The New Zealand government has begun preliminary work to extend anti-money laundering compliance obligations on more professions and companies, including lawyers, accountants, and businesses that deal in high-value goods.
That revelation comes as the number of suspicious transactions reported to the country’s law enforcement agencies has increased threefold since 2013, when New Zealand introduced the Anti-Money Laundering and Countering Financing of Terrorism Act (AML/CFT), which marked a “major overhaul of our regime,” said Justice Minister Amy Adams in a keynote address July 13 at the Asia Pacific Group on Money Laundering in Auckland.
About 360 delegates from around the world take part in the international gathering, including 41 member countries from the Asia-Pacific region and international organizations, including the World Bank, the International Monetary Fund, and the United Nations.
“Individual institutions and firms are now much more aware of their money laundering and terrorist financing risks and have implemented AML compliance regimes to mitigate and address those risks,” Adams said. New Zealand’s financial institutions, casinos, trusts, and service providers now play a much larger role in detecting suspicious financial activity and alerting authorities, she said.
Under the changes, 1,760 financial institutions are now required to conduct due diligence on their customers and regularly report suspicious activity to authorities. “This means more comprehensive and accurate information is being collected and reported than ever before,” Adams added.
As a result, the reporting of suspicious transactions to New Zealand Police’s Financial Intelligence Unit has increased from 3,500 reports during the period 2012 to 2013 to over 12,000 reports during the period 2013 to 2014—a threefold increase. The quality of reporting also has increased from 12,000 reported transactions worth $545 million during the period 2012 to 2013 to over 86,500 reported transactions worth NZ$3.5 billion during the period 2013 to 2014.
Despite the progress being made, more work needs to be done, Adams said. As a result, the New Zealand’s Ministry of Justice “has begun preliminary policy work considering a second tranche of AML/CFT reform to extend coverage to additional designated non-financial professions and businesses, including lawyers, accountants, conveyancing practitioners, real estate agents and businesses that deal in high-value goods.”
Currently, these non-financial professions and firms are covered under the Financial Transactions Reporting Act, “but a next stage would see them subject to the more robust AML obligations under the AML/CFT Act,” Adams said. “You can expect more of an update on this work as it progresses.”
In addition to extending its AML efforts, the New Zealand government also has pending before Parliament the “Organized Crime and Anti-corruption Legislation Bill,” which would make “two important amendments to the money laundering offense under the Crimes Act,” Adams said.
First, it would remove the requirement that the proceeds from money laundering be generated from offending punishable by five years or more imprisonment. This means that any offense, regardless of penalty, is a predicate offense for money laundering.
The second change would make it easier to prosecute money launderers by clarifying that prosecution is not required to prove that a defendant had specific intent to conceal the proceeds of crime “It is enough that the criminal intended the act that resulted in concealment,” Adams said. “This removes what has been a substantial barrier to prosecution in New Zealand.”
In addition, the Bill introduces new reporting requirements under the AML/CFT Act for two high-risk classes of transactions that we know criminals use to launder money and finance terrorism. Under the new requirements, financial institutions will need to report international wire transactions of over $1,000 and all physical cash transactions of $10,000 or more to the Financial Intelligence Unit within Police.
“The amendment will improve our ability to detect and investigate money-laundering and align New Zealand with international best practice for combating money laundering,” Adams said. “It also brings us into greater alignment with our closest partners in the region, which will make it easier to law enforcement to share information.”
New Zealand already ranks as one of the least corrupt countries in the world. According to Transparency International’s 2014 Corruption Perceptions Index, New Zealand ranked second behind Denmark out of 175 countries and territories, with an overall score of 91. The index ranks countries on a scale of zero (perceived to be highly corrupt) to 100 (perceived to be very clean).
“We are proud to have a strong reputation as one of the least corrupt countries in the world,” Adams said. “However, while we consistently rank at the top of Transparency International’s Corruption Perceptions Index we cannot afford to become complacent.”