Under the AML/CFT regime, from what amount must a physical cash transaction through a real estate agency be reported to the Financial Intelligence Unit as a prescribed transaction?
Correct Answer
A) $10,000 or more
A physical cash transaction of NZ$10,000 or more conducted through a reporting entity is a prescribed transaction that must be reported to the Financial Intelligence Unit under section 48A of the AML/CFT Act 2009. Separately, suspicious activity must be reported whatever the amount.
Why This Is the Correct Answer
A physical cash transaction of NZ$10,000 or more through a reporting entity is a prescribed transaction and must be reported to the Financial Intelligence Unit under section 48A of the AML/CFT Act 2009. Suspicious activity must be reported whatever the amount.
Why the Other Options Are Wrong
Option B: $15,000 or more
$15,000 is not the New Zealand figure; the prescribed transaction threshold for physical cash is $10,000.
Option C: $20,000 or more
$20,000 overstates the threshold; physical cash of $10,000 or more is reportable.
Option D: $25,000 or more
$25,000 is well above the threshold; reporting starts at $10,000 in physical cash.
Deep Analysis of This Compliance Question
Prescribed transaction reports are automatic: they depend on the amount and type of transaction, not on suspicion. Suspicious activity reports are judgement-based and have no dollar threshold. The two work together; a cash payment of $10,000 or more is reported as a prescribed transaction, and if anything about it is suspicious, a suspicious activity report is made as well.
Background Knowledge for Compliance
Real estate agents are reporting entities under the AML/CFT Act 2009. Subpart 2A of Part 2 requires prescribed transaction reports for transactions at or above the applicable threshold, which for physical cash is $10,000. Suspicious activity reports under section 40 are due within three working days of forming a suspicion, regardless of amount.
Memory Technique
Remember 'Perfect Ten' - just like a perfect score of 10/10, the AML cash reporting threshold is a perfect $10,000. Think of it as 'Ten Thousand = Tell the FIU' - when you hit that perfect ten (thousand), you must tell the Financial Intelligence Unit.
When you see AML cash reporting questions, immediately think 'Perfect Ten' and recall that $10,000 is the magic number. Any amount at or above this perfect ten thousand requires reporting to the FIU.
Exam Tip for Compliance
Physical cash of $10,000 or more: prescribed transaction report. Suspicion: suspicious activity report, at any amount.
Real World Application in Compliance
A buyer pays a $12,000 deposit in cash. The agency records the transaction, completes due diligence, and files a prescribed transaction report with the Financial Intelligence Unit. Nothing about the buyer seems unusual, so no suspicious activity report is needed.
Common Mistakes to Avoid on Compliance Questions
- •Confusing the prescribed transaction threshold with a threshold for suspicious activity reports
- •Thinking customer due diligence on a business relationship depends on the cash amount
- •Ignoring a pattern of payments just under $10,000
Related Topics & Key Terms
Key Terms:
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