From 1 June 2025, online marketplaces are partially exempt from most requirements of the AML/CFT Act. The partial exemption applies in relation to customers whose transactions do not exceed NZD $10,000 in any consecutive 12-month period. The partial exemption does not exempt online marketplaces from submitting a suspicious activity report or record keeping if the transaction is relevant to a suspicious activity report and section 92-100 (inclusive) of the Act
Partial Exemption
For the purposes of the Act, both the buyer and the seller meet the definition of a “customer” when funds for the sale/purchase are transacted through the online marketplace. Therefore, customer due diligence (CDD) obligations may apply to both parties
However, it is recognised that many low cumulative value sales and purchases transacted through online marketplaces are of lower money laundering and terrorism financing risk. For example, a person occasionally selling second-hand goods, such as clothes, toys or other household and family items.
Accordingly, online marketplaces have been granted a partial exemption from the requirements of the Act. This applies in relation to a customer, if their respective transactions do not exceed NZD $10,000 in any consecutive 12-month rolling period. This means that CDD (and any ongoing CDD, account monitoring or enhanced CDD) or any prescribed transaction reporting requirements are only required when a customer reaches the NZD $10,000 transaction threshold.
The partial exemption does not exempt online marketplaces from submitting a suspicious activity report, record-keeping if the transaction is relevant to a suspicious activity report and section 92 – 100 (inclusive) of the Act
Notes:
The partial exemption applies whether the $NZD $10,000 transactions are carried out in one or more transactions, in a single operation or several operations that appear to be linked (Linked Customer Conditions). In practice, this means an online marketplace must take steps to identify linked transactions, including if they involve multiple accounts on the marketplace, so that CDD requirements can be applied.
DIA’s view:
The Department’s view is that the partial exemption applies as follow:
For a new buyer or seller that establishes a business relationship with an online marketplace from 1 June 2025, CDD is only required if/when their transactions reach NZD $10,000 in a consecutive 12-month period.
For any existing buyer or seller with whom there was a business relationship prior to 1 June 2025, the CDD requirements for “existing customers” under the Act apply if/when their transactions reach NZD $10,000 in a consecutive 12-month period. From this point:
- Standard CDD must be conducted if there is a material change in the nature and purpose of the businesss relationship and insufficient information is held
- Enhanced CDD must be conducted at any times as required under the Act
- Ongoing CDD and account monitoring obligations also commence, including a requirement, according to the level of risk involved, to update and verify customer information held
For any buyer or seller previously subject to CDD that does not conduct transactions of NZD $10,000 or more in consecutive 12-month period, the remaining requirements of the Act cease to apply. In the event the buyer or seller reaches this threshold again:
- Enhanced CDD must be conducted at any times as required under the Act
- Ongoing CDD and account monitoring obligations also recommence, including a requirement, according to the level of risk involved, to update and verify customer information held
Linked Customer Conditions
Entities should be mindful of the Linked Customer Conditions as they are an “anti-avoidance” provision to mitigate the risk of a person, or more than one person together, structuring transactions, including by opening multiple accounts, to bypass the NZD $10,000 threshhold, and to evade the application of AML/CFT requirements
To detect linked transactions, including those involving multiple accounts in the marketplace, a provider of an online marketplace should take a risk-based approach to implement appropriate procedures, policies and controls. Some options which may be applied in combination include:
- Collecting buyer and seller identity information: Ensuring sufficient identity information (such as name, address, phone number, email address and IP address) is collected and subject to appropriate authentication;
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Preventing duplicate accounts: Preventing a person from opening more than one account
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Identifying linked accounts from identity information and patterns of transactions: Monitoring accounts and transactions to identify commonalities and potentially linked accounts/transactions. This will ensure that a person trying to bypass the Linked Customer Conditions can be identified, as well as situations where multiple persons are operating together to try to do so; and with
- Review and examination: There should be accompanying processes to review, escalate and respond to situations when the Linked Customer Conditions are exceeded.
If you have any concerns or questions regarding AML compliance, please don’t hesitate to contact us at info@fraudchecksolutions.co.nz
