New Zealand’s Department of Internal Affairs has issued a formal warning to a large real estate agency chain.
Property Brokers, which operates 80 branches across New Zealand, failed to meet Anti Money Laundering/ Counter Terrorism Financing (AML/CFT) obligations relating to the establishment, implementation, and maintenance of its AML/CFT programme and the hiring and training of compliance staff, the DIA said.
“They also failed to have adequate policies, procedures and controls for monitoring compliance or to follow guidance material from AML/CFT supervisors”, a DIA statement. There is no suggestion that Property Brokers has been involved in money laundering or terrorism financing.
The warning is the first issued by the New Zealand supervisor since the country’s Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act was expanded to cover real estate agents in January 2019.
“Real estate is a high-value asset often used domestically and internationally to launder and invest criminal proceeds. Businesses have an obligation to have robust processes in place to protect them from misuse” says Mike Stone, Director of DIA’s AML Group.
“Our inspection of Property Brokers Limited highlighted concerns and we have a responsibility to act on these concerns. New Zealanders need to have confidence and trust in the integrity of the New Zealand financial system.”
Property Brokers Limited is now required to take immediate action to rectify all areas of non-compliance.
Tim Mordaunt, chair of Property Brokers, said he felt his firm was being made an example of because the legislation is new. He said the company felt it was being compliant but admits it is still learning.
He said: “Accountants, solicitors and real estate agents - everyone is trying to get up to speed. It’s quite simple for an individual like yourself, but when you’ve got a company or a trust, it’s far more detailed and difficult to get the information you require. They’re just looking at our processes and saying there are some aspects we could improve.”
Penalties for continued non-compliance can result in civil penalties of up to NZ$2 million for companies and criminal penalties of imprisonment for up to two years or a fine of up to NZ$300,000, in the case of an individual, and NZ$5 million in the case of a company.
The New Zealand’s AML/CFT Act requires regulated entities to meet reporting requirements, and standards for identifying customers and record-keeping. It has applied to financial institutions since 2013 and was expanded to cover lawyers, conveyancers, trust and company services, accountants and book-keepers in 2018 before real estate agencies were added to the list two years ago.
Register for free to receive the latest FinCrime news and analysis straight to your inbox