Hon Phil Goff Minister of Justice

16 February 2005

Goff tightens money laundering, terrorist financing laws

New laws will be introduced to counter money laundering and terrorist financing, Justice Minister Phil Goff announced today.

"The globalisation of crime and the need to shut down potential avenues for terrorist financing necessitate a further tightening of the law," Mr Goff said.

"There is currently no specific evidence that New Zealand is being exploited by international crime or terrorist groups to launder money or finance terrorism. However the OECD’s Financial Action Task Force has advised that changes are needed in our laws for New Zealand to be fully compliant with international standards.

"New Zealand’s largely deregulated financial system results in potential loopholes in our system that require closing in order to meet strict international requirements.

"While greater regulation does impose administrative costs, not to take action to comply with international standards would risk damage to New Zealand’s financial and political reputation.

"Cabinet has therefore agreed to the following changes being implemented by legislation:

A comprehensive monitoring framework will be put in place to ensure all financial institutions meet standards for countering money laundering and terrorist financing.

Persons providing money transfer or currency change services will be subject to a registration regime.

Statutory requirements for financial institutions to comply with customer due diligence, and to implement internal anti-money laundering systems and procedures. Detailed obligations will be set out in an enforceable code of practice.

Financial institutions will be required to obtain, verify and retain information concerning the identity of the originator of wire transfers through an amendment to the Financial Transactions Reporting Act (1996).

Officials will also consider the practicability of directors and senior managers of financial institutions in the insurance and securities sectors being evaluated to ensure that they meet the 'fit and proper persons' criteria, which would bring them into line with the banking sector.

"An interagency working group, chaired by Justice, will be consulting with the financial sector on the operation and funding of the anti-money laundering compliance monitoring framework and registration regime. This will report back to the government on progress by April 30.

"The Terrorism Suppression Amendment Bill, which was given a first reading last week, also tightens prohibitions on the provision of funds to non-designated terrorist entities.

"Implementation of all of these changes will further secure New Zealand from the risk of being exploited by criminals or terrorist groups, and ensure that New Zealand meets the standards set by the international community," Mr Goff said.

ENDS

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