The New Zealand Law Society has released a suggested one-page explanation which lawyers can give clients to explain why they will need to collect and verify information as part of customer due diligence under the Anti-Money Laundering and Countering Funding of Terrorism requirements.

Customer due diligence will require a law firm to undertake certain background checks before providing services to clients. Lawyers must take reasonable steps to make sure the information they receive from clients is correct, and will need to ask for documents that show this.

Clients who have never been asked for such information before or who are trying to engage a lawyer for the first time after 1 July 2018 may be surprised at being required to prove their identity and address.

Download a PDF of the Law Society's Why we need to ask you for information. It provides a plain English explanation of the information which is required and why it is required.

The Law Society says lawyers and law firms are free to use the explanation and are welcome to customise it with their logo or other identifying information. This is provided in plain text so that it may be copied and customised:

Plain text version of the explanation

Why we need to ask for information

New Zealand has passed a law called the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (we will call it the AML/CFT law). The purpose of the law reflects New Zealand’s commitment to the international initiative to counter the impact that criminal activity has on people and economies within the global community.

Recent changes to the AML/CFT Act mean that from 1 July 2018, lawyers are required to comply with its requirements. This law requires lawyers to do a number of things to help combat money laundering and terrorist financing, and to help Police bring the criminals who do it to justice. The AML/CFT law does this because the services law firms and other professionals offer may be attractive to those involved in criminal activity.

The law says that law firms and other professionals must assess the risk they may face from the actions of money launderers and people who finance terrorism and to identify potentially suspicious activity.

To make that assessment lawyers must obtain and verify information from prospective and existing clients about a range of things. This is part of what the AML/CFT law calls “customer due diligence” (‘CDD’).

CDD requires a law firm to undertake certain background checks before providing services to clients or customers. Lawyers must take reasonable steps to make sure the information they receive from clients is correct, and so they need to ask for documents that show this.

We will need to obtain and verify certain information from you to meet these legal requirements. This information includes:

• your full name; and
• your date of birth; and
• your address.

To confirm these details, documents such as your driver’s licence or your birth certificate, and documents that show your address, such as a current bank statement will be required.

If you are seeing us about company or trust business, we will need information about the company or trust including the people associated with it (such as directors and shareholders, trustees and beneficiaries).

We may also need to ask you for further information. We will need to ask you about the nature and purpose of the proposed work you are asking us to do for you. Information confirming the source of funds for a transaction may also be necessary to meet the legal requirements.

If we are not able to obtain the required information from you, it is likely we will not be able to act for you.

Before we start working for you, we will let you know what information we need, and what documents you need to show us and let us photocopy.

Please contact the lawyer who will be undertaking your work, if you have any queries or concerns.