Blog - Cooper & Co

Client Advisory - Anti-Money Laundering

The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (the Act) has applied to financial institutions and casinos in New Zealand since 2013.The Act is designed to prevent money obtained through illegal means from entering the New Zealand financial system to be “laundered”. Although New Zealand is considered to be a relatively clean market it currently falls prey to an estimated $1.35b in money laundering activities each year.

Since 2013, other non-financial businesses and professions have been captured by the act.  Lawyers and Conveyancers and some businesses forming trusts have had to comply since 1 July 2018 and Accountants from 1 October 2018.

From 1 January 2019 entities carrying out Real Estate activities will be required to:

  • have appointed a compliance officer;
  • have assessed and documented the money laundering and terrorist financing risks the business faces;
  • have established a programme to detect and manage any risks identified; and undertake a number of other specific tasks, including but not limited to performing customer due diligence when they enter a relationship with their customers (or vendors as described by the Real Estate Agents Act 2008).

At its core, Real Estate Agents need to identify who their customers (vendors) are and this is required before the agency work commences.  When the property is in the name of an individual, proof of identity is relatively simple to collect and is straight forward.

For properties that are held in companies, trusts or a combination of both, a more enhanced suite of requirements for due diligence is required. Where the Real Estate Agent cannot perform the prescribed level of due diligence, then the customer must not be onboarded and the listing cannot be accepted.

Following the inclusion of Lawyers and Conveyancers from July 1, property transactions have already been captured under Anti-Money Laundering/Countering Finance of Tourism legislation. From this date members of the legal profession are required to perform to the same compliance regime and perform the same levels of due diligence as mentioned above to the buyers of property.

Fast forward to 1 January 2019, due diligence will be required to be performed on the buyers and sellers of property. This will result in property transactions, particularly commercial property which often involves complex ownership structures, to become more onerous to navigate and more time consuming.

In the meantime, it is important real estate agents have systems in place by 1 January 2019 to ensure compliance with the obligations imposed them.  Additionally, buyers and sellers of property, especially commercial property need to fully appreciate the new requirements of this Act and the impact it will have on their businesses.

Crombie Lockwood has worked through the process of obtaining cover under the Act for Solicitors and Accountants. Most insurers have provided some sub-limited cover for defence costs and civil pecuniary penalties arising from an alleged breach of the obligations imposed by the legislation. We will be looking to obtain similar cover for Real Estate Agents ahead of the compliance date of 1 January 2019.

What you need to know about the Overseas Investment Act changes?

How do the changes to the Overseas Investment Act affect me?

The implications of the Overseas Investment Amendment Act 2018 (“Act”) have been widely discussed and, in particular, its effect on ‘overseas persons’ acquiring residential property in New Zealand. As of 22 October 2018, new laws prevent certain overseas persons from acquiring residential property in New Zealand.

The Act will not apply to transactions entered into before 22 October 2018.

Residential Land

The new laws apply to land that is categorised as ‘residential’ or ‘lifestyle’ under the District Valuation Roll.

Overseas Persons

An ‘overseas person’ means a person who is neither a New Zealand citizen nor ‘ordinarily resident in New Zealand’.  A person is ‘ordinarily resident in New Zealand’ if they:

  • hold a residence class visa; and
  • have lived in New Zealand for the last 12 months; and
  • have been present in New Zealand for at least 183 days in the last 12 months; and
  • are a New Zealand tax resident.

The restrictions do not apply to citizens or permanent residents of Australia or Singapore who live in New Zealand.


Overseas Investment Office Consent

The new laws are not a complete ban on overseas persons acquiring residential property in New Zealand, but (subject to certain exemptions) such acquisitions will now require the consent of the Overseas Investment Office (“OIO”).

There are some exemptions from the requirement to obtain OIO consent, such as if an overseas person acquires an apartment ‘off the plan’ within a multi-storey development of 20 or more apartments.  Developers of these properties can apply to the OIO for an exemption to sell a certain percentage of such properties to overseas purchasers.

Eligibility Statement

Another change under the new laws is that every person acquiring residential land will be required to complete a Residential Land Statement form which can be provided by a conveyancer (usually a lawyer). It is an offence to make a false or misleading statement and the penalties are significant.

The magic word that separates dud buys from dream buys

If you’re buying a home, why not buy one with “potential”.

“Potential” can mean many things in houses for sale. That can mean “potential” to create the perfect home, or “potential” to add value and climb the property ladder. It could mean “potential” as a suburb gentrifies or the local school goes up in desirability.

It could also mean “potential” to earn an income from a “home and income” property that comes with a legal flat, a self-contained guest suite or room in the home that can be let to flatmates, boarders, international students or Airbnb guests.

Sometimes the potential isn’t always obvious. You may even need a good surveyor or architect to really identify the potential.

Write down what you’re looking for to create a shopping list. Then set up a saved search that isn’t too specific.

Doing the numbers

The dream and reality of potential are two different things. Do-ups can be money pits so you need to do the numbers. What will it cost to buy, how much will the work cost and how much you can realistically sell for afterwards if it’s a quick flick. It’s a good idea to become a spreadsheet ninja and/or get professional input from architects, surveyors, quantity surveyors and others. The more time you do planning the less trouble and cost you’ll encounter.


Do-ups are as Kiwi as paua and pav. Many young couples jump a couple of rungs on the property ladder thanks to putting in blood, sweat, tears and money to turn around a rough diamond into home magazine tucker.

Property investors and traders have taken the do-up to the next level. They know that a clever renovation will a: allow them to have the property revalued and release capital for their next purchase, b: command more rent increasing their yield on a rental property, and c: ultimately result in capital gain. Traders are looking for quick flips and/or cheap improvements that pay handsome dividends.

They look for:

• Sections that can be subdivided

• Walls that can be moved added to increase the number of bedrooms.

• Easily added en-suites. One bathroom just doesn’t cut it these days for many buyers.

• Kitchens and laundries that can be converted to bedrooms. .

• Basement conversions.

Worst house in the best street and school zones

If it’s an owner occupied property you’re looking for, the potential may be in buying the worst house in the best street or school zone. If you can get your children into a good school then it could be well worthwhile spending time and money on doing a less than desirable home up.

Watch the markets

Do your homework and know your market so you can spot bargains. Whatever you do keep a beady eye on properties for sale as they’re listed.

One buyer’s problem can be another buyer’s potential. So look long and hard at properties that don’t sell instantly. If you can solve the problem that turns others off buying, you might be able to buy cheaply.

Devonport home sells for $2.9m - more than 30% above CV

A four-bedroom Auckland home sold last week under the hammer for more than 30 percent above its CV – netting the vendors almost $3 million.

The house at 28 Tainui Road, in Cheltenham, also achieved the highest sale price of all properties sold at auction in Auckland last week.

It sold onsite on September 2 for $2,960,000 after intense competition between two bidders.

Though the property was always expected to bring in top dollar, he says the final price was still a surprise.

“We knew it would go for more than the CV but the result ended up better than any of us expected. I wish we had three properties like it but they don’t come up that often.”

The 238.3sqm house sits on a 692sqm section and is just 400m from Cheltenham Beach.

“This particular bungalow was well renovated, had a wonderful connection to the outside from the large living room/ kitchen area, had four bedrooms, two bathrooms and, rare for the area, a double garage,” Mr Potter said.

He added that the area was seen as one of New Zealand’s safest. “It has lovely beaches, historic buildings and great schools. Why wouldn’t you want that as your lifestyle whatever is going on in the market or the economy?”

The sale comes as the latest REINZ figures show the median house price for Auckland saw its first year-on-year increase in six months.

The median price across the city rose 1.4 per cent to $852,000 in August, suggesting an early spring for the market.

Median house prices for New Zealand increased 3.6 per cent year-on-year to $549,000. For New Zealand excluding Auckland, the increase was even greater with a 6.2 per cent annual increase from $428,500 to $455,000.

The latest OneRoof Property Report figures showed the median value of houses in the area was $1,734,800, up 1.9 percent on the year before. Figures also showed that the average sales price for the suburb for the three months to May 31 this year was 4.3 percent up in relation to CVs.

In the week from September 1 to September 7, 70 properties sold at auction in Auckland, and 111 passed in. Only four properties achieved a sales price of more than $2 million at auction.

The second highest selling property at auction was also in Devonport. A four-bedroom home at 24 Ewen Alison Avenue sold for $2,275,000, 10.98% above its CV. The fully renovated early 1900s Edwardian Villa came complete with wrap around verandas, landscaped gardens and a separate semi self-contained studio/sleepout at the back of the property.

Also performing well above its CV was 34 Unsworth Drive in Albany. The 3-bedroom home, which sits on a 719sqm section, sold at auction for $1,391,000 – 18.38 percent above CV.

The appeal of a home and income property may have been a contributing factor, with the property containing separate 2-bedroom flat at the rear of the main building.

“We had about 50 people there with a few buyers but only two bidders in the end with a very energetic auction unfolding which resulted in a fabulous result all around,” he told

“Bidding started at $1,800,000 and went through to $2,960,000 – there must have been about 50 bids.”

Harcourts agent Gary Potter, who listed the home, said the renovated 1920s bungalow house had attracted plenty of interest.