DIA Formal Warning

Hills Real Estate Limited

Lan’s Enterprise Limited Training Program

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

Overview

  • DIA issued a formal warning under s80 AML/CFT Act 2009
  • Warning date: 8 May 2023 — publicly announced 6 July 2023
  • Second formal warning to a real estate agent within two months
  • Signals DIA’s escalating enforcement posture against non-bank reporting entities

Who is Hills Real Estate?

  • South Auckland real estate agency
  • A reporting entity under the AML/CFT Act since 1 January 2019 (real-estate sector phase-in)
  • Required to maintain a full AML/CFT compliance programme, conduct CDD, monitor activity, and keep records — the same obligations that apply to financial institutions

What DIA Found

Four areas of non-compliance

  1. AML/CFT Programme — failed to establish, implement and maintain an adequate programme
  2. Ongoing CDD — neglected ongoing customer due diligence obligations
  3. Monitoring & review — insufficient transaction monitoring to detect grounds for SAR reporting
  4. Record keeping — failed to maintain records as required by the Act

The Regulator’s Position

“Real estate agencies should take note of the two recent warnings and expect stronger action for serious breaches. DIA uses escalating enforcement tools — from educational guidance through to prosecution.”

— Mike Stone, Director AML/CFT Group, DIA

  • Pattern: education → directions → formal warning → civil penalty → prosecution
  • A formal warning is public, and stays on the regulator’s record

Required Remedial Actions

  • Immediate action to rectify all areas of non-compliance
  • Continued close monitoring by DIA officials
  • Public disclosure — reputational consequence beyond the warning itself
  • Independent verification of remediation typically expected

Why This Matters to Us

LEL is a money remitter — same Act, same obligations

  • Programme adequacy is non-negotiable
  • Ongoing CDD must be documented and dated, not implicit
  • Transaction monitoring must produce evidence of review — not just system logs
  • Record keeping is the regulator’s window into our compliance — gaps are treated as breaches

Key Lessons & Takeaways

  1. A programme that exists on paper but is not implemented is a breach
  2. Ongoing CDD is an active obligation — not just onboarding
  3. Monitoring must produce reviewable, dated artefacts
  4. Records are the audit trail that proves compliance
  5. Voluntary self-detection is always cheaper than a DIA finding

Contact Information

Questions?

Thank you for your attention

References

  • DIA Press Release — DIA issues formal warning to Hills Real Estate Limited for Anti-Money Laundering non-compliance (6 July 2023)
  • AML/CFT Act 2009, section 80 (formal warnings)
  • NZ Herald & RNZ coverage, July 2023