Note that this article does not constitute legal advice and is opinionated based on self-review of New Zealand requirements.
The Anti-Money Laundering (“AML”) Countering Financing of Terrorism Act 2009 ("Act”) requires reporting entities in New Zealand to undertake Know Your Customer (“KYC”) processes (commonly referred to as “customer due diligence”). The New Zealand AML Supervisors (e.g., Financial Markets Authority, Department of Internal Affairs) have done a great job of providing guidance to reporting entities to understand how to perform KYC processes for natural persons (individuals) and legal persons (legal entities).
As we have gone through and examined the New Zealand legislation, Acts, regulations, orders, guidelines, and other practice related publications, we learned that KYC does not have to be challenging. While reporting entities still need to make some business decisions on how to manage their own risk assessment processes and AML programme, the basic criteria and guidelines of what is expected by the Supervisor has been helpful.
In New Zealand, KYC is broken down into different categories requiring different customer identification and verification including:
The customer classification will depend on the reporting entity’s risk assessment of the customer. Once the reporting entity decides the level of customer due diligence required, appropriate verification methods need to be undertaken to verify the New Zealand requirements.
When verifying the customer’s information, the reporting entity can accomplish this through:
- Face to face
- Trusted Referee
- Electronic Identity Verification
At SingleSource, we help reporting entities as part of the Electronic Identity Verification process where we:
(a) verify the customer’s name from at least one independent electronic source that is able to verify an individual’s identity to a high level of confidence; and
(b) verify the customer’s date of birth from at least one reliable and independent electronic source.
Additional information and criteria can be found in the “Identity Verification Code of Practice – Explanatory Note – December 2017” and “Amended Identity Verification Code of Practice 2013”.
In order to validate the full name of the customer, certain identification documents are acceptable. For natural persons (individuals), the following primary identification documentation can provide evidence of the full name and date of birth requirements:
- New Zealand Passport
- New Zealand certificate of identity; refugee travel document; or emergency travel document issued under the Passports Act 1992
- New Zealand certificate of identity issued under the Immigration New Zealand Operational Manual that is published under section 25 of the Immigration Act 2009
- New Zealand firearms license
- Overseas passport or a similar document issued for the purpose of international travel which contains the name, date of birth, a photograph and the signature of the person in whose name the document is issued; and is issued by a foreign government, the United Nations or an agency of the United Nations.
- A national identity card issued for the purpose of identification, that contains the name, date of birth and a photograph of the person in whose name the document is issued and their signature or other biometric measure included where relevant; and is issued by a foreign government, the United Nations or an agency of the United Nations.
If the customer does not have the primary documents above available, then a combination of documents can also help verify identity including those in the table below.
One form of the following primary non-photographic identification:
In combination with a secondary or supporting form of photographic identification, for example:
NZ Drivers Licence
In addition, one of the following:
Note: Regulation 13(3) of the Health Entitlement Cards Regulations 1993 places strict restrictions on those who can legally demand or request a community services card as a form of identification. Reporting entities may accept a community services card if the customer offers it; however they cannot request it.
Reporting entities also need to remember that identity and date of birth are only two of the criteria required in New Zealand depending on the risk assessment of the customer. Other requirements may include:
- Person’s relationship to the customer if a person is acting on behalf of the customer
- Customer’s address or address of the registered office
- Customer’s company identifier or registration number
- Identification of Beneficial Owners
- Source of Wealth / Source of Funds (s23)
- Politically Exposed Person / Sanctions Check
Now where to from here? While the New Zealand requirements may not be that complex, having a partner like SingleSource can help simplify your compliance and speed up your on boarding processes for your customers.
For more information about how SingleSource works, download a copy of the whitepaper here. Alternatively, you can contact us here to find out how SingleSource can help you speed up your on-boarding and KYC processes.