Fighting the Good fight

Prior to New Zealand’s Anti-Money Laundering and Countering Financing of Terrorism Act coming into force in June 2013, Richard Manthel identified an opportunity and launched a consultancy to assist reporting entities in navigating the often complex legislation. The business has grown swiftly since.

When two hijacked planes rocked the world by slamming into New York’s World Trade Center Towers on September 11, 2001, little did Richard Manthel know it would trigger a sequence of events that would lead to him to co-found and own New Zealand’s leading specialist Anti-Money Laundering/Countering Financing of Terrorism (AML/CFT) consultancy.
That fateful day highlighted the increasingly global problem of money laundering and terrorist financing.

The Financial Action Task Force (FATF), an intergovernmental organisation established in 1989 to combat money laundering, added terrorism financing to its portfolio in 2001. Subsequently the US, followed by the UK, Australia, and other countries, passed legislation to curb the problem of billions of dollars’ worth of laundered money being shifted around the world.

New Zealand was a late guest to the party. Its own AML/CFT laws were passed in 2009 and only came into effect in June 2013 after allowing some 2,000 local reporting entities – such as banks, casinos, money remitters, finance companies, fund managers, and stock-brokers – four years to implement their AML programmes.

Richard Manthel, former MD of Robert Walters New Zealand, believes introducing AML legislation later has had its advantages, allowing New Zealand to learn from other countries’ experiences. Manthel believes New Zealand now has comparatively good legislation. This will be tested in 2019/20 when FATF conducts its scheduled New Zealand Mutual Evaluation and looks into the effectiveness of New Zealand’s regime.

Manthel co-founded AML Solutions in 2012. Today the other director is former lawyer and compliance specialist Martin Dilly.
At the time, Dilly was seen as “one of the best AML experts in the marketplace” says Manthel. Once on board he immediately travelled to Washington DC to gain the ACAMS Audit Advanced certification and was “the first in Australasia to do so”.
The goal in setting up AML Solutions was to become the country’s leading specialist consultancy in the relatively young sector.

Four years later Manthel believes they have achieved that objective.
“We’ve assisted more than 500 reporting entities with either their initial programme setup and maintenance, or their AML audits, and each of those entities are different when it comes to identifying and mitigating risk. We are now recognised as the industry experts, not just by clients – some of which are very large organisations – but also by the Supervisors: the Reserve Bank of NZ, Financial Markets Authority and Department of Internal Affairs,” he says.

Working from its Newmarket office, AML Solutions now has a team of eight permanent staff and two contractors. Manthel is in charge of systems, marketing, strategy, general management, and product development (they’ve developed extensive training products including their second AML Conference coming up on March 9), while Dilly handles legal aspects and heads product delivery.

As well as helping with the practical side of compliance, such as identifying and managing risks, Manthel and Dilly pride themselves on the thought leadership position adopted by the company. This is achieved through ongoing engagement with all industry sectors and Supervisors, and training more than 1,000 AML compliance staff around New Zealand.
“Our goal is to help clients understand, manage, and demystify their obligations under the Act and to interpret the regular guidance materials from the Supervisors,” explains Manthel. “In other words, [help them to] know who their customers are, monitor their [financial] activity and report any suspicious transactions to the Police.”
He explains the essence of AML compliance is having the ability to track the flow of money; (where it has come from and where it is going), and meticulous record-keeping.

Manthel says it is vital all companies caught within the legislation have the motivation and will to comply. Although larger companies may have greater financial resources, it is equally important for smaller entities to comply and not feel tempted to flout the law because they are reluctant to bear the cost of compliance.

There is a risk that some (mainly smaller) companies may fail to take their AML obligations seriously, or may take a DIY approach to engagement and give the compliance role to an unqualified staff member as an add on role.
“There is an industry joke that someone will miss a Monday morning staff meeting, and come in Tuesday to be told they have been elected the AML compliance officer!” says Manthel. “But the fact is directors are liable for [complying with] the legislation, and they need to be aware of the serious consequences of non-compliance.”

“A good compliance officer in an organisation allows directors to sleep well at night.”

His advice to directors and owners is to give AML/CFT compliance detailed and ongoing attention.
“Your compliance officer must be given the necessary support and training. You should be asking questions about the progress of your AML programme and ensure your programme is well documented, both for ease of compliance and to ensure continuity in the event of staff turnover.
“We know it’s challenging for smaller businesses, but AML needs to be on every director’s radar and discussed regularly.
“The fact is, a good compliance officer in an organisation allows directors to sleep well at night.”

More changes imminent
While ‘Phase 1’ of the AML legislation has been in force since 2013, ‘Phase 2’ is expected to be passed into law in the middle of this year and will capture lawyers, accountants, real estate agents, and high value goods dealers as reporting entities. FATF has made strong recommendations to broaden the capture and these changes are also being introduced in Australia.

While Phase 2 has always been signalled in New Zealand, the recent urgency has two catalysts.
“The first is New Zealand’s 2019 FATF evaluation, and the desire to have it all in place by then. The second is the Panama Papers incident, which highlighted New Zealand foreign trusts and potential money laundering.”
Manthel’s advice for ‘Phase 2’ companies is “don’t leave addressing compliance to the last minute. The Supervisors are now taking more of an enforcement approach to AML compliance, as distinct from the educational approach they took in the first two years,” he warns. “There have already been many official warnings issued.”

AML Solutions has grown quickly in the four years it’s been operating, helped along, says Manthel, by having excellent systems from day one, along with expert capability in Dilly and the team.
The business has quickly established a reputation in the market for providing pragmatic, affordable, and trusted advice – gaining a wealth of AML experience in the process.

The goal is to continue sharing AML knowledge by holding regular courses and training new consultants.
The ultimate aim for everyone concerned, of course, is to win the war against money laundering and terrorism funding worldwide.
There have already been some impressive battles won.