DIA

DIA Formal Warning NZForex Limited — 3,182 Unreported PTRs 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 to NZForex Limited on 18 March 2025 3,182 prescribed transactions were not reported to the FIU Reporting gap spanned 1 November 2017 → 28 February 2024 — over six years All unreported transactions were non-NZD denominated No allegation of money laundering — this was a system / reporting-control failure Who is NZForex? Online foreign-exchange and international payments business Reporting entity under the AML/CFT Act 2009 Required to file: International Funds Transfers (IFTs) ≥ NZ$1,000 cross-border Large Cash Transactions (LCTs) ≥ NZ$10,000 in cash Collectively known as Prescribed Transaction Reports (PTRs) What Went Wrong The system issue A defect in NZForex’s PTR processing pipeline Affected transactions not denominated in New Zealand Dollars Non-NZD volumes silently bypassed the reporting workflow The defect persisted for 6 years and 4 months undetected by internal monitoring What was missed 3,182 individual prescribed transactions Each was a separately reportable obligation under section 48A How It Was Discovered NZForex itself identified the issue The defect surfaced through internal system review — not a DIA finding NZForex voluntarily disclosed the non-compliance to DIA Backfill: all 3,182 transactions were submitted to the FIU An independent audit was commissioned voluntarily The Regulator’s Position “DIA acknowledges that NZForex has voluntarily disclosed the non-compliance, and we commend NZForex for disclosing the non-compliance, admitting fault and taking steps to resolve the system issue.” ...

AML Case Study The Jiaxin Finance Investigation Lan’s Enterprise Limited Training Program Presented by: Angela Ji Contact: aml@gmfinance.co.nz Emergency Hotline: +64 09-309-8808 Training Objectives Understand the Jiaxin Finance DIA investigation and its context Identify the compliance failures that triggered regulatory action Recognise the enforcement pathway DIA follows for money remitters Apply the lessons learned to LEL’s own compliance operations Reinforce the importance of proactive compliance over reactive remediation Overview DIA conducted a compliance investigation into Jiaxin Finance, a money remitter Investigation revealed systemic AML/CFT compliance failures Case is part of DIA’s escalating enforcement posture against non-bank reporting entities Money remitters remain a high-priority supervisory target for DIA Follows a pattern of enforcement actions against remitters: Ping An Finance, Lidong Foreign Exchange, NZForex DIA Enforcement Context Money remitters under the spotlight The AML/CFT Act 2009 applies equally to all reporting entities — banks and non-banks alike DIA has explicitly signalled that money remitters face heightened scrutiny Remittance sector is identified as high-risk for money laundering due to: High-volume, cross-border cash flows Customer base often involving migrant remittances Potential for structuring and layering Variable compliance maturity across the sector DIA Enforcement Pathway Escalating regulatory tools Educational guidance — informal engagement Directions — formal requirement to act Formal warning — public record under s80 Civil penalty — pecuniary penalty order Criminal prosecution — for knowing or reckless breaches “Money remitters should expect stronger action for serious breaches. DIA uses escalating enforcement tools — from educational guidance through to prosecution.” ...

AML/CFT Webinar Customer Due Diligence — 2024 Refresh Lan’s Enterprise Limited Training Program Presented by: Angela Ji Contact: aml@gmfinance.co.nz Emergency Hotline: +64 09-309-8808 Overview 10 May 2024 — DIA, FMA and RBNZ jointly published updated CDD guidance Tied to AML/CFT Amendment Regulations 2023 in force from 1 June 2024 Five new guideline documents replacing/supplementing prior CDD guidance This session walks through what changed and what we must adopt at LEL Why the Refresh? 2021 Statutory Review of the AML/CFT Act identified gaps in CDD practice 2023 amending regulations clarified beneficial-ownership obligations Supervisors aligned on a single, risk-based, principles-based interpretation Real-world enforcement (Hills, SkyCity, Jiaxin) reinforced the need for clearer guidance The Five New Documents # Document Focus 1 Beneficial Ownership Guideline Identifying and verifying the natural-person owner behind every customer 2 CDD: Companies Standard and enhanced CDD on incorporated customers 3 CDD: Trusts Settlor / trustee / beneficiary / class verification 4 CDD: Limited Partnerships General partner ID + LP register checks 5 Enhanced CDD When ECDD is triggered, what extra steps are required What Changed — Beneficial Ownership 25% threshold confirmed for beneficial ownership of companies — but also any person with effective control regardless of shareholding Multi-layer corporate structures: must drill through every layer to natural persons Where no natural person can be identified, senior managing official must be CDD’d Document the reasoning — the supervisor wants to see how you concluded What Changed — Trusts & LPs Trusts CDD on every named beneficiary, settlor, trustee, and protector Where beneficiaries are a class, the class must be described and CDD applied to known members Discretionary trusts get extra scrutiny Limited Partnerships General partner is treated as the responsible party LP register must be checked against customer-provided info Foreign LPs trigger ECDD by default What Changed — Enhanced CDD ECDD triggers (refreshed) Trusts and vehicles dealing with assets Companies with nominee shareholders or directors Politically Exposed Persons (PEPs) Customers from high-risk jurisdictions Wire transfers above prescribed thresholds Anything else the entity’s risk assessment flags ECDD requirements Source of funds and source of wealth Senior management approval Enhanced ongoing monitoring frequency The Risk-Based Approach “Reporting entities must tailor their AML/CFT programme to their specific risk profile.” ...

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 AML/CFT Programme — failed to establish, implement and maintain an adequate programme Ongoing CDD — neglected ongoing customer due diligence obligations Monitoring & review — insufficient transaction monitoring to detect grounds for SAR reporting 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.” ...

DIA AML/CFT Videos Keeping New Zealand in Business for Good Lan’s Enterprise Limited Training Program Presented by: Angela Ji Contact: aml@gmfinance.co.nz Emergency Hotline: +64 09-309-8808 Training Objectives Understand the DIA’s role as an AML/CFT supervisor in New Zealand Review the key themes from the DIA’s educational video series Identify compliance obligations specific to money remitters Learn practical steps to strengthen our AML/CFT programme Understand why compliance matters for keeping NZ in business for good DIA’s Role and AML/CFT Mission The Department of Internal Affairs (DIA) is one of three AML/CFT supervisors in New Zealand DIA supervises non-bank financial institutions — including money remitters like LEL Other supervisors: Reserve Bank of New Zealand (banks) and Financial Markets Authority (securities) DIA’s mission: protect New Zealand’s financial system integrity and international reputation “Keeping NZ in Business for Good” “Keeping New Zealand in business for good” — DIA’s AML/CFT awareness message ...