Accountancy: with Matthew Bellingham, Bellingham Wallace Bellingham Wallace Accountancy Director Matt Bellingham is Chairman of the New Zealand Institute of Chartered Accountants’ Public Practice Advisory Board. This month he gives Channel readers an expert insight into the recent tightening of security procedures in banking.
Banking on our Patience Have you tried to open a new bank account lately? Acting as a trustee for many family trusts, filling in the multitude of forms has become a way of life for me, but having recently opened two bank accounts with two different trading banks for two different clients, I was blown away with the process and paper work involved. A quick investigation revealed that banks will be counting on our patience more and more after the Anti-Money Laundering and Countering of Terrorism Act (AMLCTA) came into effect at the end June. It is a bit of a mouthful but this new law will mean that banks and other financial institutions will need to collect extra information from you and anyone who is acting on your behalf. However, be prepared, because collecting and verifying this information may take a little more time than it has in the past. It only takes a few bad apples: So is this really necessary? The Government certainly seems to think so. Last year New Zealand was removed from the Eurozone bankers' white list after an Auckland-based company was used to channel kickbacks to eastern European officials. In December 2009 a New Zealand shell company was found to have chartered a Georgian-registered plane to try to fly embargo-busting arms from North Korea to the Middle East. But how many other shell companies are illegally operating in New Zealand and causing considerable harm to the country? The AMLCTA was established to detect and deter money laundering and the financing of terrorism, which ultimately bolsters the public’s confidence in our financial system and improves New Zealand’s reputation internationally. The net result: a positive difference to the economy – something we at Bellingham Wallace are always in favour of. In reality this piece of legislation brings New Zealand in line with best practice around the world. It has probably been too easy to set up and operate bank accounts in New Zealand for too long.
Matt Bellingham.
How will this affect you? The new laws mean that you should expect your bank to ask you for more information, more frequently, to verify your identity and address. The same goes for anyone acting on your behalf. For example, you may need to provide identity documents such as your passport, birth certificate or driver’s licence, as well as a document that confirms your address. While this will primarily affect people opening new accounts, you should also expect a request for additional information when attempting to make any alterations to your account or sending/receiving amounts of over $1000, for example. How will this affect organisations? The repercussion of the AMLCTA on businesses, trusts and other types of organisations is that they too will be expected to provide more information about themselves. Banks will be obligated to collect information about anyone who owns more than 25% of the organisation, and / or has a high degree of influence or authority and/or has signing authority or power of attorney. Anyone who works through a trust or company with nominee shareholders, i.e. act as custodians for the real owners, should expect to come under immediate scrutiny, as will any beneficial owners. Obviously there are a number of other factors that will also be taken into consideration, such as the size and complexity of a business, what products and/or services it offers, who it deals with and where those contacts are based.
What is the law? The AMLCTA requires all New Zealand banks and other financial institutions to: • Identify their customers before providing certain services • Monitor customer transactions on an on-going basis when providing specific services • Clarify or update customer information including in some circumstances the nature and purpose of the customer’s relationship with the bank • Report certain transactions and suspicious activities and/or behaviours
Summary: Banks and other financial professionals are going to be forced to get to know their customers even more closely than they already do. We think this is a good thing. Yes it may mean that we will need to learn to temper our patience, but surely this is a small price to pay for the greater good and ensuring a more honest future. Once these first- tranche organisations have come to grips with the AMLCTA, it is likely that the AMLCTA will be extended to other businesses and professions, such as accountants, lawyers, car dealers, real estate agents and businesses that deal in high-value goods, such as auctioneers and bullion dealers. Timing for this next phase has not yet been determined; however given its reach it will have a major impact on us all. There is some good news to all this and that is the likely creation of new apps and IT programmes to enable consumers to be identified electronically, thus reducing the need for multiple verifications of your identity. Could this be another sign that big brother is watching?
Non-compliance will result in penalties of up to two years' imprisonment and a NZD$300,000 fine; for an organisation, the fine could be as high as NZD$5 million.
The Bellingham Wallace team are ready to help and can be contacted on 09 309 7851. www.bellinghamwallace.co.nz
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To find out more and secure your place on the next series call Damian on 09 367 1623 or email damianb@bellinghamwallace.co.nz
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The Business Channel
Issue 12 - July 2013
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