Government plans to introduce single-supervisor structure and new funding model
The New Zealand government has announced its plans for major changes that will introduce a single supervisor and a new funding model to its anti-money laundering and countering financing of terrorism (AML/CFT) system.
“These reforms will allow the system to be more responsive to industry and community needs, more agile, and more focused on the real risks posed by money laundering to New Zealand businesses,” said Nicole McKee, New Zealand’s associate justice minister, in a news release.
The overhaul to the AML/CFT system, which will impact sectors where the cost of regulation is overly burdensome on businesses, seeks to improve the system’s efficiency and effectiveness in meeting international standards, McKee said in the news release from the New Zealand government.
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The reforms will include the implementation of a single-supervisor model of monitoring AML/CFT compliance, with the Department of Internal Affairs acting as the system’s sole supervisor. Currently, there is a three-supervisor model, with the Reserve Bank, Financial Markets Authority, and Internal Affairs overseeing different parts of the system.
This change aims to address the risks that money laundering and financing of terrorism present to New Zealand businesses by imposing a more risk-based approach seeking to improve the system’s efficiency and to speed up the provision of guidance and support.
“In considering how to improve the supervisory model, I will be focusing on how the positive effects can be felt as soon as possible, such as ensuring work on industry guidance and codes of practice starts promptly,” McKee said in the government’s news release.
New funding model
The overhaul will also introduce a new sustainable funding model for the AML/CFT system, which aims to improve regulation, supervision, and support for industry.
This new funding model will establish an industry levy that seeks to support a flexible and coordinated system delivering sector benefits and to ensure that costs are equitable and reasonable for the sector and not unduly burdensome on small businesses.
As part of the funding model, the government will introduce an AML/CFT national strategy and work programme to inform any amendments to the levy and will develop this programme in partnership with industry to ensure that the system’s focus is on industry priorities.
These reforms were announced on the heels of a Financial Action Task Force evaluation of the country’s regulatory regime and a review of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.
“The changes will ensure New Zealand maintains its international reputation and will align our AML/CFT system with the financial sectors of our key trading partners to support trade, investment and economic growth,” McKee said in the government’s news release.