The exemption recognises that AML/CFT requirements imposed a significant compliance burden on accounting and tax agency businesses undertaking transfers of excess tax. Because these transactions are very low risk when it comes to money laundering the exemption effectively makes the compliance requirements proportionate to the risk. 

What does this mean?

From 15 July 2022 whenever you undertake a tax transfer of excess tax the exemption applies and you are no longer required to complete the following actions:

• Conduct standard customer due diligence: for a new business relationship, occasional activity or where there is a change to a business relationship.
• Conduct simplified customer due diligence: for a new business relationship or occasional activity.
• Conduct enhanced customer due diligence: for a new business relationship or occasional activity.
• To conduct ongoing customer due diligence and account monitoring.
• To keep records of transactions.
• To keep records: of identity and address verification.

Key takeaway

Despite the exemption, tax transfers remain a captured activity under the Act. This means accounting practices that carry out tax transfers (including where this is their only captured activity) are still AML/CFT reporting entities.

You will need to stay compliant with all other requirements of the Act, for example, have an up to date risk assessment and programme, file annual supervisor reports, complete an independent audit of your risk assessment and programme at least every three years, and most importantly you are still required to report any suspicious activities or transfers that are identified.  

Suggested action moving forward 

• We recommend you read the exemption notice in its entirety. It is important to note there are some exceptions to the exemption and although they largely relate to less common transaction types you need to understand what they are and when they apply.  
• Make a decision about the practicality of identifying the exempt activities and not undertaking the CDD versus keeping your AML/CFT programme the way it is and undertaking CDD on all clients.
• If you wish to utilise the exemption, then amend your AML/CFT programme to reflect the exemption, upskill your staff on the changes and have compliance controls in place to ensure you don’t inadvertently carry the exempt obligations across to other AML/CFT captured activities within your business.

If you need help with any of the points listed above or have any questions regarding any aspect of your audit, please don’t hesitate to contact the team. We are happy to answer your questions and point you in the right direction.