New Zealand’s banks have been warned not to adopt sweeping ‘de-risking’ strategies by refusing to do business with international money transfer service providers.

The warning came in a stern statement from the Reserve Bank of New Zealand (RBNZ), which is clearly very concerned about the de-risking process.

Essential remittances
International money transfer service providers, otherwise known as money remitters, are well used by Pacific Islanders working in New Zealand to send money to relatives in islands, including Fiji, Samoa and Tonga.

The Reserve Bank has warned banks not to make sweeping decisions to refuse accounts and services to the remitters in their efforts to comply with anti-money laundering laws.

Risk management
Banks’ obligations under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act) require measured risk management and do not justify blanket de-risking, according an RBNZ statement.

It says that with appropriate systems and controls in place, banks should be able to manage and mitigate the money laundering and terrorism financing risks posed by many money remitters.

Blanket de-risking
If banks are de-risking to avoid rather than manage and mitigate those risks, then the RBNZ says that would be inconsistent with the intended effect of the AML/CFT Act.

It seems unlikely, according to RBNZ, but if banks are using blanket de-risking itself as a procedure to manage and mitigate those risks, then the central bank would consider that an inadequate means of complying with their obligations under the AML/CFT Act.

The full version of the RBNZ statement can be found here: http://www.rbnz.govt.nz/news/2015/6004856.html

Categories: Trade Based Financial crimes News

Tags: anti-money laundering, international money transfer