Part 1. General

1. Title

This Act may be cited as the Regulation To Support Remitters Act 2021.

2. Commencement

This Act comes into force on the 6 months after Royal Assent.

3. Purpose

The purpose of this Act is to—

• (a) create safe harbours from finacial penalties of the Anti-Money Laundering and Countering Financing of Terrorism Act for banks that bank Money Transfer Operators that are registered, audited annually by a licenced auditor and comply with transaction data collection requirements;

• (b) establish new limited licences for Money Transfer Operators and Pacific Banks to offer a limited range of financial products and services in New Zealand subject to balance sheet caps.

4. Application

This Act may apply to transactions outside of the Realm of New Zealand as long as part of the transaction was made in or through the Realm of New Zealand.

5. Interpretation

In this Act, unless the context otherwise requires,—

“transfer of funds” means any transfer made through a money transmitter to make funds available at another money transmitter where at some stage money is moved electronically.

“Money transfer operator” means businesses that are engaged in the cross border transfer of funds but not registered banks, for a complete definition of activities and exceptions see section 13.

“e-currency” means electronically or magnetically stored monetary value as represented by a claim to value by an issuer.

“registered bank” has the same meaning in the Reserve Bank of New Zealand Act 1989.

“reliable documents” mean:

• (a) a passport,

• (b) a driver's license,

• (c) a birth certificate, or

• (d) documents issued by a government department.

6. Act to bind the Crown

This Act binds the Crown.

Part 2. Amendments to the Anti-Money Laundering and Countering Financing of Terrorism Act 2009

Safe Harbours

7. Principal Act

In this subpart the principle act is the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.

8. New section 78A inserted

In the principle act after section 78 insert—

78A. Exceptions from civil liability acts

(1) A registered bank does not incur civil liability under section 78 if—

(a) That liability is in respect of the banks dealings with a Money Transfer Operator; and

(b) That money transfer operator meets the Remitters Safe Harbour Standard.

9. New section 78B inserted

In the principle act after section 78A insert—

78B. The safe harbour standard

A Money Transfer Operator meets the Remitters Safe Harbour Standard if;

(a) it is registered under section 14 of the Regulation To Support Remitters Act 2021;

(b) it meets all section 15 obligations of that Act;

(c) it has successfully passed an onsite audit by an independent licensed auditor within the last year; and

(d) there was no intent or negligent failure to act on behalf of the body corporate to commit the act that incurs civil liability.

10. New section 78C inserted

In the principle act after section 78B insert—

78C. Annual Audit

(1) The annual audit completed to meet the requirements of section 78B must be made available to the Financial Markets Authority upon its completion.

(2) Under this section the Financial Markets Authority has a duty to as soon as is practicable make the audit publicly available.

(3) The annual audit is judged to be successfully passed, by the licensed auditor with respect to standards published by the Financial Markets Authority.

(4) The Minister may by regulations add or amend a mandatory element in any published standards.

11. Section 59 amended (Review and audit of risk assessment and AML/CFT programmes)

(1) Section 59 of the principal act is amended as follows.

(2) For subsection (2) substitute;

A reporting entity (other than a high-value dealer) must ensure that its risk assessment and AML/CFT programme are audited by a licensed auditor every 2 years or during a different time period prescribed by regulations, or at any other time at the request of the relevant AML/CFT supervisor.

(2) After subsection (2) insert—

(3) In this section a “licensed auditor” means an auditor licensed under section 11 of the Auditor Regulation Act 2011.

12. Section 5 amended (Interpretation)

Insert alphabetically in the list of definitions—

** “Money transfer operator” has the same meaning as in the Regulation To Support Remitters Act 2021.

Part 3. Money transfer operator registration

13. Requirement to register

(1) Money transfer operators must register with the Financial Markets Authority.

(2) A money transfer operator is a business that;

• (a) operates as a bureau de change,

• (b) transmits money or any e-currency, or

• (c) cashes cheques that are payable to customers.

(3) A business is exempt from the (1), if—

• (a) the business meets all of the following criteria—

• (i) currency exchange or cash chequing is not the main activity of the business,

• (ii) the total turnover of money service activities is no more than $200,000 a year or 5% of the total annual turnover of the business, and

• (iii) currency exchange or cheque cashing transactions worth more than $1,500 are limited to 1 per customer,

• (b) The business has less than $25,000 in capital.

• (c) The business is already regulated by the Financial Markets Authority, or

• (d) The business transmits money, but only does so as a cash courier.

(4) For the purposes of section 3 (c), the 1 per customer transaction also includes any series of smaller transactions that a reasonable person may suspect to be linked.

14. Registration Application

(1) The Financial Markets Authority may approve registration after providing information under this section.

(2) Any person applying for registration from the Financial Markets Authority must provide—

• (a) the name and address of persons running the business,

• (b) the name and address of senior officers of the business,

• (c) the name and address of persons running the business,

• (d) a statement that says that all persons listed (a)-(c) have not been convicted of an offence under the Terrorism Supression Act 2002 or the Anti-Money Laundering and Countering Financing of Terrorism Act 2009,

• (e) a description of internal price control policies,

• (f) a description of internal security procedures,

• (g) projected future cash-flow and earnings,

• (h) financial statements showing that the business meets a minimum capital requirement of $25,000,

• (i) other information that may be specified in regulations made by the Minister, and

• (j) payment of any fee required by the Financial Markets Authority.

(3) The Financial Markets Authority may reject an application if it—

• (a) does not meet the requirements under subsection (2),

• (b) provides false information, or

• (c) does not meet requirements in subsequent regulations made by the Minister.

(4) The Financial Markets Authority may charge a fee for the application, not in excess of the cost of administration and processing the application.

15. Obligations of registered money transfer operators

Registered money transfer operators must comply with—

• (a) Transaction data collection obligations under section 16,

• (b) Information inspection obligations under section 17,

• (c) Suspicious transaction reporting obligations under section 18.

16. Transaction data collection

(1) When a money transfer operator makes or receives any transfer of funds they must have and maintain the required transaction information.

(2) Required transaction information:

• (a) In respect to a receipt of funds includes:

• (i) a description of the nature of the transaction,

• (ii) the amount of the transaction and the currency in which it was denominated,

• (iii) the date on which the transaction was conducted,

• (iv) the parties to the transaction,

• (v) if applicable, the name of the facility through which the transaction was conducted, and any other facilities directly involved in the transaction,

• (vi) the name of the payer,

• (vii) identifying information of the payer,

• (viii) the account number or a unique identifier given to the transaction.

• (b) In respect to a payment of funds includes:

• (i) a description of the nature of the transaction,

• (ii) the amount of the transaction and the currency in which it was denominated,

• (iii) the date on which the transaction was conducted,

• (iv) the parties to the transaction,

• (v) if applicable, the name of the facility through which the transaction was conducted, and any other facilities directly involved in the transaction,

• (vi) identifying information of the payer, and

• (vii) the account number or a unique identifier given to the transaction.

17. Inspection of identifying information

(1) A person commits an offence if the person processes a transaction or series of transactions that to a reasonable person appear linked, for an amount greater than $1,500 without first verifying the identifying information of the payee or payer.

(2) In order to verify that someone provided accurate information, it is required to inspect a reliable document.

(3) For a payee identifying information comprises their name.

(4) For a payer their identifying information comprises;

• (a) their name, and

• (b) either—

• (i) their date and place of birth,

• (ii) customer identification number, or

• (iii) a passport number.

18. Suspicious transaction reports

(1) It is an offence for a money transfer operator to fail to report to the police, any transaction that it has made or proposes to make if the money transfer operator has formed a belief that it is suspicious or a reasonable person would believe that.

(2) A transaction is “suspicious” if there are reasonable grounds for suspecting that the transfer in question:

• (a) is a proceed of crime, or
• (b) maybe made to support organised crime or terrorisum.

(3) In deciding whether there are reasonable grounds for suspecting illicit activity, the seller must consider if the prospective payer or payee—

• (a) appears unclear about the intended purpose of the transfer,
• (b) appears unfamiliar with the intended purpose or is unable to satisfactorily explain it,
• (c) is party to a transfer of fund or series of transfer in quantities or combinations that would be uncommon, or
• (d) is unwilling to provide identifying information.

19. Penalties

(1) A person guilty of an offence under section 18(1) is liable on conviction imprisonment for a term not exceeding 3 months or a fine not exceeding $5,000 (or both),

(2) A body corporate guilty of an offence under section 18(1) is liable to a fine not exceeding exceeding $50,000

(3) For a body corporate to be guilty of an offence under this section it is sufficient that an offence was committed by an individual in the course of their duties for the body corporate.

Part 4. Amendments to the Reserve Bank of New Zealand Act 1989

Limited Pacific Banking License

20. Principal Act

In this part the Principal Act is the Reserve Bank of New Zealand Act 1989.

21. Section 67A amended (Interpretation in this part)

Insert alphabetically in the list of definitions—

“Limited Pacific Banking License” means a license given to a registered bank under section 74A.

22. New section 74A inserted

After Section 74 insert—

74A. Conditions for registration for a limited Pacific banking license

(1) Where a bank seeks to trade under a limited Pacific banking license, they may notify the Bank.

(2) The Bank may by notice impose conditions upon the issuance of the license, and on the subsequent registration and vary them as they see fit.

(3) The Bank in setting conditions is to have regard for the limitations of license and proportionately make conditions and interpret this enactment.

(4) The Bank may not under (3) derogate from any matters referred to in section 73 (a) (c) (e) (f) or (g) only in cases where the regulation specifies they must not be derogated from under this enactment, section 78 or section 81.

(5) A bank registered under this section, may only trade in specified nations.

(6) A bank registered under this section may only trade in specified financial products.

(7) A bank registered under this section must be registered in a specified nation.

(8) A bank registered under this section must maintain a capped balance sheet as a condition of registration of an amount determined by the Bank.

(9) In determining the amount in (8) the bank is to have regard to the operations of the bank and also the stability of the financial system in New Zealand.

23. New sub-title inserted

After section 80 insert—

Limited Pacific Banking Licenses

24. New Section 80A inserted

After section 80 insert-

80A. Restrictions in trading imposed by licenses

(1) Ministers may from time to time publish in the Gazette a list of countries that are specified countries.

(2) In determining specific countries the Minister shall have regard to any relevant factors but must ensure that any country designated under subsection (1)—

• (a) is a Pacific country,
• (b) must have a Basel AML rating of 5 or lower.

(3) In this part “specified financial products” are limited to meaning—

• (a) small loans with a rate of interest no greater than 30% pa and for an amount no greater than $5000;
• (b) money transfer services;
• (c) foreign currency exchange;
• (d) providing access to bank accounts in specified countries.

Explanatory Notes;

Part 1: Title, purpose, definitions etc

Part 2: Amends the AML act to allow for safe harbours so that genuine remitters who meet certain standards are not caught up in onerous AML requirements that make remittance payments more expensive and risky for financial institutions to carry out - thus preventing a lower standards or a black market in money transfers.

Part 3: Sets the conditions to access the safe harbours, from reporting requirements on transactions, to suspicious transaction reports.

Part 4: Establishes a new limited banking license accessible to financial institutions from some pacific partners, currently no nation would qualify under the Basel AML rating but the rating is low enough that - it would encourage reform in pacific nations with the carrot of being able to access this license.

Once Pacific partners are able to access this license financial institutions would be able to enter the profitable area of small loans in New Zealand often supporting their nationals, this expansion in financial services would come with remittance services which alone would come not due to the lower profitability of these services and higher risk.

B.1096 - Regulation To Support Remitters Act 2021 is authored by u/LeChevaliarMal-Fait (Labour) and is sponsored by /u/model-frod (Labour) as a Private Members Bill.

Debate will end on 22nd of August 11:59pm