What is the Reserve Bank of New Zealand (RBNZ)?
The RBNZ works to maintain the stability of New Zealand’s monetary and financial system and provides regulatory oversight for banks and other financial institutions.
The Reserve Bank of New Zealand (RBNZ) is New Zealand’s central bank, and the primary regulator of the country’s financial system and institutions. Established in 1934, the RBNZ’s specific role and function have evolved over the years but its modern powers were set out in the Reserve Bank of New Zealand Act 1989, which tasked the RBNZ with keeping the financial system stable. Today, that mandate includes the supervision of New Zealand’s banks and financial institutions, as well as a leading role in preventing money laundering and financing of terrorism.
The RBNZ is wholly owned by the government of New Zealand. As an independent governmental body, it answers directly to New Zealand’s parliament. The bank is currently led by Governor Adrian Orr and is headquartered in the capital city of Wellington.
The RBNZ performs a similar role to other central banks around the world in that it works to maintain the New Zealand financial system and protect its participants and the public from criminal activities. To this end, the RBNZ’s general role and responsibilities include:
- Operating monetary policy
- Managing foreign reserves
- Issuing currency
- Operating in financial markets
- Monitoring and supervising banks and financial institutions
As part of its supervisory role, the RBNZ is responsible for registering and licensing banks and financial institutions within New Zealand in order to verify that they meet regulatory standards and can operate in a prudent manner.
The RBNZ has oversight on banks, insurers and credit unions. The bank plays a significant part in the development of New Zealand AML regulations. Operating under the authority of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (along with the Financial Markets Authority (FMA) and the Departmet of Internal Affairs) the RBNZ’s AML/CFT powers and responsibilities include:
Policy-making: The RBNZ helps to develop the New Zealand AML/CFT regulatory policy in line with legislation introduced by the government and with its mandate to ensure the stability of the financial system. The RBNZ’s approach to policy-making includes:
- Consultation with banks and financial institutions
- Analysis of the impact of regulation on financial markets
- Delivery of implementation timelines
- Consideration of RBNZ principles and philosophy
Supervision: The RBNZ monitors financial institutions to ensure they are satisfying their AML/CFT obligations and reporting requirements. In order to comply with RBNZ requirements, financial institutions in New Zealand must:
- Take a risk-based approach to the money laundering and terrorism financing threats they face.
- Implement an AML/CFT program that reflects their risk profile and includes appropriate due diligence measures, account monitoring, and suspicious transaction reporting mechanisms.
- Appoint an AML/CFT compliance officer to oversee their internal AML/CFT program.
- Conduct internal AML/CFT audits and reviews to ensure updated compliance.
Enforcement: In order to address non-compliance with AML/CFT regulation, the RBNZ has the power to carry out enforcement actions, potentially in collaboration with New Zealand authorities. The RBNZ will seek to impose appropriate sanctions on institutions, which can include the revocation of operating licenses or financial penalties.
Relationship Management: The RBNZ has the mandate to create better “regulator/regulated” relationships in order to promote the mutual fight against money laundering and the financing of terrorism. It focuses its relationship management efforts on its behavior towards financial institutions and the way it communicates with them.