Money laundering warning for agency

Real estate agency Arizto has been given a formal warning under the Anti-Money Laundering and Countering Financing of Terrorism Act (AML/CFT Act).

The Department of Internal Affairs said Arizto was not alleged to be involved in money laundering or the financing of terrorism but was required to take immediate action to rectify all areas of non-compliance and would continue to be closely monitored.

It is only the second issued to a real estate agency since the new rules came into force for the sector in January 2019.

The AML/CFT Act established a system to detect and deter money laundering and the financing of terrorism, with the objective of enhancing the country’s international reputation and public confidence in the financial system.

The formal warning was issued on the basis that the department had grounds to believe Arizto had failed to conduct customer due diligence, and failed to establish, implement, or maintain an AML/CFT programme.

Arizto chief executive Pernell Callaghan said it was important to note the department did not accuse Arizto of any money laundering or financing of terrorism activities.

‘‘The notice issued to Arizto served as an opportunity to improve its processes for managing and mitigating risk. Arizto has responded swiftly to rectify areas of noncompliance,’’ a spokesperson said.

‘‘These actions included thorough staff training and external checks.

‘‘Arizto emphasises that there has been no suspension of licenses held by its employees or the company following the review. The focus has solely been on enhancing internal processes and compliance with AML/CFT regulations.’’

Department of Internal Affairs director of anti-money laundering operations Mike Stone said real estate was used by criminals to launder money, domestically and internationally.

‘‘Real estate agents must have robust processes in place to manage and mitigate the risk of being misused by criminals for money laundering,’’ he said.

‘‘Non-compliance is unacceptable in New Zealand’s anti-money laundering system.

‘‘DIA has a responsibility to act on noncompliance to contribute to a robust AML/ CFT system and ensure New Zealanders can trust the integrity of the real estate sector in Aotearoa.’’

Arizto employs around 150 staff and sells residential properties throughout New Zealand.

Stone said the company had demonstrated commitment towards improving its processes following the issuance of a DIA inspection report.

‘‘DIA takes proportional action to address non-compliance, ranging from education and guidance to civil penalties and prosecution depending on the scale and significance of breaches.’’

The formal warning to Arizto was issued on April 12, under section 80 of the AML/CFT.

‘‘Should ongoing deficiencies or noncompliance occur the department may choose to utilise a number of regulatory responses ranging in severity and consequence. These can include enforceable undertakings, and both civil and criminal prosecution. In some circumstances, this could include taking action against staff and/or senior managers.’’

The Real Estate Authority (REA) said it was aware of the warning, and would engage with the DIA and Arizto before taking ‘‘appropriate and proportional action’’.

Arizto license.