Recent amendments to the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 will require real estate agents to implement process that help combat money laundering and terrorist financing in New Zealand from 1 January 2019. The obligations under the legislation were previously reserved for financial institutions, accountants and lawyers. The amendments to the laws will require real estate firms to do a number of things to help combat money laundering and terrorist financing, and to help Police bring the criminals who do it to justice.
One of the key obligations of the Act requires real estate agents to verify the identity of their clients and their client’s beneficiaries prior to entering into an agency agreement to lease or sell property on their behalf. This process, known under the Act as customer due diligence, involves background checks of identity, date of birth and address which needs to be confirmed by acceptable documents such as a driver’s licence or birth certificate and documents showing an address. If your business with Savills involves a company or trust, we will also need information about the people associated with it, such as directors and shareholders, trustees and beneficiaries. We may also need to ask you about the nature and purpose of the proposed work you are asking us to do for you. Information confirming the source of funds for a transaction may also be necessary to meet the legal requirements.
Given that the ownership of property generally involves the use of financial institutions and lawyers, we anticipate that these changes will cause little disruption to your usual business process and will simply be a continuation of the verification process the law already requires you to complete with your bank and law firm.
As a global organisation, we have the resources necessary to ensure that our customer due diligence is completed as efficiently as possible and that any personal information we are compelled to collect remains safe and secure.
We value our ongoing business relationship with you and look forward to working with you as these laws take effect. Please do not hesitate to contact either Paddy or Harold or any of the team at Savills should you wish to discuss these changes in further detail.
To learn more about the changes, visit https://www.keepourmoneyclean.govt.nz.
Frequently Asked Questions
Who do real estate agents need to complete CDD on?
They must identify and verify:
- the client;
- each beneficial owner of the client; and
- each person acting on behalf of the client including the authority to act on behalf of the client e.g. a lawyer or representative giving instructions on someone’s behalf.
What is a beneficial owner?
A beneficial owner is any individual (natural person) who satisfies one or more of following:
- the individual has effective control of the client; or
- the individual is a person on whose behalf a transaction is conducted;
- the individual owns more than 25% of the client or person on whose behalf a transaction is conducted (e.g. direct/indirect shareholders).
What is effective control?
Effective control is the ability to exercise control or influence over a company or entity. Typically, this will be the directors of a company or entity or those who hold senior positions. It could also be those who are funding the company, so this is something else that you will need to consider, and where relevant, enquire about.
What information will they need to get?
As a starting point, the following identity information must be obtained:
- the person’s full name;
- the person’s date of birth;
- if the person is not the client, the person’s relationship to the client;
- any additional information prescribed by regulations.
This can be done several ways but not unlike the banks, they will ask to see your identity documents like your Passport, Driver's Licence, utility bill etc.
Source of funds/wealth
In some cases your real estate agent will need to establish the source of the funds for the transaction (i.e. where the funds have actually come from) and source of wealth (i.e. how those funds got there in the first place and how was that money obtained).
Documentation you may be asked for
The below gives an indication of some of the documents your real estate agent may ask you to present in person or as certified documents as part of this process:
Passport, NZ Firearms Licence or NZ Driver Licence with another document such as a bank statement or statement issued by a Government agency. You will also need to provide a document with your residential address (for example, a utility bill)
The Trust Deed and, for trustees, and settlors, the information required for individuals as noted above, together with information regarding the Trust’s source of funds or wealth. Additional information may also be required for beneficiaries.
Details of the company, together with the information for individuals noted above for every individual with more than a 25% shareholding, all individuals with effective control of the company and all individuals acting on behalf of the company. Information regarding source of funds or wealth may also be required.