The Financial Markets Authority of New Zealand has issued a formal warning to 12 reporting entities under section 80 Anti-Money Laundering and Countering Financing of Terrorism Act 2009.

Last year, in accordance with section 59(2) of the Act, the FMA required reporting entities to submit their audit of their AML/CFT risk assessments and AML/CFT programme by 25 November 2016. It asked 77 reporting entities for the information. This is just under 10% of the reporting entities that the FMA supervises.

These entities were required to take a risk-based approach to compliance. Selection was partly based on factors including the previous late filing of an AML/CFT annual report and those REs who, for the last two years in a row, said they had not carried out an AML/CFT audit report.

Twelve reporting entities were found to be breaking the law. Nine reporting entities failed to provide their audits, two did not respond to the FMA’s request and one did not submit an AML/CFT annual report as legally required.

The Act requires a reporting entity to ensure that its risk assessment and AML/CFT programme are audited every two years or at any other time at the request of the relevant AML/CFT supervisor.

The regulatory regime to tackle money laundering and the financing of terrorism has been in place for more than three years. The FMA beleives that firms and people have now had enough time to comply. Independent audits are an essential component of compliance with the Act.

The names of the twelve companies and individuals have not been published. Of the 9 entities who failed to provide audits, all are now taking steps to do so.

The FMA will take further steps against the two reporting entities who did not respond to its requests and the single reporting entity that failed to provide its annual AML/CFT report if they fail to respond to the warnings.