New Zealand Streamlines AML Compliance for Family Trust Property Sales

The New Zealand Government has announced a significant reform to its Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act, aimed at removing bureaucratic hurdles for everyday Kiwi families selling homes held in family trusts. Associate Justice Minister Nicole McKee revealed the reforms this week, underscoring the Government’s intent to build a smarter, fairer, and risk-focused approach to money laundering compliance.

Simplified Rules for Low-Risk Family Transactions

At the heart of the reform is a shift away from one-size-fits-all compliance checks. The changes will allow real estate agents to apply “simplified customer due diligence” for clearly low-risk property sales involving family trusts. This move is designed to remove the burdensome and invasive verification process that ordinary homeowners have been subjected to.

“Families who’ve worked hard, paid off their mortgage, and saved for the future shouldn’t be treated like potential criminals just because they want to move house,” said McKee.

Previously, selling a home held in a trust could trigger rigorous checks requiring:

• Names and addresses of all trustees and beneficiaries (even minor children)

• Lawyer details

• Full financial histories explaining how the home was funded

• Copies of trust deeds, bank statements, and supporting documentation

Under the new regime, if the transaction is clearly low-risk, real estate agents will only need to:

• Confirm the property’s ownership and trustee details align with the title

• Verify the identities of trustees

• Retain a copy of the trust deed

This streamlined approach will reduce paperwork and legal costs for families, while still maintaining essential safeguards against money laundering and terrorism financing.

Real-Life Scenario: Simplifying the Sale

McKee described a typical example: A couple who’ve lived in the same home for 15 years, raised children there, and placed the home in a family trust for asset protection. If they wish to move or downsize, the current AML rules demand invasive and excessive documentation, even when the financial history is straightforward.

“When there’s clearly nothing untoward going on, there’s no need for invasive investigations or repetitive paperwork,” she noted.

Clear Guidance and Risk-Based Supervision

To ensure smooth implementation of the changes, the Government has directed the future AML/CFT supervisor to provide clear and practical guidance to frontline professionals — especially real estate agents, lawyers, and accountants. This is intended to remove the ambiguity and fear of non-compliance penalties that has discouraged simplified approaches in the past.

“These changes are about recognising that not all customers carry the same risk and it’s time our laws reflected that,” McKee said.

The updated guidance will outline when and how simplified due diligence can be applied, giving professionals the confidence to reduce unnecessary red tape while maintaining legal integrity.

Part of Broader AML Modernisation

The reforms are part of a broader overhaul of New Zealand’s AML/CFT regime. The Government is working to ensure the system remains robust, risk-focused, and proportionate, targeting serious financial crimes while removing friction for compliant citizens and businesses.

Minister McKee emphasized that these changes signal a broader philosophical shift:

“New Zealanders who play by the rules, work hard, and save for their future should be supported by the system, not tied up in red tape.”

Looking Ahead

As compliance regimes evolve globally, balancing enforcement with fairness remains a key policy challenge. New Zealand’s latest AML/CFT reforms are being closely watched as a case study in proportional regulation, with the potential to inform similar policy changes in other jurisdictions.