Recent changes to New Zealand’s Anti-Money Laundering and Countering Financing of Terrorism Act (AML/CFT) have eased compliance requirements for family trusts, particularly when selling property. The reforms, in force from June 2025, respond to long-standing criticism that the old rules placed too much burden on low-risk transactions.
What Has Changed
Previously, whenever a trust was involved in a property sale, lawyers and other reporting entities were required to complete full due diligence. This meant identifying not only trustees but also all beneficiaries, settlors and sometimes protectors, as well as providing information on the trust’s source of wealth. For a straightforward family trust selling a family home, the process could be disproportionate.
The new framework allows for a risk-based approach. Where a trust transaction is clearly low risk, simplified checks are now permitted. In such cases, it may be enough to:
- Confirm the identity of trustees,
- Verify ownership of the property being sold, and
- Hold a copy of the trust deed.
This streamlines the process, saving trustees time and cost, while still meeting the objectives of AML/CFT.
Implementation Issues
Although the reforms are welcome, not all questions are settled. The threshold for what qualifies as “clearly low risk” remains uncertain. Complex trust structures or offshore connections may still require full due diligence. Further, reporting entities must keep clear records explaining why simplified checks were used, so they can demonstrate compliance if reviewed. Guidance from regulators is expected, but gaps remain.
Importance of Good Records
One message remains loud and clear: trustees must keep thorough and accurate records. This includes maintaining up-to-date trust deeds, trustee and beneficiary details, and an audit trail of decisions. Even with simplified checks, poor records can expose trustees and advisers to risk. As trust law continues to evolve, careful record-keeping remains the best protection against both regulatory challenge and disputes within families.
Summary
The 2025 reforms make life easier for trustees involved in routine property sales, reducing unnecessary duplication and paperwork. But the responsibility to apply the rules carefully, document decisions, and maintain sound records is as important as ever. If you are a trustee considering a property transaction, professional advice remains essential to ensure the right balance between efficiency and compliance.
