Sweeping reforms to laundering laws
Set to be in place by the next election, the changes to New Zealand's Anti-Money Laundering and Countering Financing of Terrorism regime aim to shut down dodgy deals, tighten financial loopholes, and take on the criminal underworld, while cutting unnecessary red tape for law-abiding citizens.
It's estimated that a staggering $1.35 billion is generated from money laundering in New Zealand every year.
The Detail talks to Lloyd Kavanagh, a financial services lawyer and deal maker from Minter Ellison Rudd Watts, about the changes, which include giving police greater powers to freeze bank accounts more quickly, banning cryptocurrency ATMs, introducing a more risk-based system for selling property from family trusts, and making it easier for parents to open bank accounts for their children.
Kavanagh also welcomes efforts to streamline and simplify the system by introducing one supervision layer to oversee the rules.
'Currently, we have three supervisors who supervise different segments of the market,' he tells The Detail. 'You have the Reserve Bank, who is the [anti money laundering] supervisor for banks, you have the FMA who oversees securities market participants broadly, and then you have the Department of Internal Affairs, who looks after casinos and everybody else … lenders, lawyers, accountants, real estate agents, and quite a wide range of smaller businesses.
'What the Government is proposing is … we should have a single supervisor so that they can be consistent in the guidance that they give to reporting entities, and have a total overview of what's going on in the sector. So that is one measure which I think will have a significant impact.
'Some of the other measures … are actually to relieve the administrative burden – one of them is, at the moment, you have to verify your customer's address, which proves to be really difficult for a lot of people … so, the change will mean you only have to do that if you have got reasons for thinking it's a high-risk customer.
'I am actually optimistic that by removing some of the mandatory bureaucracy, resources will get refocused in doing what I think, and I certainly hope all New Zealanders are keen to do, which is to use the pressure on what happens to the proceeds of crime to help us detect crime in the first place.'
Kavanagh does have some concerns about giving greater powers to police.
'I'm a little reserved about simply giving additional powers to the police if you don't have the right checks and balances'.
And questions the ban on cryptocurrency ATMs, which are kiosks that allow users to buy and sell cryptocurrency using cash.
'I'm somewhat puzzled by that inclusion because I haven't seen the evidence as to why that would be a particular priority.'
But ultimately, he believes the law changes will make a difference.
'We all benefit if there is less crime in New Zealand. These people [money launderers] make business decisions as to which countries are easier to operate in and profitable to operate in.
'And we know from the reports that have come from the Government over the last year that New Zealand has an increasing level of drug abuse. We know that we are more and more connected in a world where there are all sorts of transactions going on.
'What we need to do is just make ourselves a little bit harder to do bad things in. So, I think these [law changes] are positive steps.'
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