Aotearoa Credit Union has been issued a formal warning by the Reserve Bank because the regulator believes the lender failed to meet its obligations under anti-money laundering and the funding of terrorism rules.

In a statement, the central bank said it had reasonable grounds to believe the credit union failed to conduct ongoing customer due diligence and account monitoring, the requirement to report suspicious transactions within three working days and the requirement to have adequate and effective procedures in order to monitor and ensure compliance with the law.

The Reserve Bank's concerns date from the end of June 2013 to the beginning of February 2015.

The credit union agreed to an undertaking to remedy the issues. If it fails to do so, the Reserve Bank said it will go to court to force it to comply.

Aotearoa Credit has nine branches, mainly in the north of the North Island. Its accounts show it generated turnover of $6.5 million in the year ended Sept. 30, 2015, the most recent period for which accounts are publicly available.

It reported a profit of $294,472, compared to a previous year loss of $386,890.

Chief executive Anthony Wilson said the union would not be making any statement in response, but added that the union was working with the Reserve Bank to tackle the issues raised.

Earlier this year, the investment watchdog the Financial Markets Authority issued a formal warning to Craigs Investment Partners for breaching anti-money laundering rules.