All real estate agents are now obliged to carry out new identity checks of clients under the Anti-Money Laundering and Countering Financing of Terrorism Act (AML/CFT).
New Zealand has had laws in place for a number of years to tackle money laundering and the financing of terrorism. Initially, these laws required banks and other financial institutions, among others, to verify the identity of customers and clients. The requirements were extended last year to include lawyers, conveyancers, trust and company service providers and accountants.
In a measure designed to prevent the use of property transactions as a means of laundering funds, the Government has now broadened these requirements to include the real estate industry.
Real estate agencies now have to carry out due diligence on their clients under the Act to ensure clients are who they say they are, as well as monitoring transactions for unusual behaviour and reporting suspicious activity to the Police.
What will the changes mean when you sell, or buy, a property?
Generally, clients of real estate agencies simply need to be conscious that they will have to provide some extra information, says Caroline Williams, Bayleys’ Group General Manager, Legal and Compliance.
Real estate agents must carry out due diligence on vendors and – if the agent is acting as a buyer’s agent – the buyer.
This involves collecting copies of identification such as a passport or driver’s license, proof of address and, in some cases, verifying the source of a client’s funds or wealth. Where the client is a company or trust, verification needs to be carried out on the individuals who own or control the client.
“Most people will be familiar with similar checks already carried out by their banks or other professional service providers. As with those processes, the type and amount of information requested will vary according to the type of client,” says Williams.
The process will be relatively straightforward for an individual, but may take longer for those who own their property through complex trust or company structures, or where people are based offshore.
The new rules dictate that even those who have used an agency’s services before may have to be asked to confirm their identity.
“While the process will be fairly simple for many, identity verification may take days, and even weeks if a trust or company is involved, so it will be essential to take this into account when you are planning to put your property on the market,” says Williams.
“With other professions, including lawyers and conveyancers, also having to carry out checks, many vendors and purchasers will find they have to tackle verification procedures more than once for a single transaction.
“Talking to your agent as early as possible and getting started with the paperwork will help ensure the process goes as quickly and smoothly as possible – so you can focus your attention on getting your property ready to achieve the best possible outcome.”
Below is an indication of some the documents your real estate agent, lawyer or conveyancer may ask you to present in person or as a certified document as part of this process:
Passport, NZ firearms licence, or NZ driver licence with another document such as a bank statement or statement issued by a government agency. You will also need to provide a document showing your residential address (for example, a utility bill).
The trust deed and, for all trustees and settlors, the information required for individuals as noted above, together with information regarding the trust’s source of funds or wealth. Additional information may also be required for beneficiaries.
Details of the company, together with the information for individuals noted above for every individual acting on behalf of a company, or who has more than a 25 percent shareholding or other individuals with effective control of the company. Information regarding source of funds or wealth may also be required.
This list is indicative only and is not exhaustive. Your real estate agent and lawyer will be able to help you with specific requirements in relation to your situation.