Guidance for the New Zealand Financial Crime Prevention Network Class Exemptions

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Guidance for the New Zealand Financial Crime Prevention Network class exemptions – Part 17 of the Schedule to the Anti-Money Laundering and Countering Financing of Terrorism (Class Exemptions) Notice 2018 Anti-Money Laundering and Countering Financing of Terrorism (Class Exemptions) Notice 2018 (LI 2018/101) (as at 31 December 2023) Schedule Class exemptions – New Zealand Legislation This guidance has been produced by the Reserve Bank of New Zealand under section 132(2) of the Anti-Money Laundering and Countering Financing of Terrorism (‘AML/CFT’) Act 2009 (‘Act’). It relates to Part 17 of the Schedule to the AML/CFT (Class Exemptions) Notice 2018 (Class Exemptions Notice). The focus of this guidance is on clause 7, Part 17 of the Schedule to the Class Exemptions Notice. This provision covers the disclosure of information by a reporting entity that is a member of the Financial Crime Prevention Network (‘FCPN’) relating to reports on suspicious activities to another member of the FCPN. Disclaimer: This guideline has been produced by the Reserve Bank of New Zealand in its capacity as an AML/CFT supervisor under section 132(2)(c) of the Act. This guideline does not constitute legal advice.
Part 17 – Financial Crime Prevention Network
Disclosure of suspicious activity report information Sections 46 and 47 of the Act set out restrictions on the disclosure of:
(a) any suspicious activity reports;
(b) any information which will identify, or is reasonably likely to identify:
(i) any person who, in their capacity as an officer/employee of a reporting entity, has handled a transaction for which a suspicious activity report was made; (ii) any person who has prepared a suspicious activity report; or (iii) any person who has made a suspicious activity report; (b) any information that discloses, or is reasonably likely to disclose, the existence of a suspicious activity report. In general, reporting entities are prohibited from disclosing the above information, except in the specific circumstances described in sections 46 and 47, and where relevant exemptions apply. Part 17 of the Class Exemptions Notice applies to disclosures made by reporting entities that are members of the FCPN. This guidance covers disclosures under clause 7 of Part 17, where a reporting entity that is a FCPN member discloses to another member.

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Frequently Asked Questions

1. We are a FCPN member and have a customer who we reasonably suspect may be involved in
   a crime. We are considering submitting a suspicious activity report on our customer. Does the FCPN class exemption allow us to disclose information to another FCPN member before we have actually submitted a suspicious activity report? The RBNZ response:
   Firstly, there are two key criteria that must be satisfied under the FCPN exemption. 1) The disclosure concerned is to another FCPN member and 2) the disclosure is only for law enforcement purposes (‘the key criteria’).
   Section 5 of the Act defines “law enforcement purposes” as including (but not limited to) the
   prevention, disruption, detection, investigation, and prosecution of any offence within the meaning of that term in section 243(1) of the Crimes Act 1961. An “offence” means an offence (or any offence described as a crime) that is punishable under New Zealand law, including any act, wherever committed, that would be an offence in New Zealand if committed in New Zealand. For example, it is the RBNZ’s view that this includes crimes involving obtaining by deception or causing loss by deception (i.e. fraud and scams). It is the RBNZ’s view that a FCPN member may disclose to another FCPN member the possibility that it may make a suspicious activity report that relates to an actual or suspected crime (before the report has been submitted), as long as such disclosure is for law enforcement purposes.
2. What if we disclose information to another FCPN member, but we decide later to not submit a
   suspicious activity report. Is that an issue?
   The RBNZ response:
   If at the point of disclosure, you were considering submitting a suspicious activity report, then the RBNZ is comfortable that falls within the scope of the exemption, provided that the disclosure is for law enforcement purposes. The RBNZ would suggest that you clearly document and record the reasons why your organisation subsequently decided not to submit a suspicious activity report following disclosure to the relevant FCPN member.
3. What type of information in relation to a suspicious activity report can we disclose to another
   FCPN member?
   The RBNZ response:
   Schedule 1 of the AML/CFT (Requirements and Compliance) Regulations 2011 (Requirements and
   Compliance Regulations) outlines the details to be contained in a suspicious activity report. This includes, but is not limited to, the following:

• Name and date of birth of the person conducting or seeking to conduct a transaction
  or proposed transaction.
• Identity documents.
• Transactional documents.

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In summary, any and all information within the suspicious activity report, including the report itself, (or the fact of the possibility of submitting a suspicious activity report) can be disclosed to another FCPN member provided it is for law enforcement purposes.
4. How should we share this information with another FCPN member? Does it have to be in writing?
The RBNZ response:
Under section 41(2) of the Act, a reporting entity may disclose a suspicious activity report orally if the urgency of the situation requires it. It is therefore the view of the RBNZ that if the urgency of the situation requires it, a FCPN member can orally disclose information relating to the submission of a suspicious activity report to another FCPN member. We would then expect this to be followed up by a written disclosure to the other FCPN member for record keeping purposes. The RBNZ’s overall view:

• Under the AML/CFT legislation the general rule is that information relating to a
  suspicious activity report must not be disclosed. However there are exceptions, including as set out in the FCPN exemption.
• Under this exemption, disclosure of information relating to suspicious activity reports
  may only be made to another FCPN member and only for law enforcement purposes. Information relating to the prevention, disruption and investigation of any crime is considered a law enforcement purpose.
• Disclosure of information to another FCPN member may occur before a suspicious
  activity report has been submitted.
• The type of information that may be disclosed to a FCPN member for law enforcement
  purposes includes the suspicious activity report (containing the information in the
  Schedule 1 of the Requirements and Compliance Regulations (as applicable)), as well as
  the information listed in section 46(1) of the Act.