FIU/ACAMS Conference 2022

Case Study Review

Lan’s Enterprise Limited Training Program

Presented by: Angela Ji Contact: aml@gmfinance.co.nz Emergency Hotline: +64 09-309-8808

Training Objectives

What You’ll Learn Today

  • Understand the role of the NZ Financial Intelligence Unit (FIU) and its priorities
  • Review key case studies presented at the FIU/ACAMS Conference 2022
  • Identify AML/CFT compliance lessons directly relevant to money remitters
  • Learn about evolving enforcement trends and regulatory expectations
  • Apply conference insights to strengthen our day-to-day compliance practices

Conference Background

FIU/ACAMS Conference 2022

  • Annual event hosted jointly by the NZ Police Financial Intelligence Unit and ACAMS
  • Brought together regulators, law enforcement, and reporting entities
  • Focused on emerging ML/TF typologies and real-world enforcement case studies
  • Key themes: remittance sector risks, proceeds of crime, and CDD failures
  • Provided critical insights into how FIU analyses suspicious transaction reports (STRs)

The NZ Financial Intelligence Unit

Who They Are

  • Part of NZ Police, based in Wellington
  • Receives, analyses, and disseminates Suspicious Transaction Reports (STRs)
  • Produced over 5,000 financial intelligence disclosures in the 2021/22 year
  • Works with the three AML/CFT supervisors: DIA, RBNZ, and FMA
  • Key partner in identifying and disrupting money laundering networks

The NZ Financial Intelligence Unit

Their Role in Our Business

  • Every SAR/STR we file goes to the FIU
  • FIU connects our reports with intelligence from other sources
  • Their analysis can trigger criminal investigations
  • They assess whether remittance businesses are meeting their reporting obligations
  • Under-reporting is a red flag — FIU knows the expected volume for our sector

Key Theme 1: Remittance Sector Under Spotlight

Why Money Remitters Were a Focus

  • Remittance businesses identified as high-risk for money laundering
  • FIU reported that the DNFBP and remittance sector had lower STR filing rates than banks
  • Conference highlighted patterns of structuring, smurfing, and third-party transfers through remitters
  • Regulators expect remitters to have robust transaction monitoring and proactive SAR filing

Key Theme 1: Remittance Sector Under Spotlight

What This Means for LEL

  • We are in a high-priority sector for regulatory attention
  • Our SAR filing patterns are compared against sector benchmarks
  • Failure to detect and report suspicious activity is treated as a compliance failure
  • Transaction monitoring must be documented and reviewable

“Remitters are a gateway for cross-border value transfer. That makes you both a risk and a line of defence.” — FIU Conference Presenter

Case Study 1: Structured Remittance Scheme

The Scenario

  • A money remittance business in Auckland was used to launder proceeds of drug trafficking
  • Customers made multiple small transfers below reporting thresholds across several days
  • Different senders directed funds to the same overseas beneficiary
  • The remitter failed to identify the pattern — no SARs were filed

Case Study 1: Structured Remittance Scheme

What Went Wrong

  1. No transaction monitoring: The remitter relied solely on individual transaction review
  2. Failed to connect related transactions: Multiple senders to one beneficiary was not flagged
  3. No threshold analysis: No system to detect structuring across time windows
  4. Inadequate CDD: Identity of the ultimate beneficiary was not verified
  5. Zero SARs filed: Despite clear indicators of suspicious activity

Case Study 1: Structured Remittance Scheme

Regulatory Outcome

  • DIA investigation initiated following FIU intelligence
  • The business received a formal warning for AML/CFT programme failures
  • Director held personally accountable for systemic compliance failures
  • Required to engage an independent auditor at own cost
  • Ongoing enhanced monitoring by the supervisor

Case Study 1: Key Lessons for LEL

How We Prevent This

  • Daily and weekly transaction reviews must look for patterns across customers
  • Beneficiary analysis: Flag when multiple senders direct funds to the same recipient
  • Threshold monitoring: Track transactions approaching or just below thresholds
  • Document your review: Every monitoring session must produce a dated file note
  • When in doubt, file a SAR — it is always better to report than to under-report

Case Study 2: Trade-Based Money Laundering via Remittance

The Scenario

  • A remitter processed large volumes of transfers linked to import/export businesses
  • Invoice values were significantly overstated — goods worth $50K invoiced at $200K
  • The excess $150K was transferred overseas under the guise of legitimate trade payments
  • The remitter accepted invoices at face value without independent verification
  • FIU analysis of STRs from banks identified the mismatch between trade flows and fund flows

Case Study 2: Trade-Based Money Laundering via Remittance

What Went Wrong

  1. No source of funds verification: Accepted customer declarations without evidence
  2. No trade documentation review: Failed to assess whether invoices were reasonable
  3. Insufficient ECDD: High-value business customers were treated as standard risk
  4. No correlation analysis: Did not compare transfer volumes against declared business activity
  5. Missed red flags: Customer’s transfer volume was disproportionate to stated business size

Case Study 2: Trade-Based Money Laundering via Remittance

Red Flags in Trade-Based ML

  • Invoice amounts disproportionate to the type and volume of goods
  • Rapid succession of large transfers with minimal business justification
  • Customer reluctant to provide supporting trade documentation
  • Payments to jurisdictions unrelated to declared trade routes
  • Multiple related entities sending/receiving funds in circular patterns

Case Study 2: Key Lessons for LEL

Strengthening Our Defences

  • Always verify SOF for business customers — request and review trade documents
  • Apply ECDD when transaction volume or value seems disproportionate to business profile
  • Compare declared business activity against actual transaction patterns
  • File notes must document why transactions are considered consistent or inconsistent with the customer profile
  • Escalate to Compliance Officer when trade-based ML indicators are present

Case Study 3: Exploitation of Identity for Remittance Fraud

The Scenario

  • A syndicate used stolen or fabricated identities to open accounts with multiple remitters
  • Transfers were made using synthetic identities — real names paired with false details
  • Some customers used multiple valid IDs with different personal information
  • One individual conducted transactions using three different names across three remitters
  • FIU connected the dots through cross-entity intelligence matching

Case Study 3: Exploitation of Identity for Remittance Fraud

What Went Wrong

  1. Inadequate identity verification: ID documents accepted without proper authentication
  2. No cross-referencing: Failed to check whether customer details matched across transactions
  3. No biometric checks: Relied solely on document-based verification
  4. No enhanced due diligence: High-risk indicators (multiple IDs, inconsistencies) were ignored
  5. Information silos: No mechanism to share red flag intelligence between industry peers

Case Study 3: Key Lessons for LEL

Identity Verification Best Practice

  • Thorough ID verification at onboarding — not just sight, but validate
  • Cross-check details: Ensure name, date of birth, and address are internally consistent
  • Flag inconsistencies: Multiple IDs with different details must trigger ECDD
  • Monitor for repeat customers using variations of personal information
  • Maintain clear records of all identity verification steps taken

Compliance Lessons from the Conference

Cross-Cutting Themes

  1. Programme implementation is king — a programme that exists on paper but is not practiced is a breach
  2. Transaction monitoring must be proactive, not reactive
  3. SAR filing is not optional — under-reporting is itself a compliance failure
  4. FIU intelligence connects the dots — your SAR may be the missing piece in a larger investigation
  5. Record keeping is the audit trail — if it’s not documented, it didn’t happen

What the Regulators Are Doing

  • DIA increased onsite inspections for remittance and DNFBP sectors
  • Formal warnings issued publicly — naming and shaming as a deterrent
  • Escalating enforcement: Education → Directions → Formal Warning → Civil Penalty → Prosecution
  • Personal liability for directors and compliance officers who fail to act
  • Sector-wide reviews — if one remitter is found non-compliant, the whole sector gets scrutiny

NZ AML Enforcement Context 2022

Key Developments

  • NZ’s Mutual Evaluation Report by FATF-style body APG highlighted areas for improvement
  • Increased focus on beneficial ownership transparency
  • Regulators emphasised effectiveness of AML programmes — not just compliance on paper
  • Growing use of data analytics by FIU to identify non-reporting entities
  • Cross-border cooperation with Australian and Pacific island FIUs intensified

Why This Matters to LEL

We Are in the Crosshairs

  • Money remitters are a priority sector for all three NZ AML/CFT supervisors
  • Our transactions are cross-border by nature — highest risk category
  • Chinese remittance patterns (split payments, offsetting) attract additional scrutiny
  • Every regulatory action against another remitter raises the bar for all of us
  • Conference presenters specifically discussed Chinese remittance typologies

Why This Matters to LEL

Our Response Must Be Proactive

  • Document everything: Every CDD decision, every monitoring review, every SAR consideration
  • File SARs promptly: Do not wait for certainty — if there are grounds for suspicion, report
  • Maintain programme alignment: What we document must match what we actually do
  • Train continuously: Conference insights must translate into updated procedures
  • Self-assess regularly: Conduct your own compliance health checks before the regulator does

Key Takeaways

Remember These Five Points

  1. SAR filing is your shield — the FIU uses your reports to build cases; under-reporting is a breach
  2. Patterns matter more than individual transactions — look for structuring, repeated beneficiaries, unusual volumes
  3. Trade-based ML is real and growing — verify SOF for business customers rigorously
  4. Identity fraud targets remitters — strengthen your verification processes
  5. Enforcement is escalating — formal warnings are public and personal liability is real

Key Takeaways (Continued)

Practical Actions for Your Daily Work

  • When reviewing transactions, ask: “Does this make sense for this customer?”
  • When a customer’s behaviour changes, update their risk assessment
  • When you see a red flag, document it and escalate it
  • When you file a SAR, keep a record of your reasoning
  • When in doubt, call the Compliance Officer

Compliance is not a box-ticking exercise. It is our business’s first line of defence.

SAR Filing Reminder

When to File

  • Any transaction that appears unusual, inconsistent, or without clear economic purpose
  • Customer provides false or misleading information
  • Transaction pattern suggests structuring or smurfing
  • Customer is reluctant to provide SOF/SOW documentation
  • Transfer to or from a high-risk jurisdiction without adequate explanation
  • Any transaction where you suspect it may be related to ML/TF

How to File

Conference Resources

Further Reading

  • NZ Police FIU Annual Report 2021/22
  • DIA AML/CFT Sector Risk Assessment
  • ACAMS NZ Conference proceedings and presentations
  • AML/CFT Act 2009 — especially Sections 40 (CDD), 80 (formal warnings), and 85 (SAR obligations)
  • APG Mutual Evaluation Report for New Zealand

Contact Information

Questions?

Thank you for your attention

References

  • NZ Police Financial Intelligence Unit — Annual Report 2021/22
  • FIU/ACAMS New Zealand AML/CFT Conference 2022 — Session materials
  • Department of Internal Affairs — AML/CFT enforcement actions 2022
  • AML/CFT Act 2009, sections 40, 80, 85
  • APG Mutual Evaluation of New Zealand (2021)
  • FATF — Trade-Based Money Laundering: Trends and Indicators