The New Zealand government has unveiled an ambitious set of proposals to overhaul the country’s anti-money laundering and countering the financing of terrorism (AML/CFT) framework. These reform suggestions, announced by the Associate Minister of Justice, aim to strike a balance between robust action against serious financial crime and the removal of unnecessary compliance burdens for legitimate businesses. Although these proposals are not yet law, they represent a significant evolution in New Zealand’s approach to AML regulation and reflect current global trends toward intelligence-led, risk-based compliance.

The proposals stem from a combination of domestic review, international peer assessments, and ongoing dialogue with the regulated sector. They seek to ensure New Zealand remains a trusted jurisdiction for international business while closing loopholes that allow money laundering and terrorist financing to flourish. This article takes a comprehensive look at the scope, intent, and likely impacts of these proposed reforms—and why they matter for New Zealand’s AML professionals, financial sector, and the global compliance community.

Proposed enforcement powers to target serious financial crime

The core of the government’s reform proposal is a bill designed to strengthen the ability of Police, financial supervisors, and the Financial Intelligence Unit (FIU) to disrupt criminal networks. The new approach would introduce several major changes if passed:

• A cap on international cash transfers: One of the headline proposals is an upper limit of NZ$5,000 per cash transfer overseas. This measure targets the risk of large-scale cash movement, structuring, and smuggling often associated with criminal organisations, especially those seeking to bypass the regulated financial sector. Similar caps are recommended by the Financial Action Task Force (FATF) as a global standard for threshold-based transaction monitoring and reporting.
• Ban on crypto ATMs: Another high-impact proposal would prohibit the operation of cryptocurrency ATMs across New Zealand. Crypto ATMs have been flagged internationally as a vulnerability due to the anonymity they offer for converting physical cash into digital assets, making it harder for authorities to trace illicit funds. By banning these devices, authorities intend to remove a common gateway for money laundering and terrorist financing involving virtual assets.
• Expanded FIU powers for ongoing data collection: The reforms would allow the FIU to order banks and other reporting entities to provide ongoing streams of information regarding persons of interest. This includes transaction histories, contextual data, and patterns of financial activity—not just static account information. The goal is to enable a more proactive, intelligence-driven response to evolving criminal tactics, with the FIU playing a central role in national and international information sharing.
• Creation of a financial sanctions supervisory regime: New Zealand’s proposals include plans for a new regime to monitor and enforce compliance with domestic and international financial sanctions. This would align the country more closely with United Nations Security Council obligations and FATF recommendations, addressing gaps identified in recent assessments.
• Sustainable funding through an AML/CFT levy: The government has also opened consultations on a risk-based levy for regulated entities. The intent is to secure ongoing funding for system improvements, supervision, and enforcement—ensuring that resources are allocated efficiently and proportionally to risk across the financial system.

All of these measures remain subject to further industry consultation and parliamentary review before they can become law. Their ultimate impact will depend on the detail of the final legislation, the timeline for implementation, and the approach taken by regulators.

Easing compliance burdens for low-risk business

A core message from the government is the need to focus resources on where the risks actually lie. The reform proposals aim to reduce “red tape” for businesses dealing mainly with low-risk customers, freeing up time and capacity to address genuine threats. Two legislative amendments already progressing through Parliament—the Statutes Amendment Bill and the AML/CFT Amendment Bill—are designed to deliver immediate relief in several areas:

• Removal of address verification for low-risk customers: The proposal would end the requirement for regulated firms to collect and verify the address details of many lower-risk clients, simplifying onboarding and ongoing compliance. This measure responds to widespread industry feedback about the limited value of address verification for low-value or low-risk accounts.
• Relaxed due diligence for lower-risk trusts: Trust structures that pose minimal money laundering or terrorism financing risk—such as certain family or charitable trusts—would see documentation requirements eased. This would allow compliance teams to focus on higher-risk, more complex legal entities.
• Pragmatic, risk-based application of AML standards: By shifting to a more intelligent allocation of compliance resources, the proposals aim to ensure that businesses spend less time on low-risk, box-ticking exercises, and more time on meaningful risk assessment, monitoring, and reporting.

These proposed changes are intended to align with the FATF’s emphasis on risk-based compliance and to address long-standing frustrations among New Zealand’s small and medium-sized businesses.

International alignment and global regulatory context

Responding to FATF evaluation and international trends

The context for these proposals is New Zealand’s commitment to meeting evolving international standards for AML/CFT. The FATF’s most recent mutual evaluation report for New Zealand acknowledged substantial progress but also identified gaps in supervision, enforcement, and sanctions. The government’s reform package aims to address these findings directly, closing loopholes that have been exploited by criminal groups, including those with international reach.

Internationally, there is a clear shift toward greater regulatory agility, data sharing, and proactive intelligence work. Countries such as Australia, Singapore, and members of the European Union have all recently updated their AML regimes to give supervisors and FIUs greater powers to act on fast-evolving threats. New Zealand’s proposals reflect this global movement toward smarter, more effective crime prevention strategies.

Impact on regulated entities and compliance professionals

If enacted, the proposals would transform the compliance landscape for thousands of financial institutions, real estate agents, lawyers, accountants, and other “reporting entities” under the AML/CFT Act 2009. The immediate impact would be twofold:

• Sharper risk focus for compliance teams: Firms would be able to concentrate resources on higher-risk clients, products, and transactions, improving the efficiency and effectiveness of internal controls.
• Greater regulatory clarity and predictability: By setting clearer boundaries on requirements—such as the proposed NZ$5,000 cap and removal of low-value address checks—the government aims to reduce uncertainty and the compliance “grey zone” that can lead to over-cautious or inconsistent practice.

Boards and senior managers would need to remain alert, however, as the reforms also envisage tougher enforcement, stiffer penalties, and enhanced data reporting. The proposals underscore that the cost of willful non-compliance, or neglect of obvious risks, will continue to rise.

National strategy, consultation, and future outlook

Structured consultation with industry and stakeholders

The government has signaled that detailed, targeted consultation will be a hallmark of the reform process. This approach is intended to balance the diverse interests of the financial sector, ensure new rules are workable in practice, and maintain alignment with international best practice. Key areas for input will include:

• The scope and structure of the new sector levy, ensuring fairness and proportionality;
• The operational mechanics of the proposed cap on cash transfers and the ban on crypto ATMs;
• Calibration of risk thresholds for due diligence exemptions and simplified procedures;
• The powers and governance arrangements for the new financial sanctions regime;
• The ongoing role of supervisors and the resourcing of the Financial Intelligence Unit.

Through this process, the government is inviting the business community, AML/CFT professionals, and other stakeholders to shape the final reforms—reflecting a broader move toward co-regulation and collaborative compliance in financial crime prevention.

What does this mean for New Zealand’s reputation and risk profile?

The proposals, if adopted, would reinforce New Zealand’s standing as a safe and trusted financial centre—particularly for international investors, correspondent banks, and regulatory counterparts. By addressing long-standing vulnerabilities and aligning more closely with FATF standards, New Zealand is likely to strengthen its position in global risk assessments and reduce the chances of adverse findings or penalties in future evaluations.

At the same time, the risk environment is constantly evolving. Criminal networks are becoming more sophisticated, exploiting new technologies and cross-border loopholes. As a result, the effectiveness of any AML regime depends on its ability to adapt quickly to new threats. The current reform proposals, and the consultative process that underpins them, are designed to deliver that flexibility—enabling New Zealand’s AML/CFT system to keep pace with a fast-moving global landscape.

Conclusion: Proposed reforms set a new standard for AML intelligence and efficiency

New Zealand’s AML/CFT reform proposals reflect a forward-looking, risk-based philosophy that balances the needs of business with the imperatives of crime prevention. By focusing enforcement tools and compliance obligations where they matter most, and by streamlining requirements for lower-risk sectors, these proposals offer a blueprint for smart, effective regulation.

The reforms are not yet law, but their scope and ambition mark a clear shift in the country’s regulatory approach. For AML professionals, compliance leaders, and financial institutions, the message is to prepare for change: review existing processes, participate in ongoing consultations, and be ready to adjust to a new era of intelligence-driven compliance.

Ultimately, if enacted, the proposals would help make New Zealand one of the easiest places to do legitimate business—and one of the hardest for financial crime to hide. As the consultation and legislative process unfolds, the opportunity is there for industry and regulators alike to shape a modern, effective, and agile AML/CFT system for the years ahead.

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Related Links

• Anti-Money Laundering and Countering Financing of Terrorism Act 2009 – New Zealand Legislation
• Ministry of Justice – AML/CFT Regime Review
• Department of Internal Affairs – AML/CFT
• Reserve Bank of New Zealand – AML/CFT
• FATF Mutual Evaluation Report – New Zealand

Other FinCrime Central Articles About New Zealand

• New Zealand Police’s Latest National Risk Assessment on Money Laundering and Terrorism Financing
• New Zealand’s AML Reform Easing Requirements for Businesses
• AML/CFT Framework: New Zealand’s Comprehensive Overhaul of Anti-Money Laundering Regulations

Source: NZ Gov, statement by Hon Nicole McKee

Some of FinCrime Central’s articles may have been enriched or edited with the help of AI tools. It may contain unintentional errors.

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