RBNZ warns Kiwibank over year-long failure on anti-money laundering checks

Wednesday 28th October 2015

Kiwibank, the government owned lender, has been formally warned by the Reserve Bank of New Zealand for a year-long period when it didn't have appropriate risk assessment measures in place to meet anti-money laundering legislation.

The central bank found that between June 2013 and June 2014, the Wellington based lender did not always operate with compliant procedures in relation to customer due diligence requirements of the Anti-Money Laundering/Countering Financing of Terrorism Act (AML/CFT) which came into effect in 2013, Kiwibank said in a statement.

Kiwibank accepted it didn't meet some of the requirements and has taken steps to remedy the issues identified. This included requiring some customers to "top up" their details, checking customers considered "high risk persons" or "politically exposed persons" and verifying the source of their cash, and collecting the addresses of customers who might conduct occasional transactions in a branch, the lender said.

The AML/CFT legislation came into effect in mid-2013, increasing the monitoring of financial firms by the Reserve Bank, Department of Internal Affairs and Financial Markets Authority, in a bid to stamp out as much as $1.5 billion of money laundering. Lenders bear the cost of increased compliance.

The central bank's warning comes after earlier this year Kiwibank was blocked from closing E-Trans International Finance's bank accounts after the money remitter challenged the state-owned lender's move in the High Court. In March, the bank told E-Trans it was going to close the firm's accounts because its business as a remitter posed too great a risk and burden under AML/CFT. E-Trans opposed the decision, saying it breached the Code of Banking Practice, and successfully sought a court order to keep the accounts open pending a full hearing in the High Court in Auckland.

BusinessDesk.co.nz

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