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Safe deposit box company gets off with a second warning after failing to keep anti-money laundering records

The Department of Internal Affairs (DIA) has given New Zealand's largest provider of safe deposit boxes its second warning in regards to its anti-money laundering practices.

In a statement released today, the DIA said Customhouse Safe Deposits Limited (CDSL), has received a formal warning under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT).

The company is the largest of its kind in New Zealand, and trades in gold and silver bullion, the Department said.

The directors of the company are Harold Paul Honnor and Valarie Jean Honnor of Auckland, according to the Companies Office, with Chartered Accountant Adrian John Davies also listed as a Director.

Mr Honnor is the current director of a total of 20 business entities, according to the Office, and the couple's registered address is an Auckland mansion valued at more than $6 million.

The DIA said CDSL failed to meet its requirements under the Act by failing to conduct due diligence on customers, or adequately monitor their accounts and transactions.

It also failed to keep accurate records or implement an AML/CFT programme.

CDSL has already been warned once before about its AML/CFL requirements after a 2014 review found they were non-compliant in a number of areas.

The DIA worked with them after that review to make sure they were compliant, but the company failed to keep to the agreed standards.

Civil or criminal proceedings are an option under the Act, but DIA opted instead to give the company its third chance to get things right.

The DIA said CDSL is not specifically accused of being involved in any money laundering or financing of terrorism.

The DIA's Anti-Money Laundering Group Director Mike Stone said "this is a case of repeated non-compliance, with little regard for money laundering risks".

Mr Stone said CDSL has agreed to maintain AML/CFT standards after the 2014 review, but had again failed to do so.

"Since then, CSDL has not only failed to maintain an on-going level of compliance but also allowed it to deteriorate, which is unacceptable.

"It's vital that they assess their risks and put a robust AML/CFT programme in place.

"This is usually driven by a competent compliance officer however, the compliance officer at CSDL did not have the depth of understanding of AML/CFT requirements and did not ensure on-going compliance."

The DIA has issued a total of 30 formal warnings to entities bound by the AML/CFT Act since it came into for in 2013 and civil proceedings have been successfully carried out against two entities.

Under the Act, non-compliant entities face civil penalties of up to $200,000 for an individual and $2m for a body corporate

In a criminal case, non-compliant entities face up to two years' imprisonment or a $300,000 fine for individuals, and up to $5m for a body corporate.

A file image of gold bullion bars.
A file image of gold bullion bars. Source: 1 NEWS