Transparency International (TI) and Transparency International New Zealand (TINZ) continue to call for improved transparency in the ownership of trusts.
While leaks such as the Panama Papers and Paradise Papers provide a sliver of insight, the opacity around trusts in New Zealand and the inherent need to disguise money laundering makes it impossible to determine the magnitude of activity.
It is estimated that New Zealand has 441,700 domestic trusts, some of which are suspected of being involved in shady dealings. We can’t look closely at them because there is no available register.
In advance of the February Financial Action Task Force (FATF) Plenary and Working Group meetings, Transparency International highlighted the crucial importance of a meaningful reform in the beneficial ownership transparency of trusts and similar legal arrangements.
“The draft amendments that were released for public consultation last year are an important step in the right direction but, as proposed, the text leaves several loopholes that the corrupt and other criminals will continue to abuse.”
In the letter to the FATF members Maira Martini, TI’s research and policy expert on beneficial ownership notes that:
“The secrecy of trusts and similar legal arrangements has allowed these instruments to be exploited for hiding asset ownership from the authorities and public watchdogs. What’s more, recent efforts to track the assets of sanctioned Russian elites have shown that trusts are a vehicle of choice for sanctions evasion.”
The letter cites recent examples where journalists and leaked files uncovered assets of sanctioned Russian oligarchs hidden in offshore trusts. One of those oligarchs is named as Roman Abramovich. Abramovich’s close business partner Alexander Abramov was added to New Zealand’s sanctions list in October 2022, with travel bans against him, his family, his aircraft and vessels.
Transparency International is calling on FATF members to ensure meaningful revision of the section on trusts to provide a multi-pronged approach, including the registration with a government agency, of information about the trusts.
Transparency International New Zealand has forwarded the letter to the Ministry of Justice representative to the FATF meeting.