AML/CFT Guide for Lawyers and Conveyancers in New Zealand

Part 1

When AML/CFT May Apply

Property, business, client-fund, company, trust, nominee and address services are key captured areas. Privileged communications require care but do not remove every duty.

• Acting in a real-estate transaction for a client.
• Managing client funds, accounts, securities or assets in a captured way.
• Acting in a transaction involving a business, company, trust or legal arrangement.
• Creating or arranging companies, trusts or other legal persons or arrangements.
• Providing nominee, trustee, partner, registered-office or business-address services.
• Carrying out another listed activity in the ordinary course of business.

Part 2

Main Risks in This Sector

These are starting points, not a ready-made risk rating. The business still needs to assess its own customers, services, countries, channels, transactions and technology.

• Trust accounts and transactions can move criminal proceeds through a trusted professional.
• Property, companies and trusts can hide beneficial ownership and source.
• Urgency, confidentiality and complex instructions can discourage proper questions.
• Overseas parties and third-party funders can separate the client from the money.
• Privilege can be misunderstood and applied to information that is not protected.

Part 3

A Practical Control Plan

1. Step 1

   Confirm scope

   Map matter types to the activities listed in section 5 and the ordinary-course test.

2. Step 2

   Build the customer process

   Place CDD and risk gates before captured work begins.

3. Step 3

   Set the risk controls

   Create a clear process for privilege, suspicious activity and restricted records.

4. Step 4

   Train and connect people

   Train fee earners and support staff on property, trusts, client funds and hidden ownership.

5. Step 5

   Test and improve

   Review sample matters for timing, beneficial ownership, source and reporting decisions.

Part 4

Worked Examples

These examples show how the scope and risk questions can be joined. They do not replace the law or the facts of a real matter.

Part 5

Evidence That Should Be Easy to Find

• The section 5, ordinary-course and New Zealand connection analysis.
• The current sector risk assessment and the official sources used.
• A matter-type scope map and ordinary-course reasoning.
• Trust-account controls linked to CDD, source and matter risk.
• A privilege and SAR process with restricted access.
• File reviews of property, company, trust and client-fund matters.
• Customer, beneficial ownership, risk, monitoring and reporting records.
• Training, internal review, independent assurance and remediation records.

Part 6

Common Mistakes

• Treating every legal matter as captured.
• Starting urgent work before required CDD is complete.
• Using privilege as a blanket reason not to collect or report.
• Identifying the instructing person but not the beneficial owner.
• Keeping SAR records in the ordinary client file.