Not-for-Profits and Anti-Money Laundering and Countering Financing of Terrorism

Risks relating to Money Laundering or Financing of Terrorism

The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT) is intended to prevent money-laundering by criminals and the financing of terrorism. Societies and charitable trusts (“not-for-profits”) and those providing them with services (such as legal, accounting and banking) are now affected by this legislation:

  • The “risk profile” of a club or society will be assessed having regard to its purpose and size and whether it is a national or local entity. If the organisation has or will have a social or local community focus, such as a sporting or cultural group, the potential risk associated with it is likely to be low. If the club’s or society’s activities are likely to be cash-intensive (with greater potential for it to be used for the placement of illicit money) the risk will be assessed as being higher.
  • The “risk profile” of a charitable trust is considered to be higher because of the potential for trusts to be used to disguise the criminal origin of funds or the true ownership and effective control of the trust, particularly where ownership and control arrangements are sophisticated or complex. As a result, all charitable trusts are subject to what is called “Extended Due Diligence,” and any charitable trusts that are geographically or financially linked to higher risk countries, or include politically exposed persons, may have increased Money Laundering or Financing of Terrorism risks.

 

Lawyers and Accountants Advising Not-for-Profits and Financial institutions providing Not-for-Profits with financial services

Before any lawyer or accountant provides a proposed or existing club, society or charitable trust with advice, the “risk profile” of that proposed or existing club, society or charitable trust must be assessed by that lawyer or accountant before providing that not-for-profit with any advice. Similarly, before a financial institution provides a not-for-profit with financial services its “risk profile” needs to be assessed.

 

Bannister & von Dadelszen’s Obligations when Advising Not-for-Profits

We require detailed information about not-for-profit clients and the transactions we undertake on their behalf to ensure that we are not in breach of our obligations under the Anti-Money Laundering and Countering Financing of Terrorism Act. Please also note that we have any suspicions about what we are asked to do for not-for-profit entities we are obliged by the Act to report those suspicions.

Before we can provide legal services to new or existing not-for-profit clients we will undertake what is called “customer due diligence” (CDD) with you and, in the case of charitable trusts, that is likely to require “extended due diligence.” This is already commonly required by a number of businesses, and they are unavoidable obligations.

For existing not-for-profit entities it should usually not be unduly difficult to provide us with the required information, but for entities being formed some of the information may be rudimentary.

For existing or proposed charitable trusts we need (those items followed by an * can be obtained online, if necessary by us):

  • Full name of the trust,
  • A copy of the constitution (Trust Deed) if already in existence*,
  • If already formed and registered, a copy of the Certificate of Incorporation issued by the Registrar of Incorporated Societies* and confirmation of registration with Charities Services if already registered under the Charites Act 2005*,
  • Legal status and purposes,
  • Principal physical and postal addresses and any registered office address,
  • Full names, proofs of identity, dates of birth, proof of addresses for all trustees, and any other controllers of the trust and beneficial owners (if specified), and
  • Source of funds or wealth of the trust.

For existing or proposed clubs and societies we need (those items followed by an * can be obtained online, if necessary by us):

  • Name of the club or society,
  • A copy of the constitution if already in existence*,
  • If already formed and registered, a copy of the Certificate of Incorporation issued by the Registrar of Incorporated Societies* and confirmation of registration with Charities Services if already registered under the Charites Act 2005*,
  • Legal status and purposes,
  • Principal physical and postal addresses and any registered office address, and
  • Full names, proofs of identity, dates of birth and proofs of address for all controllers of the organisation and their relationship to the organisation (president, secretary, treasurer, committee members, management team and other members with effective control of the organisation).

For the certification of copies of documents which we do not sight, the copy must be certified as a true copy by :

  • A trusted referee, that is, anyone over the age of 20 and who is a Member of the Police
  • Justice of the Peace, Registered medical doctor, Registered nurse
  • Registered teacher
  • Minister of religion
  • Lawyer
  • Notary public
  • Chartered accountant
  • New Zealand Court official
  • A person who has the legal authority to take statutory declarations in New Zealand

AND the trusted referee must not be:

  • related to you; for example, a trusted referee cannot be your spouse, parent, child, brother, sister, aunt, uncle or cousin etc., nor
  • a person who lives at the same address as you, nor
  • a person involved in the transaction or business requiring the certification.

Certification when overseas

  • When certification occurs overseas, copies of international identification provided by a person resident overseas must be certified by a person authorised by law in that country to take statutory declarations or equivalent in the person’s country.

Method

  • For identification verification, the trusted referee must sight the original documentary identification and make a statement to the effect that the documents provided are a true copy and represent the identity of the named individual:

The document provided is a true copy of the original I have sighted and represents the identity of the named individual 
 
…………………………………………………………
Signature of Trusted Referee
[Print Name of Trusted Referee]
[Print Occupation/capacity]
[Print Date]

 

  • For address verification only, the trusted referee must sight the original documents and make a statement to the effect that the documents provided are a true copy:

Certified to be a true copy of the original which I have sighted
 
…………………………………………………………
Signature of Trusted Referee
[Print Name of Trusted Referee]
[Print Occupation/capacity]
[Print Date]

  • Certification must include the Trusted Referee’s name, occupation/capacity, signature, and the date of certification.
  • If you cannot find a trusted referee as above, you must contact us for confirmation on who we may accept as an alternate referee.
One form of ID requiredOROne form of primary non-photo IDORNew Zealand Drivers Licence
New Zealand PassportNew Zealand full birth certificateAND
One of the following
New Zealand Certificate of IdentityCertificate of New Zealand citizenship
New Zealand Refugee Travel documentationOverseas citizenship certificateCredit card statement/bank statement
Emergency travel documentOverseas birth certificateOther issued by a registered bank that contains the person's name and signature (eg credit card, debit card or eftpos card)
New Zealand firearms licenceSupergold Card
Overseas passport (which contains name, date of birth, a photograph and the signature of the person in whose name the document is issued)AND
One form of secondary photo ID
NZ Defence Photo ID
Police Photo ID
New Zealand drivers licenceCommunity Services Card
18+ card
International Driving Permit and a licence from another Country with a translation
Student ID card (which contains a photograph)
AND
One form of the acceptable address verification below (issued to the person in the last 12 months)
Utility bill
Rates bill
Bank account statement
Non-bank financial institution statement
Government or Government Department document
Rental tenancy agreement
IRD tax notice/personal tax summary
Car registration bill
Insurance bill
If you cannot provide us with any of the above documents, including if your ID has expired, please ring us to discuss

We may need to ask you for further information beyond that outlined above depending on the nature and purpose of the proposed work we are asked to do, and information confirming the source of funds for a transaction may also be necessary to meet our legal requirements.

We are not required to retain the originals of the required documents, but we need to see the originals or properly certified copies, and then take a photocopy and keep them in our records for the future.

If we are not provided with required information we cannot provide you with advice or carry out any other work for you.