A Hamilton-based law firm has been fined $60,000 after pleading guilty to multiple breaches of New Zealand’s Anti-Money Laundering and Countering Financing of Terrorism Act (AML/CFT), following a Department of Internal Affairs (DIA) investigation that exposed what regulators described as prolonged and systemic non-compliance.
Foster & Milroy admitted to criminal failures including not undertaking a compliant risk assessment, failing to establish or maintain an AML/CFT programme, inadequate record-keeping, and—most seriously—wilfully obstructing an AML/CFT supervisor.
The District Court took into account the firm’s size and financial capacity in setting the penalty, but the underlying conduct drew a blunt assessment from regulators.
“The offending in this case was serious as it was prolonged, intentional and systemic. As a law firm, Foster & Milroy’s partnership also had professional obligations to uphold the law, which they failed to do,” said Serge Sablyak, Director of AML/CFT at the DIA.
Three Years of Non-Compliance
According to the DIA, the breaches occurred over a three-year period between March 2022 and March 2025, during which the firm repeatedly failed to meet its statutory obligations.
Compounding the issue was the firm’s conduct during the investigation itself.
“Foster & Milroy also wilfully obstructed the Department’s investigators from exercising their statutory powers by refusing to respond to our notices and only responding to parts of others,” Sablyak said.
The case highlights an increasingly assertive enforcement stance from regulators, particularly where non-compliance appears deliberate rather than negligent.
A Small Firm with Broad Practice Exposure
Foster & Milroy has operated as a Waikato-based legal practice offering a range of services typical of regional firms, including property transactions, commercial matters, trusts, estates, and general legal advisory work. These areas—particularly property and trust structures—are widely recognised as higher-risk channels for potential money laundering activity.
Like many small-to-mid-sized firms, Foster & Milroy would have been captured by the extension of AML/CFT obligations to legal practitioners in 2018, requiring implementation of robust compliance systems, client due diligence processes, and ongoing monitoring.
Law Firms Still in the AML Crosshairs
The DIA emphasised that lawyers remain a key frontline defence against financial crime—but also a prime target for exploitation.
“Criminals with money laundering in mind target businesses they believe have weak systems they can exploit,” Sablyak said.
“Law firms are particularly vulnerable because they are trusted, and criminals leverage that trust by using their broad range of services to conceal the proceeds of their offending.”
Failures in AML/CFT compliance, he added, can have “far-reaching consequences”—not only for firms themselves but for the integrity of the wider financial system.
Enforcement Message: Engage or Pay the Price
The prosecution indicates the risks of non-compliance, particularly when coupled with obstruction.
“Where there is a pattern of non-compliance or deliberate attempts to obstruct or mislead, we take decisive action, whether through civil enforcement or criminal prosecution,” Sablyak said.
For law firms still treating AML compliance as a box-ticking exercise, the message is increasingly hard to ignore.
More information on the DIA’s AML/CFT role is available at www.dia.govt.nz/AML-CFT-Homepage.
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