The objective of the AML CFT Act is for businesses to detect and report suspicious activities.  The risk assessment and compliance programme should be the tools that provide the means for suspicious transactions to be identified. 

Suspicious transactions are required to be reported to the NZ Police Financial Intelligence Unit (FIU).   Such reporting is known as Suspicious Transaction Reports (STRs).  An STR must be in the prescribed form which will be set out in Regulations.

Structured reporting lines - As employees will not necessarily have the same level of knowledge as the AML CFT Compliance Officer, or share the same level of access to relevant information, they should be discouraged from forwarding STRs directly to the FIU.  

Internal reporting lines should be as short as possible, with the minimum number of people between the person with the suspicion and the AML CFT Compliance Officer.  This ensures speed and confidentiality.  

3 day reporting period - If a business detects a suspicious transaction, the STR must be reported to the FIU within 3 working days.  To meet this obligation businesses should set out in policy what practices and procedures employees are required to follow upon detecting a suspicious transaction.

Some entities, especially larger organisations who may receive several STRs on a daily basis, may find it difficult to complete internal investigations within 3 days.   Regulators are therefore likely to provide guidance material to assist businesses to comply with the reporting period.  If such guidelines are not forthcoming, a possible solution is that an entity's policy require the 3-day period to commence once the AML CFT Compliance Officer (or equivalent) has formed the suspicion. Nevertheless, the process for internal reporting will have to be sufficiently adequate so that STRs are examined without delay.  

It will be unsatisfactory if the AML CFT Compliance Officer (or equivalent) allows unjustifiable delays before they examine the employee's internal report.

Secure internal reporting lines - When designing AML CFT programmes, consideration should be given to the level of confidentiality to internal suspicious reporting. 

Confidentiality - Employees need to be aware of "tipping off" provisions of the AML CFT Act.  Guarding against tipping off essentially refers to the obligation to keep information relating to suspicious reporting confidential.

Reporting Register - A reporting register should be maintained so that your business knows how many reports have been submitted to your regulator in any given period. The register will also assist to identify higher risk customers and products / services that your business provides.  Confidentiality of the register is of utmost importance.