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In March 2026, New Zealand’s Ministry of Justice (MOJ) released a consultation on the implementation of its AML levy, which is intended to fully fund the establishment and running of its new AML regulator.
The implementation of this levy reflects a trend underway in developed financial markets, where regulators are moving from being services provided and funded by the state to effectively service providers whose operations licensees must pay for.
This raises a number of ethical and commercial considerations for the regulators themselves and the organisations they oversee.
Build it and they will come? They’re coming anyway so get them to build it!
New Zealand’s AML levy makes it the latest jurisdiction to implement a user-funded regulator, but it is not the first developed or mature financial market to do so.
In March 2026, Hong Kong announced that it would be implementing a “you use, you pay” approach to government services, with the Customs and Excise Department announcing a raise in supervisory fees for money services operators to cover the cost of services rendered, to take effect on May 15.
This trend is not limited to the Asia-Pacific region: Article 5 of the EU’s regulation on supervisory fees mandates that the European Banking Authority (EBA) calculate the fees it charges in a manner that covers its overall expenditure.
The UK’s Financial Conduct Authority (FCA) takes a similar approach to covering its operating costs, with supervisory fees covering nearly 90 percent of its yearly operating costs.
In contrast, the Monetary Authority of Singapore (MAS) has no such mandate to cover its supervisory costs in its establishing act.
What sets Singapore apart from the rest of these regulators, which all supervise large and mature financial centres with no shortage of firms lining up to set up shop?
One key difference might perhaps be their approach to attracting business. Singapore is an outlier here, in that despite already being one of the world’s premier financial centres, it remains keen to encourage even more financial firms to move to the island state. The government offers a variety of incentives to both traditional and innovative firms considering establishing a presence in Singapore.
In addition to tax breaks and grants, the MAS charges relatively modest supervisory fees, including just US$7,800 per year for major payment institutions.
It might be tempting to simply regard the Singaporean approach as a thinly veiled state subsidy on its financial industry. However, the fact that the MAS still generated a healthy profit of more than US$2.8bn in 2025 suggests that high supervisory fees are less the economic necessity that some regulators claim them to be, but rather a question of political regulatory policy.
The ethics of privatised supervision
Aside from the financial impact of high supervisory fees, imposing levies to fund regulatory bodies raises the question of whether it is appropriate to ask regulated entities to bear the cost of what should be government initiatives.
The New Zealand government takes the view that it is fine. In its proposal, it classifies AML controls as a “club good”, meaning a good or service that benefits only a limited set of individuals or entities – in this instance, AML reporting entities.
However, although having a single AML regulator does make things easier for reporting entities, it is questionable whether the benefit is equivalent to the NZ$6.7m (US$3.9m) per year that the government expects ANZ Bank to pay.
Indeed, a strong AML regime arguably meets the MoJ’s own definition of a public good, given that the country as a whole should benefit from being seen as a clean and reputable place to do business.
The New Zealand government’s position, however, seems to be that if firms are lining up to access the market, there is no harm in adding one more fee to the already long list of costs.
The transformation of regulators into entities dependent on revenue from supervisory fees and penalties creates significant risks to their independence. If the majority of their funding comes from just a handful of key supervised entities, they may be tempted to overlook what might be considered milder violations.
Indeed, there is arguably a risk that these supervised entities themselves could attempt to exert pressure on regulators to do just that. After all, if they are effectively paying for a service, it may be difficult for them not to try and dictate terms.
An opposing risk is that if the bulk of a regulator’s funding comes from penalties, they might lean towards a more onerous level of scrutiny that would deter potential new entrants and frustrate existing market participants.
What this means for firms
Given the trend for club-good levies in developed markets, firms operating in established or popular markets where high supervision fees have not yet been imposed should evaluate the possibility that regulators will adopt this approach to recovering the costs of their supervision, and how much it might cost them.
In markets such as New Zealand, where levies are already in place, the question becomes whether more such fees are likely to be imposed, and where.
In effect, the privatisation of regulatory supervision means that the cost of simply being present in a market may well match the cost of remaining compliant with its rules.
New entrants to most mature markets then are left with the choice of whether to enter a market with high fees but with a risk of regulatory capture by existing dominant players, or one with low fees but more onerous supervisory expectations and a higher risk of penalties.
