Small Auckland-based law firm Kidd Legal received the warning from the Department of Internal Affairs (DIA) after failing to meet several of its requirements under the AML/CFT Act.  

According to the DIA’s media release, Kidd Legal’s failures related to the establishment, implementation and maintenance of its AML/CFT Programme, and it also failed to demonstrate how it would ensure staff compliance. Further failures included not understanding or assessing money laundering/financing of terrorism risks within the business.

The legal sector became subject to the AML/CFT Act’s requirements in July 2018.

“Our inspection of Kidd Legal highlighted a lack of understanding and apathy towards developing and maintaining policies and procedures. This warranted the issue of a formal warning,” says DIA’s AML group director, Mike Stone.

Kidd Legal is not alleged to be involved in any form of money laundering or terrorism financing. However, the firm is required to take immediate action to rectify all areas of non-compliance with the Act and will be closely monitored by the DIA until its deficiencies are remedied.

The DIA issued a similar formal warning to Property Brokers Limited under the AML/CFT Act in early March. These warnings send a timely reminder of the importance of compliance and show that the DIA’s patience is wearing thin for phase two firms (such as lawyers, accountants and real estate agents) still adapting to the new regulatory landscape. It also shows the regulator is not afraid to act against those not toeing the regulatory line.

Our advice is that reporting entities must ensure their own businesses are compliant and take immediate steps to check that processes, systems, and controls align with supervisor expectations.

If your AML processes need bringing into line, the experienced Strategi team can help.