Panama Papers

Remember the Panama Papers? - What happened?

Brendon Wilson

by Brendon Wilson

TINZ Director

Writing for Employers and Manufacturers Association

BusinessPlus Magazine

Following the Panama Papers leak -a whistleblowing event of heroic proportions- to a world audience in 2016, New Zealand was named as a desired destination for foreign trusts, suspected of potentially hiding funds from tax and other agencies. In these trusts the true owner of the assets was not identified and could not be discovered, so New Zealand was rightly or wrongly seen by many as complicit in helping to protect money launderers and tax evaders.

Following widespread concern which gathered business and public support, including strong advocacy from Transparency International New Zealand (TINZ), a previously uninterested NZ government appointed world-recognised tax figure John Shewan to conduct an inquiry. The resulting in the Shewan Report found that ‘there is a reasonable likelihood that the regime is facilitating the hiding of funds or evasion of tax’. To its credit, the government codified many of his recommendations, into law which became effective in February, with a compliance deadline of 1 July 2017.

The resulting more rigorous requirements for foreign trusts has produced a significant drop in registrations. Where there were 11,675 registered foreign trusts in April last year, at the 1 July deadline only 3,000 have registered under the new disclosure laws.

Of the trusts who have not re-registered – and so are now unable to operate legally in New Zealand – some 3,000 have indicated to IRD that they will no longer be registering. The IRD has yet to hear from the remaining 5,000.

"By adding tougher disclosure requirements, New Zealand sent a strong signal that we will no longer tolerate being a conduit for corrupt money and property purchases," says Suzanne Snively, Chair of Transparency International New Zealand. "The sharp decline in registrations strongly suggests that there are a number of foreign trusts involved in activities that couldn't stand scrutiny."

By any measure, the sheer logic of these new registration numbers indicates a large number moving away to avoid the disclosure the new law requires. There is no need – or way – to enquire further into the background of these departed trusts, except to commiserate that many will probably find another anonymous home – but not here.

The new law did not establish a centralised register of beneficial ownership of companies and trusts, open and available to all reporting entities. This would promote greater transparency and public confidence, and would be consistent with the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act. It is still a worthy objective.

Preventing the use of New Zealand's reputation to legitimise ill-gotten funds is a vital part of the effort to achieve a transparent and corruption-free New Zealand – a major TINZ goal.

Has the new law improved the New Zealand financial landscape and international reputation? We think so.


Recent Activity

Protect our whistleblowers
Transparency International New Zealand (TINZ) is calls for better whistleblower protection. 8 Aug, 2017

Auditor General resignation requires transparency
Transparency International New Zealand (TINZ) calls on Parliament to release the report by Sir Maarten Wevers that lead to the resignation of Auditor-General Martin Matthews. 5 Aug, 2017

TINZ applauds decline in foreign trusts
Government implementation of tougher disclosure requirements for foreign trusts have led to around 75% discontinuing or exiting New Zealand. 9 Jul, 2017

Public Sector Integrity Media Release
State Services Commission took a very positive step in addressing a key recommendation of TINZ's Integrity Plus 2013 New Zealand National Integrity System Assessment by advertising a role for Deputy Commissioner, Integrity, Ethics and Standards. 11 May, 2017

Corruption Perceptions Index 2016 TINZ media release
Transparency International 25 Jan, 2017