Anti-money laundering law passes second reading

A bill designed to help prevent money laundering and the financing of terrorism has cleared another hurdle, passing its second reading in parliament yesterday after adjustments at select committee stage.

The Anti-Money Laundering and Countering Financing of Terrorism Bill will affect several industries, with the onus on organisations that money could be laundered through to be more vigilant in detecting illegal activity.

Businesses will be required to make more robust checks on customer identity and verification and have better systems in place to identify and track suspicious activity.

Justice Minister Simon Power said the bill would help deal with organised crime by helping to detect, trace and seize profits from financial and drug-related crime.

He said the ability to investigate organised crime by following the money trail through financial systems would go hand in hand with the Criminal Proceeds (Recovery) Act, passed by the government in April, which can be used to seize those profits.

“New Zealand cannot be seen as a target for organised criminals and terrorists,” he said.

“This bill will allow us to better contribute to the international fight against money laundering, tax evasion, and terrorism financing.”

He said that changes had been made to the bill in response to the concerns of some submitters during the select committee process.

These included refining the requirements for existing customers, giving industry the opportunity to delay verification of a customer’s identity and allowing foreign “politically exposed” people to be identified through back-office functions.

The bill sets out regulatory changes to enable New Zealand to comply with the Financial Action Task Force (FATF) - an inter-governmental body that sets international standards for combating money laundering and terrorist financing.

"Most of New Zealand’s financial trading partners are included in the task force, and not implementing its measures puts our reputation and our access to international financial markets at risk," Mr Power said.

“The reform needs to be widened beyond the financial sector.”

There will be two phases of coverage, he said.

The first will cover financial institutions and casinos and the second will include other industries and professions where money laundering could occur – including lawyers, accountants and real estate agents.

“The Government does not want to tie the financial sector up in red tape,” Mr Power said.

“Our approach is flexible and enlists the skills of the sector to help to manage money-laundering risks.”
 

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2 Comments & Questions

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politicians or government officials and public service officers should be included, they should not be allowed protection from any if all of their direct or indirect involvement, becomes known

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I wonder what, if any, provision there is to investigate New Zealand Companies that do business internationally and "funnel" their overseas earnings into offshore bank accounts using associates thereby circumventing the NZ banking system, avoiding showing the earnings in their financials and, doubtless, also avoiding paying tax on those earnings. To me, at least, that is another form of "money laundering" and I know of at least one NZ company that is, or at least was, into that kind of operation.

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