Last week, Associate Justice Minister Nicole McKee built a buzz about reforms to the anti-money laundering (AML) regime, with media releases on each of Monday through Thursday.

From making it easier to open bank accounts for children to cutting through unnecessary bureaucracy for “hard-working Kiwi families managing property through family trusts”, the media releases certainly hit some pain points. But as always with the AML regime, care is needed to avoid unintended consequences. We review and comment on the announcements below.

Monday: Cutting red tape so young Kiwis can start saving (7 July 2025)

The week started with an announcement relating to bank accounts for children, proposing that banks would be able to deploy a simplified approach “when risk is low”. Banks could put measures in place to make a child’s bank account low-risk - for example by setting transaction limits to achieve this status - and then the information required for account opening (from an AML regime perspective) could be limited to the child’s birth certificate.

Our view: Real care needs to be taken here to ensure that children do not become unintended conduits for money launderers or terrorism financing. Admittedly, some banks may have developed one-size-fits-all processes that may be overly onerous for every situation. However, misuse of a child’s bank account is a significant vector for money laundering. Sometimes, strict processes are needed to manage that risk.

Further, if the new settings require judgement about what is ‘low risk’, this inevitably leads to complexity and cost. The Minister has signalled that there will be regulatory guidance from the future AML/CFT supervisor (which will be the Department of Internal Affairs) so that businesses know exactly how to apply these simplified checks without fear of penalty. We will have to wait and see if this simplification can be achieved without simply exchanging one set of complexity for another.

Tuesday: Simplifying requirements around family trusts (8 July 2025)

Tuesday’s announcement was that real estate agents (and others) will be able to apply simplified customer due diligence for the sale of a property held in a family trust that is “clearly low risk”. Currently, enhanced customer due diligence is required for property transactions (and other activities) involving a trust, regardless of level of risk.

Our view: We welcome the concept of simplifying customer due diligence requirements for low risk trusts. The challenge will be in identifying whether a trust is ‘low risk’. Risk-based approaches can lead to different judgements by different reporting entities. For example, for a property transaction, customers who have trusts won’t be better off if their real estate agent thinks they are ‘high risk’ and their lawyer thinks they are ‘low risk’ - each will impose different requirements on the customer, not to mention how their new bank might risk rate them. Without black-and-white rules to ensure consistent treatment, this change may not deliver.

Wednesday: Targeting criminals, not Kiwi businesses (9 July 2025) 

Wednesday’s announcement was that a Bill will be introduced to “strengthen enforcement powers for Police and regulators”. This announcement seems to reiterate policy that was announced some time ago, along with some new details. In summary:

• The Police’s and regulators’ enforcement powers will be strengthened.
• A new financial sanctions supervisory system will be put in place.
• There will be an industry levy.
• There will be a NZ$5,000 cap per international cash transfer.
• Crypto ATMs will be banned.
• The Financial Intelligence Unit (FIU) will gain authority to require banks and businesses to share information on persons of interest on an ongoing basis.

Our view: Closing down clear money laundering vulnerabilities is welcome, so that New Zealand’s financial system is not exploited in obvious ways. The industry levy will be a key area of focus for those who might be required to pay it. Many reporting entities view compliance costs as a significant burden and believe that meeting these obligations is, in itself, a sufficient contribution to the public good.

Thursday: Red tape relief making a difference for businesses (10 July 2025)

Thursday’s release recapped many of the points covered earlier in the week while adding more examples of how the Government intends to upgrade our AML regime to be one that “hits criminals hard, not ordinary New Zealanders”. The Minister indicated that the simplification drive may extend to digital wallets and small businesses in rural areas. She also mentioned that share brokers and bookkeepers may be able to reduce the level of customer due diligence required for ‘low-risk’ customers and businesses where there are appropriate restrictions and conditions put in place, such as transaction limits. The focus continues to be on reducing compliance obligations for ‘low risk’ customers, supported by clear regulator guidance.

Our view: The new examples do not leap out as inherently low risk, and some also already benefit from partial exemptive relief. In this context, it is difficult to tell from the media release whether the law reform will focus on the examples the Minister is giving, or whether it will provide, more generally, that if a reporting entity considers any customer to be ‘low risk’, then a form of simpler customer due diligence will be available.

It seems unlikely that this simpler customer due diligence the Minister refers to will be the same as the legislation’s existing “simplified customer due diligence” regime. That regime, which dispenses with the need to verify a customer’s existence and source of wealth, applies to specified entity types of a public nature (such as Crown entities and listed companies) which do not need such verification. If the Minister has a distinct regime in mind, reporting entities will need to exercise judgement and discretion in terms of the customer due diligence steps they need to take. As noted above, that in itself can create complexity and compliance challenge. Clear law and clear guidance will be essential.

Timing

The Minister has indicated that an Anti-Money Laundering and Countering Financing of Terrorism (Omnibus) Amendment Bill will be introduced to implement her reforms. This is likely to be next year. This Bill should then be passed and implemented during this Parliamentary term.

The proposed Bill will be additional to two Bills already before Parliament, which propose some specific amendments to the AML regime. The Minister expects the latter two Bills to be passed this year.

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