AML Reform to Bring Relief for Small Business

The Government has taken a step towards a more practical, risk-based approach to Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) laws – a move that’s set to benefit small businesses across the country.

Last week, Associate Justice Minister Nicole McKee confirmed Cabinet’s approval to begin drafting the AML/CFT (Omnibus) Amendment Bill, aimed at reducing unnecessary red tape for low-risk operators. This means simpler compliance processes for businesses such as real estate agents, bookkeepers, and small financial service providers, while keeping the focus firmly on disrupting serious and organised crime.

“This level of scrutiny is overkill for a small business dealing with law-abiding New Zealanders... Our AML laws need to be smarter and more risk-based,” says Minister McKee.

These proposed reforms align closely with recommendations we raised last year in our Reducing Compliance Burden on New Zealand Small Businesses report, released in partnership with the BusinessNZ Network.

PDF Download: Reducing Compliance Burden on New Zealand Small Businesses | October 2024

🧾 AML/CFT Reform – At a Glance

The Government is progressing wide-ranging changes to New Zealand’s AML/CFT regime to make compliance smarter, more risk-based, and easier for legitimate businesses. These reforms are being implemented across several amendment bills and will roll out through to 2026.

✅ Smarter, Risk-Based Compliance

• Simplified customer due diligence (CDD) for low-risk customers
• More flexibility when verifying high-risk customers
• Address verification required only when there’s a clear risk

🤝 Easier Group Compliance

• Automatic formation of Designated Business Groups (DBGs) for eligible businesses
• Wider access to voluntary DBGs with shared compliance programmes

🔍 Stronger Enforcement Tools

• More powers for the Financial Intelligence Unit (FIU) to detect and disrupt suspicious activity
• Ability to freeze accounts or transactions linked to suspected crime

💸 Cracking Down on Criminal Activity

• Ban on virtual currency (crypto) ATMs
• $5,000 cash payment cap for international money transfers
• Higher penalties and new offences for serious non-compliance

🧯 Improved Oversight and Guidance

• DIA to become the sole supervisor of AML/CFT
• New industry levy to support hybrid funding of the regime
• Shift from audits to independent evaluations of AML programmes

🕒 Extended Timeframes and Practical Changes

• PTR deadline extended from 10 to 20 working days
• SAR submission window for law firms extended to 5 working days
• Clearer rules around foreign politically exposed persons and trust verification

What Did We Hear from Small Businesses?

Our October 2024 report highlighted widespread frustration from small businesses dealing with:

• Repetitive and inconsistent information requests
• High compliance costs and excessive procedures
• Limited use of digital tools
• No centralised AML data system

Key recommendations included:

• Creating a centralised AML data service
• Introducing simplified and unified verification processes
• Developing clear, consistent guidance
• Establishing an “accredited business” model to reduce repeated checks

We’re pleased to see the Government responding to longstanding concerns from small business owners. These reforms have the potential to deliver real-world relief, allowing businesses to focus on what they do best, instead of navigating red tape. The bill marks a long-overdue modernisation of AML/CFT rules – and we’ll be watching closely to ensure it continues to balance national security with practical business needs.

Key resources:

• Beehive Press Release: Red tape relief making a difference for businesses
  
  • PDF Download: Case studies - Benefits of AML-CFT reforms 
  • PDF Download: AML-CFT reform – Summary of key changes