In accordance with section 157(6)(b) of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (“Act”), the Associate Minister of Justice hereby gives notice that he has granted the following exemption from the Act:
Ministerial Exemption: Trustees of the Funeral Directors Association of New Zealand Incorporated Prepaid Funerals Trust Fund
- As the Associate Minister of Justice and pursuant to section 157 of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (“Act”), I exempt the trustees of the Funeral Directors Association of New Zealand Incorporated Prepaid Funerals Trust Fund (“Trust”) from the following provisions of the Act:
- Sections 10–71 inclusive.
- The exemption is made subject to the following conditions:
- Enhanced customer due diligence (CDD) in accordance with the Act is required on account balances that have accumulated an amount over the threshold value of $29,999;
- Suspicious transaction reports are to be carried out in accordance with subpart 2 of Part 2 of the Act;
- Standard CDD in accordance with sections 14–17 of the Act is required on any refunds made during the “cooling off period” of over $9,999;
- Standard CDD in accordance with sections 14–17 of the Act is required on all funds returned for the purposes of permanent emigration or due to hardship;
- Standard CDD in accordance with sections 14–17 of the Act be carried out on any amount returned to an estate over $9,999 after a funeral has been paid for; and
- When customers apply to have funds refunded due to permanent emigration from New Zealand or due to hardship, levels of proof of emigration or hardship consistent with the KiwiSaver regime are required.
- This exemption has been made for the following reasons:
- Whilst generally the Trust is a low risk target for money laundering and terrorist financing, there are a number of risks of the Trust being used for these purposes that have been covered off by conditions. These are set out below:
- There is no maximum limit on the amount paid into the Trust or on the amount accumulated. There is a risk that a person could place a lot of money in the Trust, the source of which is unknown. The requirement to undertake Enhanced CDD on account balances that accumulated an amount over the threshold value mitigates this risk;
- Applicants have a 21 day “cooling-off” period from the date of initial payment. During this period an applicant can effectively cancel the contract and withdraw their funds without reason. There is obviously a risk that money launderers could place illicit money in the Trust and ask for an immediate withdrawal of funds in a form that has been “cleaned”. This risk is mitigated by requiring the trustees to undertake standard CDD on any refunds over $9,999;
- Payments are returned to an applicant in cases where the applicant is permanently emigrating from New Zealand or where there is hardship. There is a risk that a person may abuse this ability to extract funds. This risk is mitigated by requiring a level of proof consistent with existing regimes and a standard level of CDD; and
- If any money remains after the cost of a funeral or a joint application has been met, it will be returned to the participant’s estate. There is a risk here that money is laundered for the benefit of a person who is a beneficiary of the estate of the participant. This is mitigated by requiring standard CDD to be carried out on any amount returned to an estate over $9,999.
- This exemption will come into force on the day after the date I grant this exemption.
- This exemption will expire on 30 June 2020.
Any person wishing to provide comment on this notice should contact the Criminal Law Team at the Ministry of Justice by emailing firstname.lastname@example.org.