordance with sections 27 and 28 if it is an ordering institution, an intermediary institution, or a beneficiary institution in relation to a wire transfer.

                        2. A reporting entity must conduct enhanced customer due diligence in accordance with section 29 if it has, or proposes to have, a correspondent banking relationship.

                        3. A reporting entity must conduct enhanced due diligence in accordance with section 30 if—

                        4. it establishes a business relationship with a customer that involves new or developing technologies, or new or developing products, that might favour anonymity; or
                          1. a customer seeks to conduct an occasional transaction or activity through the reporting entity that involves new or developing technologies, or new or developing products, that might favour anonymity.

                            1. Despite subsections (1) to (5), a real estate agent must conduct enhanced customer due diligence at the times, in the circumstances, and with any other modifications specified in regulations.

                            Notes
                            • Section 22(1)(b): amended, on , by section 68 of the Anti-Money Laundering and Countering Financing of Terrorism Amendment Act 2017 (2017 No 35).
                            • Section 22(1)(e): amended, on , by section 13(1) of the Anti-Money Laundering and Countering Financing of Terrorism Amendment Act 2017 (2017 No 35).
                            • Section 22(2)(b): amended, on , by section 68 of the Anti-Money Laundering and Countering Financing of Terrorism Amendment Act 2017 (2017 No 35).
                            • Section 22(5)(b): amended, on , by section 68 of the Anti-Money Laundering and Countering Financing of Terrorism Amendment Act 2017 (2017 No 35).
                            • Section 22(6): inserted, on , by section 13(2) of the Anti-Money Laundering and Countering Financing of Terrorism Amendment Act 2017 (2017 No 35).