"In August 2017, the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Amendment Bill was passed meaning that lawyers, accountants, real estate agents, the NZ Racing Board and high value dealers will now need to comply with the AML/CFT Act (Phase 2) Real Estate Agencies will need to be compliant from 1 January 2019." - REINZ
What does this mean for me as a Vendor or Purchaser ?
As a vendor you will be required to "Prove Your Idenity" to your real estate agent, who is required to verify you are who you say you are in line with the anti money laundering legislation.
As a purchaser there may be some situations where you are required to prove your identity.
Individuals, trusts and companies are all required to prove their identity. The link below outlines the requirements for each category and what paperwork you require.
Verification of individuals with the appropriate identification can be completed on the day. For trusts and companies or for individuals that reside overseas it can take days or weeks.
If your real estate agent cannot verify your identity they will not be able to act for you.
AML_Identity Verfication December_2108_v7
Background (as outlined on the REINZ Information Sheet distributed to New Zealand Real Estate Agents)
Real estate transactions are an established method of money laundering internationally. Criminals are drawn to realestate to launder funds due to:
- the ability to disguise the ultimate beneficila opwnership of real estate (through Trust and company structures);
- the relative stability and reliability in real estate investment; and
- the ability to renovate and improve real estate (often in cash) thereby increasing the value.
While some of the above may be hard to detect, there are many indicators or 'red flags' that assist to identify potential money-laundering. These red flags are well documented internationally and include:
- Purchasers appearing to be acting on behalf of another person and showinbg a reluctance to identify those they represent.
- Purchasers buying or vendors selling multiple properties in a short period of time.
- Purchasers buying and vendors selling property above or below market value while apparently unconcerned about the economic outcome of the transaction.
- Purchasers paying deposits and then cancelling agreements under due dilgence clauses (for example) and asking for the deposit to be refunded to a different person or bank account (often overseas).
Real Estate Agencies are required to report any suspicious activity to the FIU (police Finacial Investigation Unit), that is, activity which the reporting entity suspects may be related to money laundering and finacing of terrorism.
For full further details please refer to Anti - Money Laundering Implications
at the AML Solutions
website, and for the Act and relevant amendments visit AML/CFT Act and Regulations
. at the Department of Internal Affairs