Guidance on impact of COVID-19 Alert Levels on AML/CFT verification
On 26 March 2020, AML/CFT Supervisors (FMA, RBNZ and DIA) published a Guidance on complying with AML/CFT verification requirements during COVID-19 Alert Levels
At COVID-19 Level 4, only those reporting entities providing essential services are able to continue to operate at their premises and must operate in a way that limits the risk of the spread and transmission of COVID-19, with limited interactions with customers.
The supervisors understand that, in the current situation, it may be more difficult for reporting entities to carry out ongoing CDD as per their usual processes. Instead, reporting entities should apply a risk-based approach. This may mean, for example, that reporting entities accept scanned copies of documents as an interim measure, with the originals to be sighted at a reasonable later time (upon lifting of alert levels).
Although the volume of new business relationships established during this period will usually be lower than normal, reporting entities still need to verify a person’s identity.
Where a person’s identity cannot be verified face-to-face because they cannot provide original identity documents, the current AML/CFT Act already contains various provisions:
Delayed verification provisions for new business relationships
The AML/CFT Act (sections 16(3) and 24(3)) enables a reporting entity to onboard a customer, but delay the verification until later, as long as it does not interrupt normal business practice and AML/CFT risks are managed through procedures of transaction limitations and account monitoring or similar procedures. Verification of identity needs to be completed as soon as is practicable once the customer has been onboarded.
Non face-to-face verification
Reporting entities can verify a person’s identity via non face-to-face means.
Reporting entities can use electronic verification (refer to Part 3 of the Amended Identity Verification Code of Practice 2013 (IVCOP)). This requires no face-to-face contact with the customer.
Additional measures, e.g. requiring the first credit into the facility from a New Zealand registered bank in the same name as the new customer, must be implemented where the electronic verification option does not link the customer to their claimed identity.
Exception handling provisions
A reporting entity must have exception handling provisions (refer to Part 1 of IVCOP) for circumstances where a customer is unable to provide their original identity documents. In the current situation exception handling measures would be suitable. Appropriate risk-based procedures must be adopted, this may include utilising the delayed verification provisions above.
Finally, an alternative not mentioned in the Guidance is verification by a (local) trusted referee, as long as this does not contravene the COVID-19 Alert Level restrictions.
Refer to https://www.fma.govt.nz/news-and-resources/covid-19/guidance-complying-with-amlcft-verification-requirements-during-covid-19-alert-levels/ for the Guidance publication.
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