Anti-money laundering NZ and real estate – what you need to know

Are you thinking about selling your home but are worried about the Anti-money Laundering Act? NZ real estate has been targeted by criminals to launder their ill-gotten gains, to the tune of millions of dollars, so the AML has been launched to identify any criminal organisations.

For most people selling and buying real estate the AML has little impact, but it does add a few extra steps to the process of selling your home.

In this blog I will explain what the AML Act is and how it affects you when it comes time to sell or buy a property.

What is money laundering?

As the name suggests, money laundering is the process a criminal entity uses to ‘clean’ their money by investing it in legitimate enterprises, such as buying and selling real estate.

When the property in question is sold, the criminals receive ‘clean’ money from the transaction that they then use to fund further criminal activities.

In recent years, money laundering in NZ real estate has become so rife that the government launched the Anti Money Laundering Act as a counter measure. This is a necessary measure to protect the NZ real estate market and our economy.

The Anti Money Laundering Act and real estate

As of January 2019, legislation requires all real estate agents to verify the identity of vendors before they list their property. This process is designed to weed out any potential criminal element involved in property transactions and included the following steps.

Step 1. Customer Due Diligence (CDD)

The first part of the process is for the real estate agent to establish who the beneficial owners of the property are and to obtain the full legal name of each and every one.

The term beneficial owner refers to any of the following:

  • Individuals
  • In the case of Trusts – all Trustees are considered to be beneficial owners
  • Companies – all persons with a share of 25% or more are considered to be beneficial owners

Step 2. Proof of identity

Once all beneficial owners have been established, the real estate agent will require you to provide proof of your identity. Please note: If for some reason you are unable to prove your identity to the real estate agent, he or she may not be able to list your property.

You can use the following as proof of your identity:

Photographic identification, including passports and travel documents and must clearly show your full legal name, date of birth and signature.

Non-photographic identification including NZ birth certificate or NZ citizenship document. Please note that both these forms of ID must be accompanied by a photographic id, such as NZ drivers’ licence.

A third i.d. option is to use a NZ drivers licence accompanied by a bank card, IRD letter or a Gold Card.

The final step is to establish the nature & purpose of property transaction.

This is one of the most important stages of the AML, as it requires any vendor to show the reasons for selling. Basically, In order to list your property, the real estate agent will need to establish why you are selling your property, whether you have bought or sold NZ property in the last 5 years and what you intend to do with the money you make from the sale of your property.

What happens to the documents I have provided?

All the documents you give to the real estate agent will be collated in a database and made available to the Ministry of Internal Affairs to audit and review.

As you can see, for most of you this will have little effect when it comes time to selling property and protects the interests of everyone.

If you are interested in selling your home and have further questions about the Anti Money Laundering Act and real estate, I’m only too happy to help. Get in touch today!

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