Government to adopt Shewan's foreign trust recommendations
The government will adopt all of the recommendations from former PwC chairman John Shewan to increase disclosure and introduce a register for foreign trusts with new legislation to be introduced next month.
Finance Minister Bill English and Revenue Minister Michael Woodhouse today said the government will act on all of Mr Shewan's recommendations to bolster registration, disclosure, anti-money laundering rules and information sharing. Mr Shewan's review of New Zealand's foreign trust rules found disclosure was inadequate and probably let illegal activity go undetected.
"The changes to the foreign trust rules are a matter that the government intends to move quickly on," Mr English said.
The government appointed Mr Shewan for the inquiry after some 11.5 million documents were leaked from Panamanian law firm Mossack Fonseca related to foreign trusts including many that referred to New Zealand. Such trusts were used by criminals and terrorists to channel illegal funds and avoid tax, according to an international group of investigative journalists who have had access to the papers.
A new tax bill will be introduced to Parliament next month requiring foreign trusts file annual returns to Inland Revenue, and setting up a register searchable by the Department of Internal Affairs, Inland Revenue and NZ Police.
Shewan's recommendations to strengthen anti-money laundering rules will be included in the second phase of reform, which is expected to see legislation introduced later this year and passed in the first half of 2017. Issues of legal privilege and regime supervision could only be dealt with through primary legislation rather than regulation, the government said in its response to the report.
A recommendation to review information sharing between the IRD, the police's financial intelligence unit and DIA will be done after the initial changes to disclosure rules are bedded in, and may coincide with either the anti-money laundering reform or a separate review of New Zealand's tax secrecy provisions.