AML Overview

AML Overview

Concerned about AML? We can help! Will it apply to you? What will you need to do and how much will it cost you? 2Shakes’ customer onboarding software helps you get Anti Money Launder (AML) Customer Due Diligence (CDD) sorted.

2Shakes client onboarding handles Signup, Authorities and AML CDD

2Shakes will provide you with the benefits of our onboarding software. So you can provide a professional, slick agreement that pull data from Companies office using the NZBN.  And ensure your authority to act for you clients with IRD, ACC and Companies Office is done correctly.  You client can electronic sign, saving everyone paper work.  And we integrate with CRM systems like Xero Practice Manager (we are a Xero Connected App) and BASE CRM.

We also provide Customer Due Diligence (CDD) features help you to comply with AML Phase 2:

  • Beneficial Owners – A suggested list of people to consider for identity checks (directors, shareholders, effective controllers).
  • Trusts – Help to identity when ownership sits in a trust, and a trust tab to capture the required trust information specific to the type of trust.
  • Electronic Identity Verification – to automatically check passport, drivers license, date of birth, address against trusted external sources.
  • Capture Manual Identity checks – ability to securely record Identity evidence and additional measures.
  • E-sign & E IDV –  Option to capture Identity verification information during signing.
  • Risk – Ability for you to track the legislated factors that require Enhanced CDD with useful help text. You can record your risk assessment of the client along with the nature and purpose of your relationship.
  • Enhanced Customer Due Diligence – Ability for either you or your clients to securely upload proof of wealth / source of fund documents.
  • Annual Reporting – Onboarding Statistics for annual reporting.
  • AML compliance officer – System requires a final check and approval.
  • Records for Audit – AML Report created for each customer agreement.

For more information on what 2Shakes can do for you, check out our software options.

Before we begin…the legal bit

2Shakes is a software company, and we are extending our software to help clients meet AML compliance. We are not lawyers, and we are not AML consultants. We have been either investigating or working on extending 2Shakes for AML since mid 2016, and have found out a lot of useful information. It seems a waste not to share that information so we might help you understand the larger AML picture and what AML may mean for you. But we need to add a caveat by saying all information we provide here and elsewhere comes with no warranties, guarantees or liabilities whatsoever. We recommend you verify your AML position for yourself – you can do that through such things as seeking advice from your professional bodies, others in your industry, your lawyers and AML specialists to understand your AML requirements, develop your programme etc. Especially since the New Zealand AML Phase 2 is constantly evolving as new information is published. That said, we really do hope you find the information here useful –  and feel free to contact us if you think anything should be added or changed.

What is AML/CFT?

Anti-Money Laundering and Countering Financing of Terrorismm (AML/CFT) Act is legislation that aims to prevent criminals from using NZ to launder money.  Criminals launder money by hiding who they are and putting money through transactions that look legitimate. This ‘cleans’ the funds. Criminals often get respected professionals like Lawyers and Accountants to do these transactions for them.  So AML/CFT legislation is rolling out in NZ to Lawyers, Accountants, Bookkeepers and others in 2018.

Will it affect me?

Ministry of Justice have advised that AML/CFT will impact Accountants who provide the following in-scope services:
Deloitte estimates that over 90% of Accountants and Bookkeepers will need to comply. So if you are a Bookkeeper or Accountant it is most likely AML/CFT will affect you.

How 2Shakes Helps

We are experts in automating your onboarding processes, and we have extended our existing cloud software to deliver a range of smart AML/CFT features to help you comply. With 2Shakes your  AML Customer Due Diligence is embedded as part of the onboarding process.  So you use a single application to get an automated, efficient, repeatable and auditable CDD solution that is securely stored for you in the cloud.

What will I need to do?

Businesses (like you) who provide ‘in-scope’ services need to report on that, and are referred to as AML Reporting Entities. Reporting Entities need to set up an AML/CFT Program with a designated Compliance Officer and perform a Risk assessment. They need to vet and train staff and file an annual report to DIA. They also need to report any suspicious activities or prescribed transactions to the police. If you provide in-scope services you will be considered a reporting entity, and have obligations under the Act. Day to day, you will need to perform Due Diligence checks on your customers. If you do not comply with legislation then the Supervisor can enforce penalties. Here’s how it fits together.

How 2Shakes Helps

AML is triggered by the services you offer, so you only need to do AML/CFT for clients you provide in-scope services for. 2Shakes helps you do AML/CFT CDD. During client onboarding we ask if the services are in-scope for AML/CFT. If they are, we help you record the nature and purpose of the business relationship, the risk assessment, and capture other factors for Annual AML/CFT Reporting.  All this supports your decision on the CDD level to use for each customer.

Onboarding Customers will change

AML Phase 2 comes into effect for Lawyers in July 2018, and for Accountants and Bookkeepers from October 2018.  If you provide in-scope services for you customers then your onboarding process will need to involve two additional steps:

1. Determine the natural people who are the customer, who control the customer or who are beneficial owners of the customer.
2. Perform Customer Due Diligence on each natural person, which includes proof of Identity, proof of address and can include proof of wealth (also called source of funds) as well as capturing additional details, such as for trusts.

If you are using 2Shakes already, in terms of effort your current sign up process would look like the picture below. (If you are not a 2Shakes user there will be a lot more effort humps instead of just “sign up”, and AML will add to them).

Who do I need to do Customer Due Diligence on?

Customer Due Diligence are checks that you need to perform on ‘natural’ people who are associated with the customer you provide services to.  Section 11 of the Act states

A reporting entity must conduct customer due diligence on:

a). a customer,

b). any ‘beneficial owner’ of a customer,

c). any person acting on behalf of a customer.

Beneficial Owners are people that:

  • own more than 25%.
  • have effective control
  • the transactions conducted on behalf of

Determining who you need to perform customer due diligence on can be complicated.  For example shares in a company can be owned by another company, whose shares are also owned by another company.  This can look a bit like this…

In this example Customer Due Diligence needs to be carried out on John – as the Director who is in effective control of the company – and on Don – a shareholder who owns a company at three levels below the customer, through which he owns more than 25% of Cards Ltd!

How 2Shakes Helps

2Shakes has smart recursive look up technology that goes through the levels of company ownership. We integrate with NZ Companies Register using the NZBN to help you identify the people and entities associated with your customers.  We show you the shareholders, directors, possible trusts, possible foreign companies and possible listed companies for clients listed on the Companies Register. That way 2Shakes shows you an aggregate picture of all the different people and other entities associated with the companies you are signing up.  And unlike doing those searches manually, where we have been told of it taking a person days to complete, 2Shakes does it for you in seconds!

More on CDD..

CDD stands for Customer Due Diligence.  The Act outlines 3 levels of CDD:

The Department of Internal Affairs also offers 3 options for verification of identity.

How 2Shakes Helps

You can record the CDD level in 2Shakes, and then use 2Shakes to record identity & address verification, all as part of the onboarding process. You can choose how you do this, either manually or electronically.

In 2Shakes, your clients can now do everything needed to sign up in one electronically signed step:

  • Sign your services agreement, agreeing fees and Ts &Cs
  • Authorise you to act on their behalf with Inland Revenue, ACC, Companies Office
  • Authorise you to act on their behalf with private organsations
  • Consent to and complete Identity and Address checking

Our system integrates with third party Identity Verification services.  This means we can automatically electronically verify both identity credentials (NZ passport or Drivers License) & NZ addresses against trusted external databases. At the same time we check to see if the customer is a foreign Politically Exposed Person (PEP).

Client forgot to bring proof of address?  Client forgot to bring their passport?
With 2Shakes you can email links to clients to get them to verify their identity and address remotely from their own computer or smart phone.

Enhanced CDD? You can record notes and uploading files every step of the way. 2Shakes’ Hints and Tips gives examples of the types of source of funds/proof of wealth documents your client could provide.

Find out more about how electronic Identity Verification (eIDV) works, when you should use it and how much it costs.

Audit Records

AML/CFT requires reporting entities to be audited every two years by an Independent Appropriately Qualified Person.  This audit is to determine the adequacy and effectiveness of your AML/CFT programme. For audit you will need to provide access to files, customer identification records, transactions and/or outputs from your systems.

See DIA AML COP link for more information.

How 2Shakes Helps

In 2Shakes you can make notes and upload documents at every step of the way through onboarding.  Our software captures a record of what you did, and what the result was.  Our electronic identity verification reports show the results for each external data source.  And when you need it, we have everything available for you from anywhere, on any device, in our secure, highly-available Microsoft Azure cloud datacentre – so everything is in one place for audit purposes.

2Shakes recognises that AML checks sometime takes time.  Where there are trusts or non-resident or foreign owners you may need to chase after the evidence or information you need. Our system allows you to get your agreement signed, while you wait for your AML/CFT CDD requirements to be completed.  We make it easy to keep track of where all you customers’ agreements and AML statuses are at, whatever is required by your AML/CFT policy and procedures.

And once done, 2Shakes has a section for your business’ AML Compliance officer to do a final review and confirmation check that AML CDD is complete.

Looking for AML help, Setting up your Programme, Audits and Reporting?

Have tricky AML and reporting questions you need answered? Then contact Trish Madison, an AML certified expert, at Audits AML.

Provide AML audits for smaller accounting firms, tax agents and bookkeepers.

Have a look at Real Estate Authority website. Read DIA’s Real Estate Agent Guidelines. 2Shakes can help with section 5. Do you know your client (also known as KYC).

CAANZ have created AML guidance documents and webinars for their members.

Aro Advisers can help with a package of resources focused specifically on the accounting sector. These resources can save you days and days of effort. Aro Advisers also show you their own documents as examples. Aro Advisers are well established 2Shakes users, so you can see how they have incorporated our software into their AML programme.
2Shakes discount on Aro Advisers AML package.

Then you could contact Compliance Plus. Well established with a legal background and a wealth of AML experience they can help with all facets of AML including some of those curly questions you might have. Compliance Plus can also provide AML staff training, and pre-audit reviews.

Silks Audit are a firm of experienced Accounting & AML auditors. Silks Audit are available to perform your AML/CFT programme two yearly audit. Using 2Shakes means that Silks Audit can offer a 20 – 25% discount on your AML audits, because Cameron and the team understand 2Shakes and can access your 2Shakes AML records remotely. Remember – although your first audit is in 2 years’ time, it is really valuable to discuss your programme with an auditor as early as you can, and make sure you are covering your compliance requirements.

You can download the DIA Accounting Sector guide directly from DIA website using this Accounting Sector Guide link. If you have confirmed that AML applies to you then you should also download the Sector Risk Assessment as well as the NZ Police FIU Guide to registering for goAML. If after reading this information you need to check in with DIA, then remember you can ask for clarification about AML/CFT using this email amlcft@dia.govt.nz 

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