In its 2021 Mutual Evaluation Report (MER), New Zealand was rated Partially Compliant (PC) with FATF Recommendation 16, which governs wire transfers. The Recommendation sets out detailed requirements to ensure that accurate originator and beneficiary information accompanies cross-border wire transfers and that financial institutions can identify, monitor, and take action on deficient transactions. The 2021 MER identified multiple legislative and procedural gaps in New Zealand’s approach.

Key Reforms

Since the MER, New Zealand has introduced significant regulatory changes through revisions to the AML/CFT (Requirements and Compliance) Regulations 2011, specifically under Regulation 15, which came into effect in June 2023. These changes were aimed at addressing deficiencies across numerous technical criteria under R.16:

• For low-value transfers (below NZD 1,000): Institutions are now required to include the originator’s full name and account number and the beneficiary’s full name and a unique transaction reference number.

• Verification Requirements: Financial institutions must now verify originator and beneficiary details where there are grounds for suspicion of money laundering or terrorist financing.

• Record-Keeping Enhancements: Beneficiary institutions are required to retain transaction details and identification records for at least five years.

• Intermediary Responsibilities: Requirements were introduced mandating intermediary institutions to develop procedures for detecting deficient wire transfers and apply risk-based responses. However, not all expectations around suspending or rejecting transactions are fully codified.

• MVTS-Specific Measures: Money or Value Transfer Service providers must now address both ordering and beneficiary information, file Suspicious Activity Reports (SARs), and adhere to stricter oversight on international transactions.

Despite these advances, some gaps remain:

• The definition of wire transfers continues to exclude credit and debit card transactions when accompanied by a card number.

• There is no explicit requirement to halt execution of non-compliant transfers.

• Intermediary institutions are still not explicitly required to determine when to reject or suspend deficient transactions.

• Some recordkeeping and post-event monitoring obligations are not fully codified, though often implied.

Re-Rating Outcome

As a result of the improvements, the FATF has upgraded New Zealand’s rating for Recommendation 16 from Partially Compliant (PC) to Largely Compliant (LC) in its 2024 Third Enhanced Follow-Up Report. This reflects the considerable progress made in aligning with the FATF standards, even though a few technical deficiencies remain outstanding.

Conclusion

New Zealand has made commendable strides in strengthening its framework for the regulation of wire transfers by addressing a broad range of previous deficiencies. The revised regulations bring New Zealand significantly closer to full FATF compliance and reflect a proactive legislative effort to mitigate money laundering and terrorist financing risks. While a few gaps persist, particularly regarding explicit operational triggers and the treatment of certain transaction types, the overall regulatory structure now provides a much more robust safeguard. Continued refinement and implementation of these measures will be key to achieving full compliance in future assessments.