TINZ submission to Shewan trust inquiry

into foreign trust disclosure rules

John Shewan

Former PwC chairman has been chosen by the Government to head the government inquiry into foreign trust disclosure rules

Transparency International New Zealand has made its submission to the Shewan Inquiry on 20 May, calling on the government to widen the Inquiry’s terms of reference to future proof our laws following the release of the Panama Papers.  It is important that we take steps now to ensure New Zealand is not supporting money laundering, tax fraud, reputation cleansing and hiding of illicit assets

New Zealand's international reputation for integrity generates immense returns to the economy, including a major contribution to the billions of dollars that make up our foreign exchange earnings.  By assuming an aggressive leadership role in international efforts to eliminate misuse of trusts and corporate entities, New Zealand stands to enhance both its reputation and the return to the economy.

The looseness of New Zealand's disclosure rules undermines international efforts to combat the illicit financial and asset flows which enable organized crime, tax evasion, funding of terrorism, money laundering, corruption and impunity.

“Our submission urges firm action to thwart corrupt politicians, organized criminals, fraudsters, bribe payers, arms dealers and terrorists from using New Zealand’s loose regulatory environment to support their activities,” says TINZ Chair, Suzanne Snively.

Specific recommendations by TINZ to the Shewan Inquiry include:

  1. Establish a comprehensive and accurate register of the beneficial owners of all types of legal constructs including foreign trusts and companies.  This requires the registration of all trusts and companies, whether foreign or domestic, the maintenance of accurate and up-to-date information, resourcing of the capability to interrogate in domestic and international criminal investigations, and integration with the international Common Reporting Standard initiative to proactively report on foreign nationals' activities.
  2. Extending the New Zealand Anti-money Laundering and Countering Financing of Terrorism (AML/CFT) Act (2009) to cover all professionals, including lawyers, accountants and real estate agents who are engaged in setting up or managing assets of New Zealand corporate vehicles and trusts.

TINZ is confident that the scope of the inquiry can be widened because of the substantial government policy work already done in this area. This means seeking genuinely effective solutions to tackle the broader spectrum of financial crime risks associated with New Zealand companies and trusts.

Positive initiatives include the existing AML/CFT regime, the Common Reporting Standard initiative, participation in the International Anti-Corruption Law Enforcement Coordination Centre and New Zealand’s support for the UN Convention Against Corruption.

These initiatives will actually be weakened if known gaps, now internationally publicised as ‘system failings’ in New Zealand’s framework of rules, are not corrected, and seen to be corrected.

Suzanne Snively says, “New Zealand is well placed to take its own expert officials’ advice and through this, show leadership in tackling international corruption by going much further than simply processing a ‘light touch’, lightly resourced, poorly conceived review.”

The full Transparency International New Zealand submission can be found at TINZ Submission to the Shewan Inquiry on Foreign Trusts