Parents should find it easier to open a bank account for their child under changes to the government's anti-money laundering policy announced this afternoon.
Associate Justice Minister Nicole McKee made the announcement this afternoon with Acting Prime Minister David Seymour.
Mckee said the changes to the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act - designed to prevent serious crimes - would make opening an account for children easier, as regulations designed to prevent serious crimes "can make the process unnecessarily difficult".
"A parent who wants to open an account for their eight-year-old child needs to gather and verify a long list of information including their child's address, date of birth, name, and their own authority to act on their child's behalf. The Act also requires banks to obtain the nature and purpose of the business relationship, evaluate whether further due diligence is required, and monitoring the child's transactions on an ongoing basis."
She said changes to the Anti-Money Laundering and Countering Financing of Terrorism Act amendment would mean banks could use a simpler process when the risk was low - for example, when a child's bank account had appropriate transaction limits.
"All that could be required is a birth certificate to confirm the child's name and date of birth, and prove the relationship to the parent. They could also skip the intrusive and unnecessary questions about the 'nature and purpose' of the account, and reduce or forego ongoing monitoring of a child's banking activity, until the account's settings are changed (e.g., removal of transaction limits when a child turns 18)."
The government had also directed the future supervisor of the Act to release clear guidance on how to apply these simple checks, she said.
The changes include removing address verification requirements - including for adults - and relaxing "enhanced customer due diligence requirements for lower-risk trusts".
McKee said the government was confident $1000 transaction limits on children's bank accounts would prevent them being used for money laundering.
"Not only that, the financial action taskforce told us we need to go out there and take risks, for the last 11 years we've done none of that, it's about time we let Kiwis get on with living."
She said the government's changes would also make it easier for the elderly to get access to financial services, and would put New Zealand more in line with international obligations and standards too.
There was no Cabinet meeting this Monday, but with Prime Minister Christopher Luxon on leave, the acting PM took the opportunity to speak about a new policy from the Beehive's theatrette.
Seymour reminisced about taking $1 each week to school and seeing the balance on his grey Postbank Passbook grow.
"If we can do one thing, if we care about financial literacy, it's make it easy for every child to have a bank account. Now, I don't remember having to prove my ID, my address, the nature of my financial relationship with my parents, and I don't think that Postbank were checking my transactions each week for any suspicious deposits or withdrawals."
He said making it easier would be just one example of a raft of anti-money laundering changes McKee would unveil this week.
"We're going to make sure that this area of bureaucracy, red tape and regulation - one of the most complained about and annoying there is - is fixed up so that people who want to open a bank account, set up a trust, buy or sell a house, and just go through the stuff of life with their financial affairs can get it done and not be tied up in red tape and bureaucracy for no reason."
McKee said she could not provide statistics on how many people had complained about the requirements, "except for the number of people who have told me that they can't open bank accounts".
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