New Zealand Updates AML Customer Due Diligence Guidance for Partnerships & Sole Traders

Key Takeaways

• New Guidance Released: New Zealand’s AML/CFT supervisors issued updated customer due diligence (CDD) guidance for limited partnerships (April 2024) and for sole traders and partnerships (September 2025).
• Focus on Transparency: Limited partnerships are treated as higher risk because only general partners are publicly disclosed, requiring firms to verify beneficial owners, nominee arrangements, and control structures.
• Regulatory Requirements: Regulation 11 (for limited partnerships) and Regulation 11A (for sole traders and partnerships) formalize CDD duties, requiring verification of ownership, governance powers, and legal form.
• Enhanced CDD Triggers: Higher-risk scenarios such as nominee general partners, non-resident customers, complex or unusual transactions, or suspicious activity reports (SARs) mandate enhanced due diligence, including verification of source of funds and wealth.
• Compliance Impact: Reporting entities must document procedures, apply a risk-based approach, and ensure policies align with the updated guidance, which they are legally required to consider when designing AML/CFT programs.

Deep Dive

New Zealand’s AML/CFT supervisors have refreshed the customer due diligence playbook across common business structures, pairing an April 2024 guide for limited partnerships with a new September 2025 guide for sole traders and partnerships. Both were issued under section 132(2) of the AML/CFT Act 2009 and are meant to be read alongside the Beneficial Ownership and Enhanced CDD guidance. They are not legal advice, but reporting entities must have regard to them when building or updating their programs.

The message is simple even if the structures are not. Know who you are dealing with, verify what you have been told, and document how you reached your risk view. For limited partnerships, the supervisors underline a persistent blind spot the Limited Partnerships Register shows general partners but not limited partners. That opacity raises inherent ML/TF risk, particularly where nominee general partners sit between the firm and the real decision-maker. The guidance treats nominee arrangements as a flashing yellow light because a nominee may be taking instructions from a third party who effectively owns or controls the partnership.

From 1 June 2024, Regulation 11 of the AML/CFT (Requirements and Compliance) Regulations 2011 formalized what standard CDD must capture on a limited partnership. Firms should obtain and, according to risk, verify the legal form and proof of existence, the ownership and control structure, the powers that bind and regulate the partnership, and whether any nominee general partner exists and by name. Because limited partner details are not public and the partnership agreement is not on the register, the guidance accepts verification using documents issued by the partnership itself when independent sources are unavailable. Where nominee general partners are present, enhanced CDD is required. Enhanced measures also kick in for non-resident customers from insufficient-controls jurisdictions, complex or unusual activity with no evident purpose, higher risk ratings from the firm’s own assessment, and when a SAR is warranted.

The 2025 guide shifts the lens to sole traders and partnerships. These tend to be simpler, but they are not risk free. Standard CDD still means establishing identity details such as legal or trading name, address, and any available identifier like an NZBN, then verifying those via reliable and independent sources. Firms must also determine the nature and purpose of the relationship and whether the risk profile calls for enhanced steps. Beneficial ownership here is often straightforward the sole trader is usually the owner, and partners are typically the beneficial owners of a partnership but the guidance asks firms to watch for third parties exercising control behind the scenes.

Regulation 11A now formalizes standard CDD expectations for partnerships. Reporting entities need to obtain and, based on risk, verify the partnership’s legal form and proof of existence, its ownership and control structure, and the powers that bind and regulate it such as a partnership agreement. If no formal agreement exists, practical evidence like emails, meeting notes, business plans, joint banking or tax records can help firms verify how the partnership actually operates. As with limited partnerships, enhanced CDD applies for higher risk features such as asset-holding vehicles, exposure to weak-control jurisdictions, unusual or complex patterns of activity, and in SAR scenarios. Where enhanced CDD applies, firms must go beyond identity and verify source of funds or source of wealth as appropriate, and add further measures if risk remains.

Across both guides the supervisors repeat a few anchors. CDD is the cornerstone of an AML/CFT program. Beneficial owners must be identified and verified to a level that satisfies the firm it knows who ultimately owns or controls the customer, including through indirect layers. Politically exposed persons must be screened at the beneficial-owner level. Anyone acting on behalf of the customer must be identified, their authority confirmed, and their identity verified to the extent the Act requires. And when independent documents are not available particularly for limited partnerships firms can rely on customer-provided records, provided that approach fits the risk.

For limited partnerships, expect more probing on who can bind the entity, whether any nominee general partner exists, and how decisions are actually made. For partnerships without formal paperwork, be ready to validate operations with alternative records. In all cases, document the rationale for standard versus enhanced CDD and escalate when the pattern looks unusual or the ownership trail feels engineered rather than explained.

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