On 9 July 2021, new amendment regulations became effective and amended four of the six regulations.
The regulations include some increasing compliance obligations and others make things easier. These changes require all reporting entities to make changes to processes and documents.
Reporting entities need to be aware of these changes and take immediate preparatory action to ensure they are operating compliantly from 9 July 2021.
The most significant changes are:
- New requirement for reporting entities dealing with companies, limited partnerships, and overseas limited partnerships to establish and verify the existence of nominee directors, nominee shareholders and nominee general partners as part of customer due diligence (CDD). If any exist, the reporting entity must conduct enhanced due diligence (EDD) on the customer.
Note: there is a compliance transitional period that applies to parts of this new regulation to 29 April 2022. Beyond this date though a reporting entity will be considered in breach of the AML/CFT Act. If they have not updated their systems and processes.
- Increase of the default audit period for most reporting entities from two years to three years (with a possibility of a four-year time-period upon notification by the relevant AML/CFT supervisor). It may not be ideal to move your audit automatically to three years as doing so may increase your business risk. If you’re not sure what’s best for your business talk to us and we can help you work out when it’s appropriate to move to a three-year audit cycle.
- Redefinition of the term ‘related’ to apply to entities that are not body corporates – resulting in an expanded ‘related entity’ exemption, and the ability for related limited partnerships to form DBGs.
- New exemptions and limited exemptions from AML/CFT obligations for entities providing certain relevant services, such as a designated non-financial business or profession (DNFBP) making low-risk transactions, parties subject to a Commissioner of Police’s order/production order, and court appointed liquidators.
- Delayed timing for real estate agents conducting CDD in relation to commercial lease transactions. This moves the timing of CDD on the landlord/lessor to before they present an offer to lease. This will reduce the compliance burden but will require an update to your processes in your AML/CFT compliance programme.
If you would like more information or assistance with any of these changes, please do not hesitate to contact us.