NEW ZEALAND Law and Practice Contributed by: James Cochrane, Andrew Comer, Carlo Wan and Graeme Crombie, Lane Neave
resident clients and at least NZD10,000 of transac- tions. An offshore FSP serving solely wholesale clients in New Zealand cannot register. Providers serving retail clients must join an approved dispute resolu- tion scheme, and registered but unlicensed providers must include a prescribed disclaimer statement on their website. The FMA has taken a strict approach, issuing public warning notices against virtual currency providers soliciting NZ business without registration. AML/CFT Act – territorial scope The AML/CFT supervisors’ joint guidance states that relevant financial activities must be “carried on in New Zealand in the ordinary course of business”, implying a place of business in New Zealand. An overseas enti- ty may also be caught where it is “actively and directly advertising or soliciting business from persons in New Zealand” (as confirmed by the DIA’s VASP Guidance). An overseas person not carrying on business in New Zealand is unlikely to be a reporting entity. Exemptions From Cross-Border Restrictions FSP Act – overseas provider exemption (no promotion) Providers without a place of business in New Zealand that do not promote their services to NZ clients are exempt from FSP Act registration – unless required to be licensed under the FMC Act or reporting entities under the AML/CFT Act. FMC Act – wholesale investor exclusions Offers to wholesale investors (Schedule 1 of the FMC Act) are excluded from PDS preparation, Disclose registration and governance requirements. However, the fair dealing provisions (Part 2) continue to apply, regardless of investor classification. FMC Act – overseas issuer exemptions The FMA has issued exemption notices for inciden- tal and ancillary offers by overseas issuers listed on specified high-quality overseas exchanges, allowing reliance on home jurisdiction requirements subject to conditions. AML/CFT – territorial scope limitation As noted under “AML/CFT Act – territorial scope” above, an overseas person not carrying on business in New Zealand is unlikely to be a reporting entity –
effectively a de facto exemption for passive offshore providers. Reverse Solicitation New Zealand does not have a statutory reverse solici- tation exemption comparable to those in some other jurisdictions (eg, Article 42 of MiFID II or the FCA’s overseas persons exclusion). However, overseas pro- viders may fall outside FSP registration where they have no NZ place of business and do not promote services to NZ clients. In practice, genuinely unsolicited inbound approaches may sit outside some regimes, depending on whether the provider is carrying on business in, or targeting, New Zealand. However, FMC Act fair-dealing obligations still apply, and application remains fact-specific with increasing regulatory scrutiny of offshore providers. Marketing of Digital Assets and Crypto-Asset Services New Zealand has no bespoke regime governing the marketing of digital assets; instead, general financial markets and consumer protection laws apply. The primary constraint is the FMC Act fair-dealing regime, which prohibits misleading or deceptive con- duct and applies broadly to all persons and all forms of advertising (including digital media). Breaches can result in civil or criminal liability, and the FMA may issue stop or direction orders. The FTA provides par- allel protections against misleading conduct in trade, which can be applied to crypto-assets. There is no crypto-specific advertising code under the ASA, and regulatory guidance emphasises a broad concept of “advertisement”. In practice, regulators (particularly the FMA) have taken enforcement action – including against offshore promoters – using these general powers (eg, Validus FZCO v Financial Markets Authority [2023] NZHC 1701).
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