Cutting Red Tape So Young Kiwis Can Start Saving
Associate Justice Minister Nicole McKee is making changes to the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act that will make it easier for parents to open bank accounts for their children.
'Opening a bank account for children should be a simple and positive step toward teaching them the value of saving. Unfortunately, regulations designed to prevent serious crimes can make the process unnecessarily difficult,' says Mrs McKee.
'The Government is cutting red tape that can make it harder for parents to do the easy thing and open a bank account for their children.
'According to the Act, a parent who wants to open an account for their eight-year-old child needs to gather and verify a long list of information, including their child's address, date of birth, name, and their own authority to act on their child's behalf. The Act also requires banks to obtain the nature and purpose of the business relationship, evaluate whether further due diligence is required, and monitoring the child's transactions on an ongoing basis.
'Under the Government's new reforms, banks will be allowed to apply a simplified processes when risk is low. This means that if a bank puts measures in place to make a child's bank account low-risk (e.g. by setting appropriate transaction limits) all that could be required is a birth certificate to confirm the child's name and date of birth, and prove the relationship to the parent.
'They could also skip the intrusive and unnecessary questions about the 'nature and purpose' of the account, and reduce or forego ongoing monitoring of a child's banking activity, until the account's settings are changed (e.g., removal of transaction limits when a child turns 18).
The Government has also directed the future AML/CFT supervisor to issue clear guidance so that businesses like banks know exactly how to apply these simplified checks without fear of penalty.
'This is a common-sense reform. Parents shouldn't be asked to jump through bureaucratic hoops just to open a bank account for their kids. We're streamlining the system so that New Zealanders can spend less time on paperwork and more time teaching their children the value of money.
'These changes reflect the Government's wider commitment to smarter regulation, focusing on outcomes rather than ticking boxes, and trusting New Zealanders to make responsible decisions without being buried under red tape.'
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