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New information requirements for law firms from 1 July

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Fuseworks Media
Fuseworks Media

Clients of law firms will be required to provide certain information on their identity and address after 1 July.

In some cases they will also be required to give details of the source of their funds.

Anti-money laundering measures for lawyers come into force on 1 July. From then, the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 requires law firms to conduct customer due diligence on clients who want the firm to carry out some activities on their behalf.

The law applies to activities such as conveyancing and forming companies or trusts for clients. When these are requested, the lawyer must carry out due diligence.

Customer due diligence involves background checks of identity, date of birth and address. This information will need to be confirmed by acceptable documents such as a driver’s licence or birth certificate and documents showing an address.

Where the client’s business involves a company or trust, the law firm will also need information about the people associated with it, such as directors and shareholders, trustees and beneficiaries.

Depending on the circumstances, a law firm could also be required to obtain details of its nature and purpose and information on the source of funds.

"The law says that law firms must assess the risk they may face from the actions of money launderers and people who finance terrorism and they must identify potentially suspicious activity," New Zealand Law Society Executive Director Mary Ollivier says.

"That assessment means the collection and verification of certain information from everyone who wants to engage the services of a law firm for activities covered by the law. Some law firms may choose to conduct customer due diligence on all their clients for future efficiency.

"The law will apply to everyone, whether they have been a firm client for a long time or whether it is their first visit. It also means that if the firm is not able to obtain the required information it will not be able to act for that person."

Mrs Ollivier says lawyers and conveyancers are the first of a number of professional groups which are being brought into the anti-money laundering requirements. Accountants follow on 1 October and they will also be required to conduct customer due diligence.

"This is a very important step in New Zealand’s moves to combat money laundering and terrorist financing. The services provided by law firms, accountants and other professionals can be used by criminals and the measures being put in place are very necessary."

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