Have you ever wondered why your lawyer asks for your passport, bank statements, and proof of address before they can even start working on your file? It is because all lawyers and law firms play a key role in New Zealand’s fight against international financial crime.
When engaging a lawyer in New Zealand, you will be asked to provide information about your identity to verify who you are, and in some cases, where your funds come from. While this may seem like an inconvenience at times and a lot of paperwork, it is actually a legal requirement designed to keep New Zealand’s financial system safe.
New Zealand has a law called the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (the “AML/CFT Act”). The primary purposes of this law are to detect and deter money laundering and the financing of terrorism, to contribute to public confidence in our financial system, and to maintain New Zealand’s international reputation.
To achieve this, the law requires certain professions and businesses to assess risks and check the backgrounds of their clients. Since 1 July 2018, all New Zealand law firms have been classified as “Designated Non-Financial Businesses or Professions” (DNFBPs) and must strictly comply with these rules.
This is the process of Customer Due Diligence (or “CDD” for short) and it is a mandatory process before legal services can be administered to you. The level of information you need to provide to your lawyer depends on what you are asking them to do, and whether you are an individual, a company, or a trust. Generally, more complex ownership structures or entities (such as trusts or companies) will trigger Enhanced Customer Due Diligence (“ECDD”) where evidence of Source of Wealth (“SOW”) and Source of Funds (“SOF”) will be required in addition to identity information.
We understand that gathering this information takes time. However, the law is very strict. If we are unable to obtain the required identity, address, and (if applicable) Source of Wealth or Source of Funds information from you, it is highly likely that we will not be allowed to act for you.
Our goal is to make this process as smooth and simple as possible for you. We will always let you know exactly what information and documents we need from you before we begin working on your matter.
