Report on Money Laundering and Financing Terrorism warns against complacency

In its updated assessment the New Zealand Police Financial Intelligence Unit (FIU) said $1.35 billion of domestic criminal proceeds is generated for laundering in New Zealand each year.

This week the FIU released the National Risk Assessment an updated assessment of the money laundering and terrorism financing risks that the country faces.
FIU Manager Andrew Hill says "Even in a comparably safe country like ours, money laundering and terrorism financing harms communities by enabling organised crime to flourish."

"Overseas criminals seeking to mask their illicit funds are also attracted by New Zealand's reputation as a safe and non-corrupt country."

This report describes the vulnerabilities of the New Zealand financial system to money laundering and terrorism financing and provides an awareness to more successfully prevent and detect illicit financial activity.

The channels that currently offer opportunities to money launderers in New Zealand are those financial, legal, accounting, real estate, and retail or dealer services that

• offer anonymity to the offenders,
• are available for moving large values and volumes of legitimate funds and which provide a screen for illicit transactions,
• are widely available internationally and also have poor AML/CFT controls internationally, and /or
• are cash intensive, which are particularly used to disguise drugs proceeds.
"The Police FIU report also highlights the high potential economic and reputational cost associated with money laundering and financing of terrorism," adds Hill.

"This report is further supports the need for complete transparency of ownership of New Zealand companies and trusts," Says Suzanne Snively, Chair of Transparency International New Zealand. "We know of trusts set up In New Zealand used as instruments of crime for corrupt people and regimes overseas. This may well include terrorists; New Zealand should not consider itself immune from being used by organisations like ISAL. Opacity of ownership under current law encourages these activities and obscures our ability to prevent them."

While the new requirement under the anti money laundering and counter terrorism act to be implemented in July will further assist the prevention of money laundering for terrorist and other criminal purposes financial transactions are not the only identifier of criminal intent. The Government needs to pass with urgency the bill that will identify beneficial ownership of trusts followed quickly with an amendment to cover all legal entities used by overseas sources and with the register fully transparent.

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