Updates to anti-money laundering laws will make it easier to open bank accounts for children.
The change responds to banks’ concerns that anti-money laundering regulations require extensive identity and address verification before accounts can be opened, which can be challenging for teenagers from less wealthy families whose parents may lack the necessary skills, time, and financial means.
Currently, parents are obliged to present amounts of information about both themselves and their children before a bank account can be opened. This involves submitting photo identification, birth certificates, proof of address, and documentation demonstrating their financial connection to their child when opening accounts.
According to Associate Justice Minister Nicole McKee, the new reforms will allow banks to “skip the intrusive and unnecessary questions about the ‘nature and purpose’ of the account and reduce or forgo ongoing monitoring of a child’s banking activity until the account’s settings are changed.”
“This is a common-sense reform,” McKee said.
“Parents shouldn’t be asked to jump through bureaucratic hoops just to open a bank account for their kids.”
“We’re streamlining the system so that New Zealanders can spend less time on paperwork and more time teaching their children the value of money,” she added.
The government has also instructed the future Anti-Money Laundering and Countering Financing of Terrorism supervisor to provide clear guidance, ensuring that businesses such as banks understand precisely how to conduct the simplified checks without risking penalties.
For Deputy Prime Minister David Seymour, the changes to anti-money laundering regulations will “remove a lot of the insanity so that ordinary people, including parents who want their children to bank, can actually have a bit of relief.”
He also noted that families were being deterred from opening accounts for young people due to the overly complicated paperwork, describing it as “the most un-Kiwi thing” that needed to be addressed.
Meanwhile, education software entrepreneur Jeff King, who is also a long-time advocate for improved banking access for children, particularly teenagers, welcomed the recent changes. However, he believes that the change still leaves New Zealand banks behind their international counterparts.
“It’s a step in the right direction but does not change the need for people to go into branches to do in-person setting up of accounts,” King stated.
“Reserve Bank research has found 50% of branches have closed in the past few years, while families still need to in some cases, take time off work to be able to go in person into the bank with their children.”
King believed that the crucial factor was allowing accounts to be opened using “verified” digital credentials.
“All the fastest-growing banks overseas are online, and they use digital onboarding – and that’s what we need to be moving towards.”