On 17 March 2025, the New Zealand Police Financial Intelligence Unit (FIU) released the 2024 National Risk Assessment on Money Laundering, Terrorism Financing and Proliferation Financing (2024 NRA). The Reserve Bank of New Zealand (RBNZ), as a joint-supervisor of the country's Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) regime, has shown support for its release.
The 2024 NRA updates the description of significant criminal behaviours generating illicit income that threatens New Zealand's financial system and assesses and identifies threat and sectoral vulnerability which criminals take advantage of when proceeds of crime are laundered.
As anticipated, there are some key changes to risk when compared with the 2019 National Risk Assessment (2019 NRA). Notably, the 2024 NRA includes a new section dedicated to virtual asset service providers (VASPs) and includes the FIU's first assessment of proliferation financing risk, which refers to the raising and moving of funds to finance the development of weapons of mass destruction.
In assessing 35 different sectors, the FIU has identified banking, money or value transfer service providers and VASPs to be the most vulnerable to exploitation by threat actors:
- The banking sector remains the dominant vulnerability sector. Despite having only 27 reporting entities the sector has high exposure to proceeds generated through high-threat crime types, both domestically (through cash, which is characteristic of drug crime) and internationally (through wire transfers, which are typically associated with fraud and inward movements of illicit wealth)
- The VASP sector is evolving rapidly. VASPs feature in both fraud and drug investigations and the sector itself is vulnerable to exploitation due to the speed with which payments can be made to any jurisdiction. For example, criminals have been found to use the banking sector to transfer funds to VASPs to purchase cryptocurrency, or to use VASPs to remit funds through cryptocurrency wallets
- Banking, VASPs and money or value transfer service sectors were identified as those most likely to be misused to finance terrorism offshore, for example, as a payment corridor to fund drug importation. This is in line with trends observed with a key change from the 2019 NRA being increasing volumes of crime and fraud observed, where the New Zealand Government and government departments (Ministry of Social Development and the Accident Compensation Corporation) had also been targeted.
Our view
As the RNBZ has pointed out, the national risk assessment is a key document for New Zealand's AML/CFT system. We welcome the release of the 2024 NRA and consider it a timely reminder for all reporting entities to consider their risk assessment and compliance programme, particularly participants in the banking, money or value transfer service and VASP sectors.
We also note the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill (Bill) which is currently in select committee. In particular, clause 15 of the Bill will amend section 58 of the AML/CFT Act to require that a reporting entity "must undertake its risk assessment in accordance with any applicable guidance materials", which would include the 2024 NRA. For further details on the Bill and wider reforms, please see our previous article: Updates on the AML/CFT reform.
Please contact our experts in the financial services regulation team if you have any questions in relation to the 2024 NRA or are considering how it may impact your individual risk assessment, compliance programme and other statutory obligations under the AML/CFT Act.
This article was co-authored by Andrew Suggate (senior associate) and Janet Liu (senior solicitor).
