Page 28 - English-DBINZ brochure-2019

25 Doing business in New Zealand

The PPSA applies to transactions that create “security interests” in personal property. A security interest
is defined as an interest in personal property created or provided for by a transaction that (in substance)
secures payment or performance of an obligation, irrespective of the form of the transaction or the
identity of the person having title to that property. Personal property includes virtually all assets and
property other than land, although there are a few other narrow exceptions. (For more information about
security interests over land, see the property section on page 28.) The types of transactions governed
by the PPSA therefore include, for example, fixed and floating charges, chattel mortgages, hire purchase
agreements, retention of title arrangements and finance leases relating to personal property.
The PPSA also deems that security interests arise from some arrangements that may not be ordinarily
thought of as creating security. These include, for example, the lease or bailment of goods for a term of
more than one year and the purchase or transfer of an account receivable. The result of this is that in
some circumstances it is advisable for an owner of property to register a financing statement in relation
to their own property while it is in the possession of another (to ensure priority over other secured
creditors of the party in possession).
As a general rule, priority between secured parties with a perfected security interest in the same
collateral is determined by the order in which the secured parties took possession or registered financing
statements against the collateral on the Securities Register. However, the priority rules under the PPSA
are complex and there are a number of specific priority rules that modify the general rule in certain
circumstances.
The PPSA also regulates the enforcement of security interests in collateral by secured parties. The
secured party and the debtor can agree to contract out of certain of the debtor’s statutory rights that
would otherwise apply on enforcement. It is therefore common for security agreements to be drafted to
contract out of some or all of the debtor’s rights.

Anti-money laundering regulations

The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT) places
obligations on certain New Zealand reporting entities, including financial institutions, casinos, trust and
company service providers and financial advisers, lawyers, accountants, real estate agents, high-value
dealers (from 1 August 2019) and the New Zealand Racing Board (from 1 August 2019), to detect and deter
money laundering and counter the financing of terrorist activities.

OBLIGATIONS
Under the Act reporting entities must:
ə Perform a detailed risk assessment of the money laundering and financing of terrorism risks that they
face and establish and maintain a detailed written compliance programme that includes procedures
to detect, deter, manage and mitigate money laundering and financing of terrorism
ə Carry out various levels of customer due diligence to satisfy themselves that financial transactions are
legitimate

ə Report suspicious activity to the Police Commissioner (in practice, to the Financial Intelligence Unit
of the New Zealand Police) and retain information collected regarding the identity of the relevant
customers
ə Maintain detailed records of each transaction conducted through the entity to allow for transactions
to be readily reconstructed
ə Report prescribed transactions within 10 working days to the Police Commissioner. A prescribed
transaction is one that involves cash of more than NZ$10,000 or overseas funds in excess of NZ$1,000.