NZBA warns AML levy split unfair as banks face rising costs
A government proposal to make banks pay the vast bulk of New Zealand’s new anti‑money laundering (AML) levies is being fiercely resisted by the industry.
The Ministry of Justice has consulted on a levy framework to help fund oversight of the AML/CFT regime, with annual levies of about $27 million to be collected from reporting entities. Banks would shoulder around $23 million, or 85% of the total, based largely on their asset size and role in processing most financial transactions.
Indicative figures suggest ANZ could face an annual levy of about $6.8 million, with ASB, BNZ, and Westpac each paying more than $4 million, while Kiwibank’s share would be closer to $1.3 million and smaller banks considerably less.
In a consultation paper, the ministry said the impact on bank profitability would be modest, estimating the levies would amount to just over 0.2% of banks’ cumulative pre‑tax profits. It also noted that a similar levy in Australia was introduced without noticeable impact on consumers. Officials also emphasise that the design is a hybrid funding model rather than full cost-recovery, with part of AML/CFT oversight funded by levies and part by the Crown.
In its submission, the New Zealand Banking Association (NZBA) argues “we are not confident that the current allocation is equitable or proportionate.” That pushback comes as lenders already face rising regulatory and funding costs, which can ultimately influence margins and home loan rates, interest.co.nz reported.
Banks question fairness of 85% share
In its submission, NZBA stresses that members have invested heavily in AML systems, staffing and reporting, and says the proposal “does not reflect the significant level of investment banks already make in AML/CFT compliance, and fails to equitably account for the risks posed by other reporting entities.”
The association notes that the Police Financial Intelligence Unit’s 2024 National Risk Assessment also highlights real estate agents, high‑value dealers, casinos, law firms, and accountants as sectors “abused for high-risk crimes.”
NZBA argues supervision costs are not always tied to inherent risk, pointing out that newer players such as virtual asset service providers and neo‑banks can require more guidance and inspections than established institutions.
It also disputes the ministry’s characterisation of AML supervision as a “club good”, arguing that the real beneficiaries of an effective regime are the wider public because crime is deterred and prosecuted. On that basis, NZBA wants a greater share of the levy revenue directed to strengthening the Police Financial Intelligence Unit rather than simply covering supervisory overheads.
It also opposes exempting non‑bank deposit takers purely because they have less than $1.5 billion in assets, saying no reporting entity should receive a “free pass” from the levy regime.
MoJ says banks are the highest‑risk hub
The Ministry of Justice defends its approach by stressing that banks sit at the centre of most money flows. It cites National Risk Assessment findings that more than $58 trillion in transactions pass through the banking system and that “well over 90% of monetary transactions include the banking system.” Even when high‑risk activities involve other professionals, banks are almost always part of the payment chain.
Levy revenue would fund AML/CFT “club goods” – shared services such as supervision by the Department of Internal Affairs (which becomes sole supervisor from July), the Financial Intelligence Unit, and the Ministry of Justice itself. Regulations are expected to be in place in the second half of 2026, with levies collected from 1 July 2027.
Stay informed with the latest housing market trends and mortgage insights — subscribe to our free daily newsletter.
