Corporate trustee AML/CFT reporting obligation waiver announced
On 25 July 2019, the Department of Internal Affairs (DIA) announced an interim waiver of annual reporting obligations under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act) for certain corporate trustee companies (DIA Announcement). The DIA Announcement can be found here.
Who needs to read it? Why?
The DIA Announcement will be of relevance to the many law firms, accounting practices and trust and company service providers (TCSPs) that have set up corporate trustee companies to offer trustee services in New Zealand, as it changes the reporting obligations that those companies have.
What does it cover?
Under the AML/CFT Act, companies set up to act as corporate trustees are considered reporting entities, and as a result are obliged to submit annual reports. This waiver exempts, for the time being, from this obligation those corporate trustee companies that are subsidiaries of law firms, accounting practices or TCSPs that are themselves reporting entities, provided that that the parent’s own annual report covers information on the relevant activities of the subsidiary.
The waiver is to operate in the interim period while a class exemption application (for trustee company subsidiaries to law firms, accounting practices or TCSPs that are reporting entities) is being considered by the Ministry of Justice, and currently only apply to the 1 July 2018 – 30 June 2019 period.
The DIA Announcement also states that, during the period of this waiver, the DIA will no longer process designated business group (DBG) notifications from law firms, accounting practices or TCSPs relating to corporate trustee company subsidiaries, but will instead simply treat those subsidiaries as part of a DBG with that parent, who will be responsible for their subsidiaries’ obligations under the AML/CFT Act.
Reporting obligations under the AML/CFT Act can be a sizeable burden on entities. A class exemption to remove those obligations where they would be redundant is a good way to ensure that the burden of compliance remains proportionate to the risk it is confronting. This waiver will allow that goal to be achieved in the interim period while such an exemption is being considered.
The DIA Announcement covers only an interim change, intended to reduce unnecessary obligations while the class exemption application is being considered.
If you have any questions in relation to how this change may affect your obligations, please contact one of our experts.
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