Managing the Money Laundering Act 18 May 2016


Most investors like to spread their risks. This means seeking out new institutions for investing.


However, it also means compliance with the Money Laundering Act. This can be onerous and is often made worse by staff at banks and other institutions who don't understand the Act.


One bank asked for a 7-year-old beneficiary of a family trust to front up in person. What if a beneficiary were a home for cats, asked an exasperated customer.


The problem is frontline staff at the banks play safe and make unrealistic demands as a consequence.


Here's an example. Ernie is sole trustee for his family trust. He wanted a new account in his own name, but he was told he would need to jump through all the hoops as though he were a new customer.


He refused and wrote to the bank.


“I’m the trustee for X trust – Me 1,” he wrote. “I’m applying for an account in my own name – Me 2. Me 1 and Me 2 are the same person.”


He demanded to know where in the Act it said the bank couldn’t cross reference from Me 1 to Me 2. Read the Act. It’s clearly written and not long. If you understand the Act it will help if you have any problems.


Compliance with the Act will be required if you go to a new finance company or bank. It pays to keep every piece of documentation so it’s ready the next time you need it.




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