RBNZ offers guidance on money laundering crack-down

Financial institutions in New Zealand will be forced to introduce more stringent identity checks for their customers after the Reserve Bank of New Zealand (RBNZ) took steps to beef-up its anti-money laundering strategy.

The RBNZ on Thursday issued an Identity Verification Code of Practice to all reporting entities supervised by the central bank, the Financial Markets Authority and the Department of Internal Affairs.

The Anti-Money Laundering and Countering Financing of Terrorism Act 2009, which will come fully into force on June 30, 2013, requires New Zealand's financial institutions and casinos to detect and deter money laundering and terrorism financing.

The code sets out an acceptable practice for verifying the name and date of birth of customers whom the reporting entities have assessed as low to medium risk. It also details acceptable forms of identification and outlines when secondary or supporting identification is required.

Examples of financial activities include: accepting deposits or other repayable funds from the public; making a loan to or for a customer; issuing a debit or credit card; managing the means of payment; supplying goods through a finance lease; providing remittance services which transfer money or property; issuing or accepting liability under life insurance policies; issuing or selling securities and derivatives; safekeeping or administering cash or liquid securities on behalf of other persons; and exchanging foreign currency.

The central bank said that although the code was not mandatory, if a reporting entity decided to opt out of it, it would have to adopt practices that are equally effective, otherwise it risks non-compliance.