Foster & Milroy, a law firm based in Hamilton, New Zealand, has admitted to multiple breaches of the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act. The firm was fined $60,000 following a court ruling that described the violations as “prolonged, intentional, and systemic.” These offences occurred between March 2022 and March 2025, spanning three years of non-compliance.
The Department of Internal Affairs (DIA), New Zealand’s AML/CFT supervisor, led the investigation and prosecution. Specific admissions included failures to conduct compliant risk assessments, establish or maintain an AML/CFT programme, keep proper records, and wilfully obstructing investigators. This marks a significant enforcement action against legal professionals, who are often targeted by criminals for their trusted status.
Detailed Breaches
The firm’s breaches were multifaceted and deliberate. First, Foster & Milroy did not undertake a compliant risk assessment, a foundational requirement under the AML/CFT Act to identify vulnerabilities in client activities like property transactions or trusts. Second, it failed to establish, implement, or maintain an AML/CFT compliance programme, leaving no structured processes for customer due diligence or transaction monitoring.
Third, proper records were not maintained, hindering audits and suspicious activity reporting. Most gravely, the firm wilfully obstructed DIA investigators by refusing to respond to notices or providing only partial information. DIA AMT/CFT Director Serge Sablyak stated: “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.” This obstruction escalated the matter to criminal prosecution.
These failures created exploitable gaps, as law firms handle high-risk services that criminals use to layer illicit funds. The court emphasized the intentional nature, distinguishing it from minor errors.
Regulatory Statements and Context
Serge Sablyak highlighted the severity: “Between March 2022 and March 2025, Foster & Milroy repeatedly failed to meet their legal obligations under the Act.” He added that businesses like law firms are the “first line of defence against money laundering,” and criminals target those with “weak systems.” The DIA vows “decisive action” for patterns of non-compliance, including civil or criminal measures.
This case underscores vulnerabilities in New Zealand’s professional services sector. Law firms are “particularly vulnerable because they are trusted,” per Sablyak, with services enabling concealment of crime proceeds. The enforcement aligns with global trends, as seen in UK Solicitors Regulation Authority fines totaling over £575,000 for similar AML lapses in recent years.
New Zealand’s AML/CFT framework, updated post-Financial Action Task Force critiques, mandates rigorous controls for reporting entities like lawyers. Foster & Milroy’s case serves as a “stern reminder” of obligations to prevent financial crimes.
Broader Implications for AML Compliance
The $60,000 fine reflects the firm’s size and the offences’ gravity, aiming for deterrence without disproportionality. It signals heightened scrutiny on small-to-medium law firms, which may underinvest in compliance due to costs. Non-compliance risks reputational damage, client loss, and escalated penalties.
Legal professionals must prioritize firm-wide risk assessments, ongoing training, and cooperation with regulators. Globally, similar cases—like UK firms fined up to £300,000 for lacking risk assessments—show regulators’ focus on systemic failures. In New Zealand, this prosecution reinforces that obstruction invites criminal charges.
Experts note law firms’ role as gatekeepers; failures erode financial system integrity. The DIA’s persistence over three years demonstrates commitment to transparency. Firms now face pressure to audit programmes amid evolving threats like crypto-related laundering.
Industry Response and Future Outlook
No direct statement from Foster & Milroy partners was available, but the admission avoided trial, potentially mitigating harsher outcomes. The New Zealand Law Society provides AML resources, urging members to follow best practices. This incident may prompt sector-wide reviews.
Regulators worldwide, including New Zealand’s DIA, are intensifying efforts against professional enablers. With global money laundering estimated at 2-5% of GDP, such cases bolster national strategies. Future enforcement may target high-risk jurisdictions or PEPs more aggressively.
For Hamilton’s legal community, this underscores compliance as non-negotiable. Businesses must view AML as core to operations, not bureaucracy. The DIA’s message is clear: “Criminals with money laundering in mind target businesses they believe have weak systems they can exploit.”