The Parliamentary Counsel Office of New Zealand Legislation updated its Anti-Money Laundering and Countering Financing of Terrorism (Requirements and Compliance) Regulations 2011 on 1 June 2024.
Firstly, it extended its definition of wire transfers to include virtual assets, updated its definition of a transaction, declared that virtual asset transfers will be treated as international wire transfers, and updated the information requirement for international wire transfers.
What is the scope of the Travel Rule in New Zealand?
The Travel Rule will apply to all virtual asset service providers (VASP). Although the term is not defined in any Act or regulations, it is widely used to describe businesses that provide services related to virtual assets.
The New AML/CFT regulations for VASPs state that any entity that considers itself a VASP or carries out one of the activities below will fall under the Act.
“• accepting deposits or other repayable funds from the public;
• transferring money or value for, or on behalf of,a customer;
• issuing or managing the means of payment;
• money or currency changing, or
• providing safe keeping or administration of virtual assets on behalf of any person
Accordingly, VASPs include:
• providers of virtual asset exchange services, custodian wallet providers, virtual asset brokers and Initial Coin Offering (ICO) or other token providers; and
• any other financial institution that provides services relating to virtual assets alongside a primary service involving fiat currency. For example, a money remitter that may accept, or buy and sell, cryptocurrency for a customer.”
[Guidance: New AML/CFT regulations for virtual asset service providers]
Who is the supervisory body for VASPs in New Zealand?
Under the AML/CFT Act, the Department of Internal Affairs (DIA) is the supervisory authority for VASPs.
However, depending on the VASP’s services provided, it can be regulated by the Financial Markets Authority (FMA).
What is the Travel Rule threshold in New Zealand?
NZD 1000
Obligations of originator virtual asset service providers
Originator VASPs hold or receive fiat currency or virtual assets on behalf of a customer, or institution of that customer, and conduct transactions on behalf of the customer to a beneficiary account held at a VASP or an account held at another reporting entity.
For all transactions of NZD 1000 and over, the originator VASP must identify and verify* the originator's identity, obtain beneficiary information, and ensure this data is transmitted to the beneficiary or intermediary VASP.
This includes:
originator’s full name,
originator’s account number,
and either the originator’s postal address, national identity number, customer identification number or place and date of birth,
beneficiary’s full name,
beneficiary’s account number, or any unique transaction reference associated with them.
*If the originator is an existing customer, it is assumed that due diligence has been conducted and the information obtained has been verified. Additionally, beneficiary data does not need to be verified by the originator VASP.
For transactions under NZD 1000, the originator VASP must ensure that the following information accompanies each wire transfer:
originator’s full name,
originator’s account number or other identifying information that allows the transaction to be traced back to the originator,
beneficiary’s full name,
beneficiary’s account number or the beneficiary’s unique transaction reference number.
No verification is required for the above data points unless there are grounds to report suspicious activity (within the meaning of section 39A of the Act) related to the transfer.
For all international wire transfers over NZD 1000, an international funds transfer (IFT) prescribed transaction report (PTR) must be submitted to the New Zealand Police Financial Intelligence Unit (FIU). Moreover, an IFT-PTR must be submitted within ten working days from the transaction date through the FIU’s goAML system.
Obligations of beneficiary virtual asset service providers
A beneficiary VASP receives fiat currency or virtual assets, which are credited to the beneficiary's account or wallet (usually the beneficiary VASP’s customer).
Beneficiary VASPs are required to use appropriate risk-based procedures for handling the wire transfer and consider whether it constitutes suspicious activity if Travel Rule data is not received.
Like originator VASPs, beneficiary VASPs must submit an international funds transfer (IFT) prescribed transaction report (PTR) to the New Zealand Police Financial Intelligence Unit (FIU) for all international wire transfers over NZD 1000. The IFT-PTR must be submitted within ten working days from the transaction date through the FIU’s goAML system.
Obligations of intermediary virtual asset service providers
With wire transfers, an intermediary VASP participates in a fund transfer that occurs through multiple institutions but is not an ordering institution or a beneficiary institution.
If a VASP is an intermediary institution, it must provide all required information from the ordering institution (originator VASP) to the beneficiary institution (beneficiary VASP) as soon as possible.
Intermediary institutions are also required to have procedures, policies and controls to identify international wire transfers that lack the required information and risk-based processes to respond to any wire transfer that does not.
When do you need to comply with the Travel Rule in New Zealand?
Now - the Travel Rule came into effect on 1 June 2024
