State-owned Kiwibank pulled up by RBNZ for not meeting all requirements of money laundering laws

State-owned Kiwibank has been slapped with a formal warning from the Reserve Bank for not fully meeting all the requirements of new anti-money laundering legislation.

The specific concern is that Kiwibank did not follow customer due diligence (CDD) obligations under the legislation, which was introduced in June 2013.

The RBNZ notes that Kiwibank has since last year addressed the problems, though it is not clear why the RBNZ has therefore gone ahead and issued the warning today.

Asked about this, the RBNZ’s response was: “We have asked Kiwibank to immediately rectify all areas where it is non-compliant with its obligations. Kiwibank has advised us that it is committed to doing so, and that it has taken the necessary actions to remedy the identified issues. The Reserve Bank will continue to monitor Kiwibank closely.”

Kiwibank said in a statement that it accepted it did not meet some of the requirements during the period from June 2013 to June 2014 and has taken steps to remedy the issues identified.  It has comprehensive compliance programmes in place and is committed to ensure its AML programme operates effectively to prevent any attempted laundering of money, Kiwibank said.

Kiwibank spokesman Bruce Thompson said when the new rules came into effect the bank had to do such things as new identity checks on existing customers, and he conceded that in the first year Kiwibank had “not got all the boxes ticked” and as a result was now getting “public admonishment” from the RBNZ that it had to accept. “Most of it was done. We had some shortcomings,” he said.

This is the statement the Reserve Bank issued today:

The Reserve Bank of New Zealand (RBNZ) has today issued a formal warning to Kiwibank Limited (Kiwibank) under section 80 of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (the Act). As the supervisor of banks for compliance with their Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) obligations, the RBNZ has reasonable grounds to believe that for various periods of time between 30 June 2013 and June 2014, Kiwibank did not fully meet all the requirements in respect to the following customer due diligence (CDD) obligations under the Act:

  • did not always conduct CDD on the beneficial owner of a new customer and any person acting on behalf of a new customer (as required under sections 14(a) and 11(1)(b) and (c));
  • did not collect addresses of customers performing occasional transactions (as required under section 15(d));
  • did not always conduct screening of politically exposed persons (as required under section 26);
  • did not always take reasonable steps to verify information relating to the source of funds or the wealth of the customer (as required under section 24(1)(b)); and
    • did not consider terminating customers’ accounts in response to its ongoing non-compliance with section 24(1)(b) (as required under section 37).

As a result Kiwibank’s AML/CFT programme did not, during the specified period, fully include adequate and effective procedures, policies, and controls for complying with its CDD requirements as required by section 57(c).

The RBNZ notes that since June 2014, Kiwibank has taken remedial action to address these matters.

This is the statement that Kiwibank issued:

Kiwibank has received a formal warning from the Reserve Bank of New Zealand (RBNZ), relating to failure to meet some of the requirements of the Anti-Money Laundering/Countering Financing of Terrorism Act which came into effect in 2013.

The RBNZ found that during the period June 2013 to June 2014, Kiwibank did not always have fully compliant procedures in relation to Customer Due Diligence requirements of the Act.

This included:

·         Requirements for some existing customers to “top up” their identification details (new or additional information) to the required standard

·         Performing of certain checks for  customers considered high risk persons

·         Verification of the source of funds for certain high risk customers

·         The collecting of address information for customers who might conduct occasional transactions in a Kiwibank branch

Kiwibank accepts that it did not meet some of the requirements during the period and has taken steps to remedy the issues identified.  It has comprehensive compliance programmes in place and is committed to ensure its AML programme operates effectively to prevent any attempted laundering of money.