Wire Transfer Requirements
There have been several recent changes to New Zealand’s AML/CFT supervisory framework, including the Department of Internal Affairs (DIA) becoming the single AML/CFT supervisor. Alongside this change, the DIA has issued new guidance clarifying the application of the wire transfer requirements and prescribed transaction reporting (PTR) obligations.
The Department of Internal Affairs (DIA) has clarified that a non-bank financial institution (NBFI) may be considered an ordering, intermediary or beneficiary institution where it is involved in a wire transfer, even if the transfer forms part of a broader service provided to a customer.
Importantly, an NBFI does not need to control the customer’s account, hold the funds, or have direct access to the relevant payment system to be considered an ordering institution.
For example, where an NBFI’s customer instructs the NBFI to transfer funds to a beneficiary, and the NBFI then instructs its bank through online banking to make the transfer, the NBFI is considered the ordering institution for the customer-facing wire transfer.
In this scenario, there are two separate wire transfers:
Customer-facing transfer: initiated by the NBFI’s customer, with the NBFI acting as the ordering institution and its bank acting as the intermediary institution; and
Bank-facing transfer: initiated by the NBFI, with the bank acting as the ordering institution in relation to its customer, the NBFI.
Where an NBFI is an ordering, intermediary or beneficiary institution, it must ensure its AML/CFT programme contains adequate and effective policies, procedures and controls to meet the applicable wire transfer requirements.
What if the NBFI is only providing advice or administrative support?
The DIA does not consider an NBFI to be an ordering, intermediary or beneficiary institution where its involvement is purely clerical or advisory.
This could include situations where the NBFI:
provides financial advice;
helps a customer complete a payment form;
is copied into payment-related correspondence; or
receives information about a proposed payment but does not communicate or act on an operative payment message.
NBFIs providing these types of services should clearly document in their AML/CFT programme that they are not considered an ordering, intermediary or beneficiary institution.
And what about PTR reporting?
Where reporting entities are an ordering, intermediary or beneficiary institution, they must file a PTR within 20 working days.
This means that a single overall movement of funds may result in multiple PTRs, because the movement can involve multiple separate wire transfers and reporting entities.
The DIA considers this “complementary reporting” rather than duplicate reporting. Each reporting entity provides a different snapshot of the movement of funds, contributing different information to the overall financial intelligence picture.
In the example above, both the NBFI and the bank have PTR obligations. The NBFI reports on the instructions and funds of its underlying customer, while the bank reports on the instructions and funds of its customer, the NBFI.
Key takeaway
If your business is an NBFI, don't assume that you are outside the wire transfer requirements simply because you do not hold client funds or directly access a payment system.
Consider what role your business actually plays in the movement of funds, and make sure your AML/CFT programme clearly reflects your obligations, or explains why the wire transfer requirements do not apply to your activities.
