Enhanced Monitoring Report on the Implementation of the Standard on Transparency and Exchange of Information on Request 2026 Update (June)

Determinations

i.p.b.

i.p.

i.p.

i.p.

i.p.

i.p.

i.p.

i.p.

i.p.

n.a.

C

Ratings

LC

C

C

C

C

C

C

C

C

C

Recommendation (A.1, framework)

New Zealand should ensure that beneficial ownership information in accordance with the international standard is available for all relevant entities and partnerships.

Underlying factor

Offshore persons must, as of 1 October 2015, inform upon tax registration (i) a fully functional New Zealand bank account or (ii) the details of a New Zealand AML reporting entity [AML‑obliged person] that has conducted customer due diligence on them. Moreover, any person who already has a tax number and becomes an offshore person must inform a current bank account to the Commissioner. Finally, income tax return forms applicable to both offshore and non-offshore persons (except partnerships and look through companies) contain a field for a current bank account to be provided, but the law does not contain explicit requirements for all persons to maintain a current bank account. New Zealand estimates that the universe of entities which do not have a bank account with a New Zealand registered bank is small.

(see paragraphs 83 et seq. of New Zealand’s 2018 Report for more information)

Summary of actions reported

Detailed policy work has been carried out by officials in respect of registers of beneficial ownership information for companies and limited partnerships, although no legislative amendments have been generated. As part of this, public consultation was conducted but the proposed reform has been put on hold since 2024.

Arising out of the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Amendment Act 2017, comprehensive risk-based compliance programs are well implemented by the three designated AML/CFT supervisors – the Reserve Bank, the Financial Markets Authority and the Department of Internal Affairs. Further, the enactment of second-phase regulations under the AML/CFT Act 2009 (Regulations) in June 2024 has introduced supplementary customer due diligence (CDD) requirements for legal persons and legal arrangements. The 2024 regulations further strengthened the requirements for standard CDD.

Additionally, Inland Revenue (the Tax Administration) facilitates the availability of ownership information in line with the standard by undertaking routine verifications of companies and partnership through both desk-based assessments and field audits.

Non-availability of beneficial ownership information for entities in New Zealand is limited and the number of entities that do not have a bank account remains negligible. Moreover, since January 2017, New Zealand has provided full beneficial ownership information in 390 requests received from treaty partners where beneficial ownership information was requested, in a timely manner.

Conclusion

No material progress has been reported in addressing the recommendation. New Zealand has taken preliminary but positive steps towards addressing the recommendation. However, the proposed reform has been put on hold since 2024 and no legal change to address the legal gap identified in the report has been taken. Despite the efficiency in implementation of the AML related obligations reported by New Zealand, there are no obligations in the legal and regulatory framework to require the identification of beneficial owners of entities (companies and partnerships) that do not have a continuous relationship with an AML-obliged person in New Zealand. New Zealand is urged to make substantive progress before its next self-assessment.

Status determined

Has not been addressed

Actions required

New Zealand should submit a schedule for the completion of steps to address the recommendation and an update on the progress made by 31 March 2026. In particular, New Zealand should -

• Indicate the actions taken to address the recommendation, i.e. relevant changes in the legal and regulatory framework that will require availability of accurate, adequate and up‑to‑date beneficial ownership information of all entities (companies and partnerships) in all cases.

• Indicate the actions taken to ensure that beneficial owners of entities are identified in line with the standard.

• Report actions and supporting implementation details taken to enforce changes to the legal and regulatory framework.

Recommendation (A.1, practice)

New Zealand should monitor the implementation of new legal provisions to ensure that relevant professionals maintain beneficial ownership information as required under the standard.

Underlying factor

AML obligations requiring a number of professionals such as lawyers, accountants and trust and company service providers to identify their customers when providing services such as trustee, nominee and other corporate services were recently enacted and their implementation could not yet be assessed.

(see paragraphs 117 et seq. of New Zealand’s 2018 Report for more information)

Summary of actions reported

The supervision of the implementation of AML obligations by AML‑obliged professionals is conducted by the Department of Internal Affairs (DIA). The DIA has over the years developed a comprehensive understanding of the sector and progressively shifted from education of the AML/CFT regime to supervision and enforcement measures, applying a risk-based framework.

Since 2022, the DIA conducted 364 desk-based verifications and 104 onsite inspections on AML-obliged professionals. It further carried out targeted supervisory projects on 36 law firms, 29 AML-obliged professionals providing trust services to European clients, and 30 high-risk trust and company service providers offering a range of services to overseas clients. Where non-compliance was identified, remedial actions were undertaken by the AML‑obliged professionals. In other cases, formal warnings were issued or enhanced inspections were conducted. New Zealand reported that formal warnings are mainly issued publicly, and this increases their deterrent effect because of the impact on the reputation of the AML‑obliged professionals. Between June 2022 and June 2024, New Zealand issued six formal warnings that led to rectifications of the identified non-compliance. Additionally, New Zealand issued, as an alternative to prosecution in the High Court, one enforceable undertaking where the AML-obliged person concerned commits to specific actions and improvements to rectify its non-compliance and this also led to rectification of the non-compliance. New Zealand has issued regulations under the Anti-Money Laundering and Countering Financing of Terrorism (Definitions) Amendment Regulations (No. 2) 2023 to clarify the definition of beneficial ownership. The clarifications require AML-obliged professionals to identify individuals with ultimate ownership or control of a customer, whether directly or indirectly.

The updated definition ensures that customer due diligence (CDD) captures all the relevant beneficial owners behind legal entities and arrangements. These regulations took effect on 1 June 2024. The DIA has continued to apply a wide range of supervisory interventions, including on-site inspections and desk-based reviews covering the relevant AML‑obliged professionals.

Conclusion

New Zealand has made progress to address the recommendation.

New Zealand has reported that a wide range of supervisory interventions are conducted to ensure effective implementation of the obligations related to CDD conducted by AML-obliged professionals.

The public agency mandated to supervise AML-obliged professionals towards implementation of the obligations to conduct customer due diligence and identification of beneficial owners has over the years developed a comprehensive understanding of the sector and progressively shifted from education of the AML/CFT regime to supervision and enforcement measures, applying a risk-based framework.

New Zealand has reported a blend of desk-based reviews, onsite inspection and targeted thematic reviews conducted since 2022. Where non-compliance was detected, remedial actions have been undertaken, enforcement by way of formal warnings or an enforceable undertaking were issued, leading to rectifications of the non-compliance by the AML‑obliged persons concerned. In other cases, enhanced inspections were undertaken. In addition, New Zealand has further clarified the definition of beneficial owner, with new amendments taking effect in June 2024. These clarifications improve the process of identification of beneficial owner by AML-obliged professionals. New Zealand should report on the implementation of the revisions to the definition of beneficial owner, in its next self-assessment.

Status determined

In the process of being addressed

Actions required

In its next self-assessment in 2028, New Zealand should –

• Report on further actions taken to supervise AML‑obliged professionals on their obligations to conduct customer due diligence and identify the beneficial owners of their clients, especially considering the recent amendment to the definition of beneficial owner.

• Provide updated statistical information about monitoring and enforcement actions carried out.

Recommendation (A.1, practice)

New Zealand should monitor the compliance with the recently introduced legal requirements to ensure that beneficial ownership information is being maintained in practice.

Underlying factor

Tax reporting requirements supporting the availability of beneficial ownership information are relatively new (as of October 2015, for offshore persons and February 2017, for non-resident settlor trusts). No programme is currently in place to ensure that offshore persons that were registered before the new requirements came into force comply with them.

(see paragraphs 124 et seq. of New Zealand’s 2018 Report for more information)

Summary of actions reported

New Zealand conducts monitoring through risk-based compliance programs. This includes a strong focus on foreign trusts having sufficient nexus to New Zealand. New Zealand has put in place a foreign trust register administered by Inland Revenue New Zealand. All foreign trusts are required to report beneficial ownership information to this register. The beneficial ownership disclosures and financial statements of these trusts are reviewed annually to ensure accuracy and completeness. On average, 20% of these disclosures are further subjected to detailed annual desk-based assessments.

Further, system-wide inspections of policies, procedures and record-keeping obligations of tax reporting requirements are undertaken on high-risk trust and company service providers, which represent 39% of the total foreign trusts. In 2022, in‑depth reviews on 574 trusts were conducted with 6 of them being de-registered for non-compliance. Similarly, 528 trusts were reviewed in 2023 and 494 trusts in 2024. The number of trusts de-registered for non-compliance in 2023 and 2024, were 6 and 4, respectively.

Companies and partnerships have very limited exposure to offshore persons and are subject to general compliance work conducted through a balanced programme of interventions carried out across Inland Revenue including risk reviews, audits and investigations. In general terms, Inland Revenue conducted 3 600 audits in 2023 and 4 300 audits in 2024. These inquiries cover among other things, availability of beneficial ownership information, although specific outcomes targeting beneficial ownership are not available. Regarding offshore persons that were registered before tax reporting requirements were introduced; Inland Revenue’s supervisory activities also cover these entities and legal arrangements. All pre-existing foreign trusts had to redocument and register with Inland Revenue in 2017 regardless of when they were established.

New Zealand has responded to 100% of the EOI requests on beneficial ownership, in a timely manner.

Conclusion

New Zealand has made progress to address the recommendation. Through a risk‑based approach, New Zealand has reported to have conducted supervisory activities targeting disclosures of foreign trusts and the tax reporting obligations of high-risk trust and company service providers.

Regarding companies and partnerships, the only form of supervision reported by New Zealand is tax audit. However, the information provided does not explain the outcomes of these supervisory activities concerning availability of beneficial ownership information. It is unknown what percentage of audited companies and partnerships complied with the obligations and the actions taken against those that did not comply. Moreover, the information does also not explain how the entities that were registered before the commencement of the tax obligations supporting the availability of beneficial ownership information, have complied. On the other hand, New Zealand reported that foreign trusts that were registered before the commencement of the new obligations have all complied. New Zealand should report further progress in its next self‑assessment.

Status determined

In the process of being addressed

Actions required

In its next self-assessment in 2028, New Zealand should –

• Report on further supervisory actions undertaken, and their outcomes, to ensure compliance of all offshore entities and foreign trusts, with the tax reporting obligations that support the availability of beneficial ownership information.

• Demonstrate how the offshore entities that were registered before the commencement of the obligations, have complied.

• Report on the outcomes of supervision, and actions taken, where required.

Recommendation (A.2, framework)

New Zealand should require that accounting records and underlying documentation be maintained for liquidated companies and liquidated limited partnerships for at least 5 years.

Underlying factor

Accounting records and underlying documentation for a liquidated company and a liquidated limited partnership are not required to be maintained for a period of 5 years or more.

(see paragraphs 203 et seq. of New Zealand’s 2018 Report for more information)

Summary of actions reported

The Insolvency Practitioners Bill was enacted and assented to on 17 June 2019. The Insolvency Practitioners Regulation (Amendments) Act, 2019 requires a liquidator to retain the accounting records and other documents of the liquidation process and the records and other documents of the company or limited partnership for a minimum of six years, following the completion of liquidation.

The new Act further establishes certain guidelines for insolvency practitioners, including but not limited to the requirement of having a valid licence. New Zealand Institute of Chartered Accountants regulates the activities of insolvency practitioners mainly through practice reviews. A practice review assesses the system of quality management and ensures that the system and the services provided comply with all regulatory requirements, including the retention of records of liquidated entities. The reviews are risk based and are conducted in cycles. All insolvency practitioners are subject to review at least once every four years. The Institute has confirmed that insolvency practitioners are retaining records as required by the law. New Zealand has used such information to respond to one EOI request and for domestic purposes.

Conclusion

New Zealand appears to have taken appropriate actions to address the recommendation. The legal and regulatory framework now requires liquidators to maintain the accounting records and underlying documentation of liquidated companies for a period of six years. New Zealand has reported the records of liquidated companies are being maintained and it has used such information to respond to one EOI request and for domestic purposes.

New Zealand Institute of Chartered Accountants supervises the obligations of insolvency practitioners, and it has confirmed that the practitioners are retaining records as required by law.

Status determined

Considered provisionally addressed in the context of the monitoring process, subject to detailed validation.

Actions required

No immediate action required.