New Zealand's financial institutions face a significant regulatory update coming into effect on 1 June 2025. While the change may seem straightforward, its implementation requires careful consideration and a strategic approach to compliance.

What's Changing?

The new regulation states:

"A reporting entity must risk-rate a new customer when conducting customer due diligence. The reporting entity must keep a record of the customer's risk rating and review the customer's risk rating."

While many reporting entities already incorporate risk rating into their compliance processes, this regulation formalises the requirement across the board. All reporting entities are now required to document their risk rating methodology, implement consistent processes, and demonstrate compliance.

Read the full blog on their website for Practical Implementation Strategies.