Most advisers remember to do the additional strands of the level 5 qualification to meet code standards but often the AML/CFT side of things is overlooked. The consequences of getting this wrong can be painful.
If the FAP starts to provide advice on bonds, shares or managed funds (other than KiwiSaver Schemes/retirement schemes) then the FAP will become an AML/CFT reporting entity and will need to meet the AML/CFT obligations.
Below is a summary of who is and is not an AML/CFT reporting entity.
Who is an AML/CFT Reporting Entity?
A Financial Advice Provider (FAP) or Authorised Body (AB) is a Reporting Entity (RE) if they arrange the following relevant services and products for their customers
| Relevant Services | Relevant products |
| Investment planningFinancial advice on financial productsSwitching funds | Other managed investment schemesDebt securitiesEquity securitiesDerivativesOther insurances (only investment-linked contacts of insurance)DIMS facilities (but see carve-out in regulation 16(5)(b)(xiii))KiwiSaver products (advisers arranging these products are considered to be REs, but can rely on the class exemption for KiwiSaver products) |
Who is not an AML/CFT Reporting Entity?
FAPS and ABs who do not arrange any of the above services or products for their customers are not REs. Services and products that are not captured include:
- Personal risk insurance
- Fire and general insurances
- Mortgage/consumer credit contracts.
Reporting Entities in Authorised Body arrangements
Where a FAP has an Authorised Body arrangement, the following criteria determine which entity is the RE.
The FAP will be the RE where:
- the FAP arranges for a reporting entity (A) to provide relevant services in respect of relevant products for customers/intended customers of A;
- an AB is not a financial advice provider but arranges for a reporting entity (A) to provide relevant services in respect of relevant products for customers/intended customers of A.
The AB will be the RE where:
- the AB is also a financial advice provider and arranges for a reporting entity (A) to provide relevant services in respect of relevant products for customers/intended customers of A.
The Financial Markets Authority (FMA) have put together some of the common AML/CFT FAQs which you may also find helpful: https://www.fma.govt.nz/business/focus-areas/amlcft/amlcft-faqs/
If you have any questions about your AML/CFT obligations or need extra support our experienced team is on hand to help. Give us a call today for a no obligation chat.