The Anti-Money Laundering & Countering Financing of Terrorism Act 2009 (AML/CFT Act) provides New Zealand’s statutory foundation for preventing financial crime. It is closely aligned with international standards, particularly those of the Financial Action Task Force (FATF), including Recommendation 16, which underpins the Travel Rule. This rule requires financial institutions to ensure that originator and beneficiary information accompanies wire transfers and is made available to competent authorities upon request.

Application of the Travel Rule

The AML/CFT Act embeds the Travel Rule into domestic law primarily through sections addressing prescribed transactions and wire transfers. Section 27 requires reporting entities to obtain key identity information about the originator of any wire transfer equal to or above the applicable threshold value. This includes the payer name, account number or unique identifier, and additional identifying details such as address, national identity number, customer number, or place and date of birth. Section 28 mandates that this identity information be verified before a transfer is initiated.

Moreover, under section 48A, any such transaction must be reported to the Commissioner within ten working days, with section 48B prescribing the detailed contents of such reports. Together, these provisions operationalise the core components of the FATF Travel Rule within New Zealand’s legal framework.

Responsibilities of Payer, Intermediary & Payee PSPs

The Act clearly delineates the responsibilities of different parties involved in a wire transfer. The ordering institution must verify and include complete payer data with the transfer. Intermediary institutions, as defined in section 27(6), are required to pass this information to the payee institution as soon as practicable. Payee institutions must use effective, risk-based procedures to manage incomplete information and assess whether such transactions may constitute suspicious activity. These roles ensure that payer and payee details are preserved and traceable throughout the transaction chain, in full alignment with the Travel Rule's intent.

Enhanced Due Diligence (EDD) & Risk Mitigation

Enhanced customer due diligence requirements apply specifically to wire transfers under section 22(3). This is further supported by obligations in sections 29 and 30, which address correspondent banking relationships and the use of new or developing technologies that could facilitate anonymity. Reporting entities must assess the adequacy and effectiveness of their counterparties’ AML/CFT controls and obtain senior management approval before establishing correspondent banking relationships. If any transaction involves products or delivery channels that might favour anonymity, additional risk mitigation measures must be implemented. These provisions address FATF’s expanded expectations around transparency and financial integrity in technologically evolving payment ecosystems.

Recordkeeping & Auditability

The Act imposes rigorous obligations on record retention, with sections 49 through 51 requiring entities to retain transaction details, identity verification records, and risk assessment documentation for a minimum of five years. This includes all data related to wire transfers, such as the payer and payee information, and any suspicious activity reports filed. Additionally, sections 59 and 60 require that AML/CFT programmes and risk assessments be audited periodically and that reporting entities submit annual reports. This ensures the auditability of compliance with Travel Rule obligations and supports regulatory oversight.

Supervisory Oversight & Enforcement

The Act designates the Reserve Bank, Financial Markets Authority, and Department of Internal Affairs as AML/CFT supervisors. Their roles include issuing codes of practice, conducting inspections, and enforcing compliance. Enforcement mechanisms under Part 3 include civil penalties, criminal prosecution, injunctions, and enforceable undertakings for non-compliance.

Notably, failures relating to the reporting or transmission of information for wire transfers can result in formal warnings or pecuniary penalties, thereby reinforcing the importance of full adherence to WTR-related requirements.

Conclusion: WTR Compliance Integration

The AML/CFT Act 2009 incorporates the FATF Travel Rule in a comprehensive and enforceable manner. It ensures that originator and beneficiary information is collected, verified, transmitted, and retained throughout the lifecycle of a wire transfer. The law assigns clear responsibilities to ordering, intermediary, and beneficiary institutions and mandates strong recordkeeping, reporting, and oversight mechanisms. Through these measures, New Zealand has established a legal environment that supports both domestic and cross-border enforcement of the Travel Rule, thereby aligning itself with global best practices in anti-money laundering and counter-terrorist financing.