At an auction a successful bidder, whom the agency does not act for, hands the agency $15,000 in banknotes toward the deposit. How does reg 5B of the AML/CFT (Definitions) Regulations 2011 treat this bidder?
Correct Answer
B) As a customer, because a cash occasional transaction was conducted with the agency.
Regulation 5B excludes non-clients from being the agent's customer, but reg 5B(1)(c) brings back a person who conducts an occasional transaction with the agent. An occasional transaction is a cash transaction outside a business relationship of $10,000 or more (reg 10). $15,000 in cash makes the bidder a customer. The cash is also a prescribed transaction to report within 20 working days.
Why This Is the Correct Answer
The bidder's cash payment of at least $10,000 is an occasional transaction, which reg 5B(1)(c) treats as making them a customer.
Why the Other Options Are Wrong
Option A: Not as a customer, because only the vendor client can ever be a customer.
Regulation 5B(1)(c) expressly includes a person who conducts an occasional transaction with the agent.
Option C: Not as a customer, because auctions are outside the AML/CFT Act.
Real estate agency work, including auctions, is covered, and the cash deposit is a transaction with the agency.
Option D: As a customer only if the cash is $50,000 or more in a single payment.
The occasional transaction threshold is $10,000, and linked payments are added together.
Background Knowledge for Compliance
Source: https://www.legislation.govt.nz/regulation/public/2011/0222/latest/whole.html
Exam Tip for Compliance
Cash of $10,000 or more from a non-client makes them a customer and triggers a prescribed transaction report.
Common Mistakes to Avoid on Compliance Questions
- •Thinking only the client can ever be the agency's customer.
More Compliance Questions
A real estate advertisement states 'Best value in the area' without any supporting evidence. Under the Fair Trading Act, this statement is:
Under the Fair Trading Act 1986, which statement about advertising a property for sale is correct?
A client provides a bank cheque for $30,000 as a deposit and mentions recently selling cryptocurrency to fund the purchase. Under AML/CFT requirements, what is the appropriate next step?
An agent holds $180,000 in trust across four transactions. One agreement is validly cancelled because the purchaser's finance condition was not met, and both parties' lawyers confirm the $60,000 deposit is to be refunded to the purchaser. What is the correct trust account procedure?
Under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009, what is the minimum threshold for conducting customer due diligence when establishing a business relationship in real estate transactions?
- → An international client buying a $2.8 million commercial property provides a copy of their overseas passport but refuses any further identity checks or information, claiming diplomatic immunity. How should the agent proceed under AML/CFT requirements?
- → Which statement best describes the trust account requirements under the Real Estate Agents Act 2008?
- → An agency's trust account reconciliation reveals that interest earned on client deposits has been retained by the agency rather than distributed to clients. This practice is:
- → According to trust account regulations, how long must real estate agencies retain records of trust account transactions?
- → What is the primary purpose of the Consumer Guarantees Act 1993 in relation to real estate services?
- → Under the Consumer Guarantees Act 1993, if a real estate agent fails to exercise reasonable care and skill when marketing a property, what remedy might be available to the client?
- → A real estate agency's trust account shows a shortage of $5,000 during a routine audit. What is the most serious disciplinary order available under the Real Estate Agents Act 2008?
- → A real estate agent advertises a property as having a 'new roof' when they know it was repaired but not replaced. A buyer purchases based on this information and later discovers the truth. Which Acts could potentially apply to this situation?
- → Which statement best describes the primary purpose of trust accounts in real estate transactions?
- → A property advertisement states 'Guaranteed rental return of 8% per annum', although no one has contracted to pay that return. Under the Fair Trading Act 1986, this statement is:
People Also Study
Property Law & Legislation
56 questions
Agency Practice
89 questions
Sale & Purchase Process
63 questions
Professional Conduct & Ethics
46 questions
Related Study Resources
Previous Question
An agency's trust account bank offers to set off an overdue overdraft on the agency's business account against the trust account. Under reg 5 of the Real Estate Agents (Audit) Regulations 2009, what should already have been put in place?
Next Question
At an auction with a reserve, the auctioneer makes several bids on the vendor's behalf without announcing them as vendor bids, and the property passes in. Under s 14A of the Fair Trading Act 1986, what is the position?