Anti-money Laundering Requirements When Leasing Properties
Posted by apm on October 11, 2023 Commercial, Company News, News
Specific requirements for AML checks on commercial property owners or their trusts can vary depending on several factors. James Bangerter, Commercial General Manager, discusses the reasons for AML checks on commercial properties and what owners need to do.
New Zealand has implemented anti-money laundering (AML) regulations under the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act. These regulations apply to various businesses and professions, including those involved in the real estate/management sector. However, the specific requirements for AML checks on commercial property owners or their trusts can vary depending on several factors, including the type of business and the nature of the transaction, but in most cases the only requirements that need to be fulfilled is the verification of the identity of all the owners associated with the property and confirmation of their current address.
Anti-money laundering (AML) checks are required on property owners when they are leasing their property to prevent and detect money laundering activities, and to ensure compliance with legal obligations.
Here are the primary reasons for these checks:
- Prevention of Money Laundering: AML checks help prevent individuals or entities disguising the origins of illegally obtained funds using transactions, as a means to legitimise or “clean” their money.
- Liability and Legal Consequences: Failure to conduct AML checks and report suspicious activities can lead to fines and penalties for property owners. In some cases, owners may even face criminal liability if they knowingly facilitate money laundering through their property.
- Protecting Reputation: Property owners have an interest in maintaining a reputation for ethical business practices. Conducting AML checks demonstrates a commitment to transparency and integrity, which can be important for attracting reputable tenants and business partners.
- Regulatory Oversight: Regulatory authorities often require businesses in various sectors to establish and maintain AML programs. These programs are subject to scrutiny and oversight by regulatory agencies to ensure compliance with AML regulations.
Commercial property and AML
AML regulations can change over time, and it’s essential for commercial property owners in New Zealand to stay updated on the latest AML/CFT requirements, consult with legal professionals or AML compliance experts, and comply with any reporting and due diligence obligations as outlined in the current AML/CFT Act and associated regulations. For the most current and specific information regarding AML requirements in New Zealand, I recommend checking the website of the New Zealand Department of Internal Affairs or consulting with a legal or compliance expert familiar with New Zealand’s AML/CFT regulations.
This is one of the reasons why apm utilises the service of leasing agents when leasing properties as they will organise the required AML checks via an independent AML company.
When a leasing agent is not required to find a tenant (e.g. the owner may know a tenant that wants to lease their property or a current tenant wants to lease another space in the same property), then leases can be drafted by either party’s solicitor. If this is the case, AML checks are still required. apm uses the services of a company that specialises in AML checks so the process is simple, and the cost of these checks can be included in the tenant’s costs of preparing the lease.
Please note that AML checks are needed for every transaction however if the transactions are very close in time then the information provided can sometimes be reused as long as circumstances haven’t changed.
AML checks on property owners when they lease their property are essential to safeguard the financial system, prevent money laundering, comply with legal requirements, mitigate risks, and protect the integrity and reputation of both property owners and the management industry as a whole. These checks are part of a broader effort to combat financial crime and maintain the integrity of financial transactions.
General Manager – Commercial Property