October Dirt

It has been a busy month with the FIU and ACAMS NZ Conference in Wellington at the start of October and a pick-up of audit enquires and jobs.  Key DIA takeaway from the conference was:

“If you think compliance is expensive, try non-compliance”

Essentially the regime has been in place for most DNFBP’s for a year or more now so the DIA expects everyone to be compliant now.  They would be taking a different approach to those that haven’t done anything now, so take heed the big stick is out….

There was an interesting discussion about organised crime cases and professional facilitators.  The signs of ML are around us all the time – redecorating the house, expensive cars, houses, jewellery.  Car dealers are still taking cash and not reporting the large transactions, money is been moved between accounts, professionals not enquiring as to source of funds, not reporting suspicious activities, assuming the bank would report, not doing CDD.  These are all fundamental legislated requirements now and perhaps this is a good time to remember what AML/CFT stands for; it is a social purpose issue and is there to help protect the community at large.

Another interesting area that was spoken about was sport integrity, not just the large international sporting fixtures but even the first XV school matches through to e-sports like ‘fortnight’ – basically if it can be streamed live there will be betting on it.  And with betting comes dishonesty and corruption.  I didn’t realise the extent and influence of it until we heard from Lou Vincent (cricketer), Hon. Nicholas Davidson QC (FIFA) and David Howman (former head of the World Anti-doping Authority).

As mentioned, we are starting to pick up with audits and enquires.  Businesses are starting to realise that 1st July and 1st October 2020 actually aren’t that far away in the scheme of things and they are looking for more certainty and clarity that they are on the right track early. 

We are finding that there is a general lack of understanding of what constitutes a risk assessment.  That it needs to consider the risks the specific business faces, not the whole industry, and there needs to be a clear rationale for assessing the risks being faced from each of the factors that need to be considered, which are prescribed by legislation.  The DIA has a Risk Assessment Webinar up on their website now, which entities may find helpful.

The programmes have been a mixed bag, with the main issues being no clear policies, procedures or controls, not based on the risk assessment, a lot of copy and pasting of legislation, and not following the procedures in practice.

However, it’s not all doom and gloom, there seems to be a good level of support throughout the organisations audited to date, a genuine interest in doing the right thing and an understanding of the importance of the Act and its intent.  These are the foundations for ensuring the efficiency and effectiveness of your programme.

News from around…

New Zealand: You may have seen how 5 members of one family were sentenced recently to prison and home detention after a $2.3 million tax evasion case brought by IR. They have also been ordered to pay more than $2.2 million in reparations.

New Zealand: Jin Juan Finance Ltd, an Auckland based money remitter, has been fined $4 million plus costs for repeated non-compliance of the AML/CFT Act. 

Malaysia:  IMDB scandal.  The case that keeps on giving.  Malaysia is seeking to move the 1MDB-linked case against Goldman Sachs to a higher court.  Authorities will apply to transfer the case to the High Court, from a magistrate court currently. The order came from the attorney general’s office, which did not specify its reasons, such a move is usually due to the seriousness of the case.

The updated AML/CFT Audit Guideline released by supervisors earlier this month is a must read to understand the audit process and requirements.