AML SUPERVISION IN NEW ZEALAND
In the year 2000, approximately 20 years ago, I attended my first professional course on combatting financial crime. It was a 2-day duration.
At that time I was working in New Zealand as an Investigator for the National Enforcement Unit (the NEU). The NEU was a division of the Ministry of Economic Development. It operated with half a dozen investigators who were responsible for carrying out investigations on behalf of the Securities Commission, the Registrar of Companies and the Insolvency & Trustee Service.
The hosts and speakers at the Financial Crime course were agents from the Australian federal government.
At some stage of the course, CCTV footage showed a driver and front seat passenger leaving a gated property. Moments later a white blast came across the CCTV screen. The car had been booby trapped with a bomb. Both occupants died instantly. The federal investigation confirmed the bombing was gang retaliation.
I learnt a lot in that 2-day course. Throughout it I had a burning question to the Australian federal agents – “Did New Zealand represent a threat to their borders”. Their response, without hesitation, was “Yes”. Their answer did not surprise me. That they openly confirmed my suspicion, to all those in attendance, was the surprise.
At that particular time, the New Zealand Police Financial Intelligence Unit, was staffed by one full time sworn officer and two administrative personnel. Though New Zealand was operating under the Financial Transactions Reporting Act 1996 (the FTR Act), it was not adequately administered – no monitoring or reporting.
The FTR Act was later found to have many flaws, making it ineffective to achieve its objective. Without any adequate systems for identification, monitoring or reporting, New Zealand was facilitating organised crime for both local and international syndicates.
New Zealand, to say the least, was in a terrible state. New Zealand government had no data on the number of type of financial institutions operating within New Zealand. This included high risk services such as foreign currency exchange and money remittance (money payment transfers).
It was not until 2008 that the beginnings of a structure began to emerge.
By this time, only 12 years ago, international crime syndicates were well embedded in New Zealand’s financial institutions, including our Tier 1 banks.
New Zealand’s perception of a ‘clean and green’ country was an attraction that increased risk. With a good reputation and no adequate controls to govern or supervise the financial services industry, we earned a reputation as a financial haven in the pacific. We were (and still are) the preferred country for setting up a corporate entity (it cost NZD $150) which could be obtained within 24 hours.
International organised criminal groups liked a lot about New Zealand. They still do.
Once the international syndicates had a NZ business bank account, they were then more readily able to open up further bank accounts either inside NZ or outside of NZ.
It was not until 2013 that New Zealand government required banks and businesses to start assessing their risks to money laundering.
Is New Zealand succeeding in its international obligations to tackle organised crime and corruption? (2013-2021)