Anti-Money Laundering and
Countering the Financing of Terrorism

Why compliance with the FAFT Recommendations is important

Compliance with the FATF Recommendations minimises the threat to business communities from money laundering and terrorist financing. The overall objective of implementing these standards is to reduce crime in New Zealand and therefore to make New Zealand communities safer.

Compliance also maintains a country’s international reputation as a nation that is fully committed to anti-money laundering, combating the financing of terrorism, and anti-corruption efforts. In general, compliance with the FATF Recommendations is increasingly viewed by many countries as indicative of the robustness of a country’s AML/CFT measures.

Non-compliance with the FATF standards would impact on a country’s international reputation, and may eventually include:

• increased costs of borrowing overseas for both the government and private sector, as overseas lenders perceive the non-compliant country as a greater financial risk
• difficulties (in the form of increased costs or lost business opportunities) for companies from the non-compliant country in doing business overseas
• difficulties in trade negotiations at a government-to-government level as foreign governments may be reluctant to extend trading privileges to non-compliant countries
• impacts on relations with international organisations, such as the World Bank, the International Monetary Fund, and the United Nations
• the possible perception that the non-compliant country may be seen as a "soft touch" for money launderers and terrorism financers.

Domestically, a weak regulatory framework in the area of money laundering and terrorist financing increases the prospect that organised criminals and terrorists will exploit a county’s financial system for criminal ends. This would have negative consequences on a country’s economy, society, and, importantly, on victims of crime.

The New Zealand government believes that the national interest requires that New Zealand complies with all FATF Recommendations.