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TINZ Staff Member responsible for Social Networking and Research
Phase 1 of the AML/CFT laws came into effect in 2013, covering businesses such as banks, casinos, certain trust and company service providers and certain financial advisers, among others. TINZ strongly supports the fast tracking of the AML provisions that prevent the negative impact of money laundering in this country.
A recommendation of the Shewan Inquiry into Foreign Trusts was to fast track the Phase 2 AMl/CFT legislation to tighten up the foreign trust structures to prevent the investment of funds from illegal or illicit sources in New Zealand.
Ideally, the Phase 2 legislation would have been passed into law prior to Christmas 2016. Instead, it was decided to have a further phase of consultation about the current version of the legislation. It is important that this additional consultation resolves questions that have arisen about its regulatory impact on lawyers, accountants, real estate agents and other high-value dealers. It is important to gain support from these sectors to get the new systems and processes in place as soon as possible.
This latest consultation process, while slowing the timeline somewhat, has also enabled more thought to go into the practical measures to protect businesses and to work with them to further develop provisions to make it harder for criminals to profit from and fund illegal activity.
The reforms are estimated to have cost the industry up to $1.6 billion over the past ten years and it is the level of compliance costs that are seen by some accountants, lawyers, real estate agents and high value goods traders as weaknesses of the legislation.
TINZ's analysis finds that these costs are more than offset by the benefits. What individual businesses fail to take into account is that the tidal wave of money moving towards New Zealand to be laundered grows daily as other countries become aware of the impact and tighten up their laws and existing procedures. The amount of money looking for a place to be laundered exceeds New Zealand’s total GDP. Were substantial amounts to get into the financial system here, it would have a great impact on property, housing, art, luxury cars and motorcycle prices, adding to the already unaffordable cost of these for many New Zealanders.
New Zealand’s reputation as a leader in preventing corruption and strengthening international integrity systems is also important. This reputation is an asset and leads to activities which are an investment in the future of this country.
The amount of damage caused by corruption and money-laundering worldwide shows that it is vital to remain vigilant and at the forefront of fighting corruption by using preventative, instead of reactionary, legislation.
TINZ's submission asks the government to keep the pedal on so that the Bill can be passed into legislation by mid-2017. It supports the provisions for combatting crime and ensuring New Zealand meets its international obligations.
TINZ supports the process to progress the AML Phase 2 Bill and endorses the government’s commitment to a realistic timeline. The new legislation will be even more effective if it considers TINZ’s three recommendations