It is coming around to the second round of audits under the AML/CFT Act 2009 (‘the Act”) requirements and as highlighted by one of the regulators (FMA) many entities have not actioned the audit to the required level. This is only one of the regulators; the same outcomes maybe also apply with the other regulators, in particular the DIA who have under their wing a very large entity base.

The FMA on 08 February 2017, released a press statement with the following extracts noted that they have:

“ issued a formal warning to 12 reporting entities under section 80 of the Anti-Money Laundering and Countering Financing of Terrorism Act (the Act).

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 non-compliant with the law. Nine reporting entities failed to provide their audit, two did not respond to the FMA’s request while one did not submit an AML/CFT annual report as legally required.”

Liam Mason, Director of Regulation at the FMA said, “The regulatory regime to tackle money laundering and the financing of terrorism has been in place for more than three years. Firms and individuals have now had sufficient time to meet the legal requirements, as we stated in our recent monitoring report. We have taken proportionate action to ensure all reporting entities are clear about their obligations under the law.

The FMA also noted that they “will take further steps against the two reporting entities who didn’t 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.”

This is a good indication that the regulators are now starting to focus on using their powers under the regulations to enforce the Act requirements. This once again emphasizes the need for ALL entities to ensure director/s take ultimate responsibility for AML/CFT compliance requirements and must set the tone by openly voicing their commitment to it, ensuring that commitment flows through all service areas and lines of business, and holding responsible parties accountable for the associated compliance.

Senior management show their commitment to AML/CFT compliance by:

1.     Establishing a strong compliance plan that is approved by director/s and is fully  implemented.

2.     Insisting that it be kept informed of compliance efforts, audit reports and any compliance failures, with corrective measures instituted.

3.     Communicating compliance expectations to all affected personnel.

4.     Implementing procedures, processes, and controls to ensure compliance with the AML/CFT Programme.

This adds to the annual report that the FMA recently released where they highlighted the following items:

1.     Training.

2.     Low level of filing of suspicious transaction reports (STR).

3.     Variances in the quality of conducting due diligence on high-risk customers.

4.     Policies and processes for on-going monitoring, including identifying pre-30 June 2013 high-risk customers.

5.     No plan or process to update existing customer records onboarded prior to 30 June 2013.