Consultation for the review of New Zealand’s anti-money laundering (AML) legislation closed on 3rd of December. It was the first real opportunity in nearly ten years to provide structured feedback on this significant regime, gaining a lot of attention from stakeholders. The team at the Ministry of Justice have done an admirable job, including delivering a weighty document discussing opportunities for improvement.
AML is a somewhat arcane area for the public. Many people don’t realise that identity checks are designed to protect them from becoming unwitting mules for dirty money or victims of identity theft. This is not entirely surprising: there was very little public education surrounding the changes, possibly because our regime is hamstrung by being split across three regulators.
The purpose of money laundering is concealment. This very element makes it hard to grasp the scale of the problem and identify victims who are often the poorest and weakest in our society. Many crimes that involve laundering don’t get prosecuted as such: it is a secondary aspect that isn’t often highlighted except when assets are very publicly seized.
Perhaps the most common example of this is tax evasion: cash from businesses gets stored up and used to buy assets. I’ve seen everything from jewellery to apartments on the Gold Coast.That’s someone deciding to steal from every New Zealander because in their mind the rules don’t apply to them.
Another example is the $80 million fraud through Penrich Global Macro Fund: money had to be laundered. And that’s just on shore – the overseas activities using NZ as a laundering pathway are even more eye watering and repugnant.
There are those who do not believe laundering is an issue for New Zealand, or that the problem is overplayed. We expect most of the submissions will be from those interested in maintaining the status quo of secrecy, arguing that AML rules are invasive and burdensome. This reflects the power imbalance in this sector: a very lucrative and well-funded industry.
Interest groups have become very adept at manipulating messaging using lobbying and professional communication methods (aka spin doctors.) Often the only thing that can stand up to these efforts are government and civil society, and with that comes its own set of challenges.
That’s why TINZ sees this as such an important consultation – there are very few organisations that can try to speak for the victims of money laundering and encourage the necessary institutional response on their behalf.
Our submission supports TI’s global focus on promoting transparency, with some local flavour. In practical terms, the push for visibility of the control of assets through a register of beneficial control and specifically to support anti-corruption processes by removing the exemption that currently exists for New Zealand politically exposed persons. We would like to see a more unified and strategic approach to regulation, and (a way of increasing transparency of Trusts through a beneficial ownership mechanism.