Jeweller of 30 years 'shocked' after bank accounts frozen over money laundering concerns

Friday, 10 July 2026

Penelope Barnhill is a successful Auckland jeweller of more than 30 years with art pieces held in permanent collections in two museums.

Late last year, her bank advised her of money laundering concerns and said she was “high risk” due to her industry, and then later froze her accounts before the deadline it gave her to provide information.

A number of communication failures followed, which Kiwibank has since apologised for.

While on holiday late last year, Auckland jeweller Penelope Barnhill received an email from her bank raising money laundering concerns and identifying her as “high risk”. Her accounts were later frozen after multiple communication failures Kiwibank has since apologised for. Jake Kenny reports.

The email from an anti-money laundering address came as a surprise. “We require further identification from you, as our records show you currently operate accounts associated with a jeweller, which Kiwibank consider a high risk industry.”

Penelope Barnhill had been a jeweller for more than 30 years and a Kiwibank customer for a decade when she received the email in September of last year. She says she had never received communication like this before. Her business never dealt in cash.

Assuming it was spam, Barnhill did not click on any attachments and ignored the request for ID. She went about enjoying her holiday in Asia - which she notified Kiwibank she was embarking on through her online business account before she left.

She was back in New Zealand two months later when she got an urgent follow-up email. If the documentation was not provided, her accounts would be frozen and after a month, closed, it said.

Barnhill was shocked. She expressed her confusion to the sender - who replied that Kiwibank needed proof of ID, and answers to a number of security questions.

“This feels absolutely wrong to be asked invasive questions,” Barnhill said in a reply two days later on November 20, which Stuff has seen.

She said she was a sole trader, had been making artworks for three decades, and had pieces held in permanent collections at Auckland and Dowse Art museums. She sent a link to her website, and said she did not buy jewellery and hand made everything.

Barnhill attached a photograph of her passport in the same email. She did not get a reply, and was worried that she had just handed over sensitive information to a scammer.

She called Kiwibank at 11pm that night and was told the email was legitimate. Barnhill then provided the rest of the required information - answers to more questions and further proof of her identity.

Unbeknown to her, Barnhill’s accounts had already been frozen - four days before the deadline Kiwibank had given to her. The bank did not advise her of this, and she only realised when some of her automatic payments started to fail.

When she checked her online banking she could see that funds were there, but the available balance had been reduced to $0.

Panic set in. “I was just so shocked,” she says. “It stopped me working.”

Again, Barnhill called Kiwibank. She says she was “mortified” to be told the person handling her case was not working that day, a Friday, and nothing could be done until Monday. She said this was unacceptable and that she needed to speak to a senior manager immediately.

“I didn’t understand what was going on. I needed my accounts unfrozen to work,” she says.

Barnhill was told she would have a response by the end of the day.

Desperate, she went to the Kiwibank branch at St Lukes that afternoon to get some answers.

She was told no managers worked on Fridays.

“I was shaking. I told the clerk I had pins and needles running up and down my arm. I felt like I was going to have a heart attack.”

Barnhill says she provided her passport and a utility bill, but that the employees had more questions than answers. Despite her stress, the staff were unable to resolve the problem. They gave her a direct dial for the bank’s anti-money laundering team (who did not answer) and a complaint line if she wished to follow up.

That afternoon, Barnhill got an email to say the freeze over her accounts had been lifted for five days, but that more information was required or the accounts would be frozen again.

She was again asked to provide her passport, proof of address and proof of income, and was questioned about the purpose of her accounts, how they were funded, expected income streams, what transactions she made, and if she made cash and international transactions.

Barnhill also had to provide a 12 month financial statement for her business and was asked for her expected annual turnover, what materials were used to make her jewellery, where the products were sourced, the value of her pieces, how transactions were conducted, and to which countries.

By 4pm the following Monday, December 1, Barnhill had still not received a response.

She called Kiwibank. She says she was told no senior managers were available, and again, the person responsible for her case was not at work. After the call, she got an email confirming the bank had received the required information and her accounts were no longer restricted.

“I was just so confused and overwhelmed. November and December are critical to my business’ survival. I make between 65 to 80% of my entire yearly income [during this time]. On this date I had 11 commissions confirmed,” Barnhill says.

“This ordeal stopped me working. It crippled me.”

In the months following the debacle, Barnhill says she was often signed out of her online banking account multiple times a week - something that never happened previously.

A merchant who pays Barnhill regularly told her that unusual windows popped up when attempting to make a payment to her that asked “do you know this person” and if they were sure they wanted to proceed.

Barnhill has since left Kiwibank.

She knows many other jewellers and similar operators in the industry. She says she does not know of anyone having the same experience with a bank, or being advised they were “high risk” because of their profession.

Her accountant is the anti-money laundering manager for her business, and said she too had never heard of this issue happening to others.

Barnhill complained to the bank, who apologised to her for the customer service she experienced and initially offered her $100 - which she described as insulting. The bank followed up with a $250 offer, and then $1000, after Barnhill continued to express dissatisfaction.

She says she intends to tell the bank to keep the money.

“I just don’t want this happening to anyone else,” she says. “It has all been so inconclusive. I’ve done nothing wrong. They owe me a hell of a lot more than that, and even then I don’t know if I would accept it. I just felt so tainted and so dirty because of all of this. I had to go to the hospital for high blood pressure and stress related anxiety.

“I was treated as guilty from the start.”

In a statement to Stuff, a spokesperson for Kiwibank said: “We are sorry for the distress Ms Barnhill experienced.”

The bank was carrying out obligations required under anti-money laundering laws, they said, “but it's clear there are parts of this experience we should have handled differently.

“The communication and support Ms Barnhill received was not the standard we expect of ourselves, and not the experience customers should have when dealing with us. We understand why she was frustrated and upset, and we apologise for that.”

Asked why Barnhill was identified as high risk in the first place, the spokesperson said customers may be reviewed based on a range of factors including their business and account activity.

“These reviews are a standard part of meeting our legal obligations and are not, in themselves, an indication that a customer has done anything wrong.”

The spokesperson said compensation was offered in recognition of the inconvenience and distress caused.

Asked about the St Lukes visit, the spokesperson said there were things the bank could have done better to support Barnhill and address her concerns.

“We are sorry for the distress this caused Ms Barnhill. We understand why she feels the way she does. The experience she describes is not the one we want customers to have. While we were carrying out obligations required by law, there are aspects of this situation we should have handled differently, and we apologise for that.”

In its preliminary findings issued this week, obtained by Stuff, the Banking Ombudsman Scheme found Kiwibank froze Barnhill’s accounts four days before the deadline it provided to her, and without notifying her, despite the fact she had already supplied some information.

Barnhill made several attempts to contact Kiwibank to get clarity and the bank did not respond, the findings said.

“It then incorrectly froze her accounts, which remained frozen for four days. She made further attempts to address the situation. Again, the bank failed to respond adequately to her concerns.”

However, it found the $1000 offer Kiwibank made to Barnhill was reasonable.

The bank was entitled and required to carry out its customer due diligence obligations, it said, so the findings were limited to considering the impact of the incorrect freezing and the bank’s “lack of timely and effective communication”.

The inconvenience was not prolonged, the bank’s wrongdoing would not have a permanent effect, there was no unnecessary financial hardship, and no material impact on Barnhill’s relationships with third parties, the findings said.

“[Kiwibank] has apologised for the distress it caused and offered $1,000 in recognition of the inconvenience and emotional impact Ms Barnhill experienced.”

The preliminary decision said it would not consider the complaint further, but requested the parties to respond before July 15 before this would be finalised.

Barnhill says the ordeal put her in the hospital, and her doctor prescribed her anxiety medication.

“I also felt my reputation was damaged.

“I still don’t understand why they had a right to do it. I opened the account with full disclosure that I was an artist and jeweller. The bank’s wrongdoing has had a very serious effect on me.

“It is highly offensive to be a customer for 10 years and be treated this way. They simply could have requested I go into a Kiwibank and provide my ID.”

To this, a spokesperson for the ombudsman scheme said:

“We acknowledge that Ms Barnhill found her dealings with the bank deeply distressing.”