{"id":66,"date":"2018-03-22T00:00:00","date_gmt":"2018-03-21T13:00:00","guid":{"rendered":"https:\/\/hub.findingsimple.com\/nz\/posts\/risk-assessment-money-laundering-financing-terror"},"modified":"2023-03-13T02:41:07","modified_gmt":"2023-03-13T02:41:07","slug":"risk-assessment-money-laundering-financing-terror","status":"publish","type":"post","link":"https:\/\/insight.thomsonreuters.co.nz\/legal\/posts\/risk-assessment-money-laundering-financing-terror","title":{"rendered":"How Vulnerable is Your Firm to Being Used for Money Laundering or Financing Terror?"},"content":{"rendered":"

Don’t know? By 1 July 2018, you\u2019re required to know, by law.<\/p>\n

In less than four months time Phase 2 of the Anti-Money Laundering\u00a0and Countering Financing of Terrorism (AML\/CFT) Amendment Act <\/a>comes into force and the legal sector needs to be fully compliant.<\/p>\n

At a recent one day Anti-Money Laundering Conference<\/a> in Auckland that offered insights for lawyers on how to interpret and comply with the new legal requirements, barrister Gary Hughes<\/a>, one of New Zealand’s leading experts on money laundering and terrorism financing, led a session on the necessity and value of risk assessment.<\/p>\n

Why a risk assessment is needed<\/span><\/h2>\n

He explained that the first step toward ensuring your firm is compliant begins with a thorough risk assessment, which is needed for several reasons.<\/p>\n

Reputational, career and liability risks in conjunction with threats to our international reputation make compliance, starting with a risk assessment, essential for survival<\/p><\/blockquote>\n

The first of these was regulatory. We are living, Hughes says, in a new, tough regulatory environment. Falling short of requirements leaves a firm open to a range of new intrusive remedies and penalty options available to the supervisors and the police. As a powerful deterrent we already have some scary-looking examples overseas of non-compliant firms being taken to task. That, he says, is a fate that can be avoided!<\/p>\n

Hughes says, a quality risk assessment can help to apply a law firm\u2019s resources in the best possible way, in particular the places most vulnerable to an attack. A risk assessment will not only save your firm from the potential loss of money in fines for either non-compliance or inadequate compliance, but will also prevent it from the ignominy of becoming a test case!<\/p>\n

The second reason to comply is that it helps to maintain and enhance New Zealand’s international reputation by adopting, where appropriate in the New Zealand context, recommendations issued by the Financial Action Task Force (FATF). That in turn will contribute to public confidence in the financial system as well as facilitating co-operation amongst reporting entities; AML\/CFT supervisors; and various government agencies, in particular law enforcement and regulatory agencies.<\/p>\n

Criminal influence and sophistication is growing. International connectivity brings new threats. Reputational, career and liability risks in conjunction with threats to our international reputation make compliance, starting with a risk assessment, essential for survival, says Hughes.<\/p>\n

What\u2019s a risk assessment?<\/span><\/h2>\n

While there\u2019s no single right or cookie-cutter definition of exactly what a risk assessment is, Hughes says, there\u2019s a guide within the Act.<\/p>\n

Section 58 <\/a>says a risk assessment must:<\/p>\n