What real estate agents need to know about AML

The Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) amendment bill introduced new obligations to the real estate industry from January 1, 2019. Are you compliant?

This is a major change for the industry, which requires every real estate agency to appoint a compliance officer, implement a compliance programme, continually monitor the programme, report annually to the Department of Internal Affairs (DIA) and, every two years, be audited externally.

While this does understandably put pressure on real estate agents, compliance also has value for business risk management and maintaining your professional reputation.

What’s money laundering and terrorism funding?

Money laundering (ML) is the process that criminals use to “clean” the money they make through their criminal activity, by turning it into seemingly legitimate funds.

Terrorism financing (TF) is used to describe the process terrorists and their sympathisers use to raise and move funds.

The real estate sector, alongside legal, conveyancing, accounting, trust and company service providers, act as gatekeepers and play a big part in preventing money laundering and terrorism funding.

DIA expects real estate agents to:

1. Know your ML/TF risks.

2. Know what to expect from your AML/CFT supervisor.

3. Know how to apply the AML/CFT Act to your business.

4. Know your compliance requirements.

5. Know your client.

6. Know the ML/TF red flags.

7. Know where to get support.

To support you to achieve this, DIA has set out a three-step process to help real estate agents meet these new obligations.

Step 1: Establish a compliance programme

Step one is about laying the groundwork. Identify the best person in your organisation to be crowned the “compliance officer”, who will have an ongoing responsibility to ensure your AML/CFT risks are kept in check and your programme is being followed.

Appoint a compliance officer. This should be someone who has detailed knowledge of the business and a degree of influence within the agency.
Conduct a risk assessment.
Develop an AML/CFT programme.

Step 2: Maintain your compliance programme

Once you’ve set up your compliance programme, it’s important to put steps and systems in place to ensure it is being followed.

DIA explains that ongoing compliance involves:

Training and vetting staff.
Conducting customer due diligence (CDD) when establishing a new business relationship or when there’s a material change in the relationship with the client.
Keeping records for at least five years.
Ongoing CDD and account monitoring.
Monitoring and managing compliance with your programme.
Reviewing your compliance programme at regular intervals.

Step 3: Report and audit

In order to ensure things are on track and working successfully to prevent money laundering and terrorism funding, real estate agents must report and be audited regularly.

File suspicious activity reports (SARs), as soon as practicable, but not more than three working days after forming a suspicion.
File prescribed transaction reports (PTRs), within 10 working days from the date the transaction took place.
Submit an annual report by 31 August each year.
Undertake an audit of your risk assessment and compliance programme every two years or at the request of DIA. The auditor must be independent and suitably qualified.

Download the guidelines now

For detailed information about complying with Anti-Money Laundering and Countering Financing of Terrorism Act 2009, download the guidelines issued by DIA for real estate agents.

Download: AML/CFT guidelines for real estate agents

Watch the video

You can also watch the video, produced by DIA, to gain an overview of AML/CFT and how it affects you - watch it here.

Learn more

For more information about how to comply with the AML/CFT Act, check out dia.govt.nz or contact amlcft@dia.govt.nz.

To learn more about money laundering and counter terrorism in New Zealand, and the work that’s being done across sectors to combat this, check out keepourmoneyclean.govt.nz.