New Zealand was placed in the FATF greylist in 2009. Following the implementation of several measures to tighten its regulations governing AML, it was removed in 2013.
However, in 2015, it was stated that $8.5 billion worth of suspicious transactions were being reported in New Zealand, an amount double that of what was flagged to the authorities in June 2014. An official estimate set the estimate of the amount of money being laundered in New Zealand at $1.5 billion, however the reality is that the figure is likely to be far higher. This shows that New Zealand still has plenty of room for improvement when it comes to anti-money laundering measures.
The Department of Internal Affairs had issued its first AML/CFT public warning against a finance company in September 2015 which preceded two public warnings sent to a bank and a brokerage by the Financial Markets Authority (FMA) in October 2015 and May 2016 respectively. Transparency International criticized the soft approach by the New Zealand government following the Panama Paper leaks after traditional safe havens like Panama fell out of favor in April 2016.
The Ministers for Finance and Revenue, Simon William English and Michael Woodhouse respectively, responded by establishing a government inquiry into foreign trust disclosure rules on 19 April 2016. The inquiry included the review of AML/CFT laws which were passed in 2009. The government intends to extend AML/ CFT laws to govern real estate, accountants and lawyers in phase two of the roll-out which is expected to be completed in 2017.
In summary, money changers can expect more robust laws and enforcement actions on AML/ CFT in the near future.
- Section 40 obliges money changes to report suspicious transaction in a timely fashion:
“Despite any other enactment or any rule of law, but subject to section 42 of this Act and to section 44(4) of the Terrorism Suppression Act 2002, this section applies if— (a) a person conducts or seeks to conduct a transaction through a reporting entity; and (b) the reporting entity has reasonable grounds to suspect that the transaction or proposed transaction is or may be— (i) relevant to the investigation or prosecution of any person for a money laundering offence; or (ii) relevant to the enforcement of the Misuse of Drugs Act 1975; or (iii) relevant to the enforcement of the Terrorism Suppression Act 2002; or (iv) relevant to the enforcement of the Proceeds of Crime Act 1991 or the Criminal Proceeds (Recovery) Act 2009; or (v) relevant to the investigation or prosecution of a serious offence within the meaning of section 243(1) of the Crimes Act 1961. (2) If this section applies, the reporting entity must, as soon as practicable, but no later than 3 working days after forming its suspicion, report the transaction or proposed transaction to the Commissioner, in accordance with section 41.”Section 73 states that both criminal and civil charges can be brought against the money changer who had flouted the law.
“Criminal proceedings for an offence under this Part may be commenced against a person in relation to particular conduct whether or not proceedings for a civil penalty under this Part have been commenced against the person in relation to the same or substantially the same conduct.”
For New Zealand money changers, the onus is on them to conduct rigorous checks before they do business with their clients to avoid any criminal or civil liabilities. They must also report any suspicious transaction as soon as possible to the Commissioner of Police.