Anti-Money Laundering and Countering Financing of Terrorism Bill

Part 1 deals with preliminary matters, as is normally the case in bills such as this one. The bill as reported back now explicitly describes in the purpose clause the Government’s intention that the private sector and public sector cooperate in the implementation and operation of the bill’s regime.

I will draw attention very briefly to the interpretation clause and the changes made to it by the Foreign Affairs, Defence and Trade Committee. The committee inserted clause 3A, “Overview”, which is consistent with the advice of the Legislation Advisory Committee. The committee also reviewed and refined a number of the definitions in the interpretation clause to eliminate any confusion or misconceptions about the scope of definitions, such as what should be considered an occasional transaction.

One important amendment is the addition of clause 4A. This clause eliminates any doubt that reporting entities may have about whether other services they offer are captured by the requirements of the bill. For example, the bill is not intended to capture the restaurant or hotel services of a casino operator. Clause 4A clearly puts these additional services outside the span of the bill.

As was referred to in many of the second reading speeches, the committee also amended the definition of “politically exposed person” in order to exempt New Zealanders holding prominent public functions. As I mentioned in my second reading speech, enhanced scrutiny of domestic politically exposed persons is not a strict requirement of the Financial Action Task Force.

I wonder why the Government has decided to bring this up. We went out with this legislation as we went into the adjournment. We had a long discussion about politically exposed people. We had quite a lot of focus at that time on Bill English, and I am sure that there will be more focus on Bill English as we work our way through not only the interpretation but also the rest of this legislation.

Since that time Melissa Lee has become a politically exposed person as well. I will be interested to know, as will my colleagues who sat on the Foreign Affairs, Defence and Trade Committee, whether Melissa Lee was there under the original interpretation of the legislation. I think that the Government has moved in a smart way to try to exclude her from this Anti-Money Laundering and Countering Financing of Terrorism Bill through the amendments made by the select committee, and I am not very happy with some of my colleagues on this side of the Chamber who let the Government get away with it. I want to know from the Minister in the chair, the Hon Simon Power, why those changes were made.

I think that we need to look at paragraph (c) of the definition of “politically exposed person” in the interpretation clause, clause 4. The paragraph states “having regard to information that is public or readily available,—(i) any individual who is known to have joint beneficial ownership of a legal entity or legal arrangement, or any other close relationship, with a person referred to …”. So I wonder whom that would refer to. I wonder whether the bill as introduced would refer to the circumstances of Bill English, and whether he has a beneficial interest, albeit a beneficial interest that is discretionary. It is a discretionary beneficial interest that Bill English has in this area. I want to know whether that was something that the Minister carefully considered as he worked through this bill and the amendments that were put to him.

Did the issue concern the discretionary beneficial interest that Bill English had in the additional funding that he was getting from the taxpayer, over and above what he was entitled to, as someone who is normally resident in Wellington? Was the reason this bill was narrowed an attempt to take Bill English out of it? If the discretionary beneficial interest that Bill English had was not the reason for the narrowing of the bill, then I want to know what was. If it was not to cover up the rorts, to stop the money being laundered through trusts in a way to hide it, then what was the reason for the change? We have heard nothing about that from members opposite.

I also want to know about the Melissa Lee situation, and about the money that was going through not a trust but a company. In the bill as introduced, that member would have come under paragraph (d) of the definition of “politically exposed person”, but that provision has been cut out by the select committee. I want to know why Melissa Lee has been protected in that way. Why was it that this money that Melissa Lee has known about since July, or 12 June—

💬 Hon Steve Chadwick: June.

Since 12 June Melissa Lee has known that she has ripped money off the taxpayer. She has known this for 4 months but did not pay it back. She had that additional money in her laundry for 4 months. I am not suggesting that she was laundering money for terrorism, but what was she laundering money for? Why was she keeping it hidden from the public view? Why was she not fronting up?

I want to know whether Melissa Lee has declared an interest in this bill. Has Bill English declared an interest in this bill? Bill English is certainly caught under the definition of “politically exposed person” in the bill as introduced. He is someone who is politically exposed. He is very, very politically exposed—partly to us but mainly to members opposite.

Just before I call John Hayes, I draw members’ attention to Speaker’s ruling 108/5: “Members must focus on the wording of the bill, on the intention in this bill, and not focus on alternatives that are not part of this bill.” I just draw members’ attention to the fact that what has been done before is not the focus of the debate.

I raise a point of order, Mr Chairperson. I want to ask you whether it is permissible to debate in the Committee stage whether it is appropriate to revert to the bill as introduced as an amendment with alternative wording to that which is currently before the Committee. I submit to you that it is quite within the realms of the Committee to put forward, and pass, an amendment to have the bill reinstated in the way that the Minister originally brought it to the House, and if to do that is within the competence of the Committee, then to suggest that it is done is also within the competence of the Committee.

I just remind the member that if there was an amendment on the floor of the Chamber to that effect, the member could then start to construct that argument. But as I understand it there is not an amendment on the floor of the Chamber to that effect. The member will appreciate that I did not call for order at the time that he mentioned it, because I accept that the Committee is entitled to fair and broad-ranging debate. But I draw members’ attention to the fact that when we are in Committee we are focusing on the wording of the bill and on the intention of the bill, and not on alternatives that are not part of the bill. Words that have now been struck out are not part of the bill. As I said, we like to have a fair debate. Members are entitled to nudge against things but not make it the focus of their presentation.

I raise a point of order, Mr Chairperson. Again, I am vaguely apologising for doing this, but my view is that your saying that people can debate amendments only when they have been tabled is a new ruling. For as long as I have been a member of the House members have indicated their intention to table amendments or the possibility of amendments being tabled. Very, very specifically in this area, I say that if it is the wish of the Committee for the Labour Opposition to table some amendments, and to withdraw them later or not to withdraw them later, then we can do that. My submission to you—and because you are my friend and colleague I do this with some reluctance—is that the ruling that you are making is without precedent. I have certainly never seen it in the time that I have been a member. In the past people have often discussed the changes and the subtleties that have occurred at the select committee and the effect that that has had on a particular clause of the bill, and they have discussed whether that has been a good thing or a bad thing. I think that to rule that out would be something that is very new.

In my view the member killed his own argument. He spoke about the intention to introduce an amendment or the possibility of introducing an amendment—those were his words. In this case he gave us a diatribe of why the wording had been cut out, and he chastised his own members on the select committee for allowing it to be cut out. I submit that that is not the same thing that he tried to say, which related to the prospect of moving an amendment.

I do not want to carry this on. Without taking the varnish off the matter, I say that if the member reflects on this issue and reads his Hansard, he will see that his speech was more appropriate to a general debate on Wednesday afternoon after 5 o’clock. His speech was getting on to issues that were well beyond the scope of the bill. I have said to the member that I will not rule out entirely the matters that he raised, and I have made that point. But I would be concerned if those matters became the sole part of the presentation on parts of this bill. I just draw the member’s attention to what the House has decided by way of Standing Order 292(1): “A committee of the whole House considers a bill to determine whether the bill properly incorporates the principles or objects of the bill as read a second time by the House.” That being the case, the Speakers’ rulings are quite clear. We are here to discuss the bill, not to discuss what it had been or what it might have been. If a member wants to provide an amendment, he or she can do that, but that member must talk to the amendment. That is what members must do.

The last 5 minutes have been a great example of the saying that a little knowledge is a dangerous thing. I would have thought that it would have been helpful to the Committee if the member opposite—experienced as he is, given that he is a former Minister—had taken the time to speak to his colleagues on the Foreign Affairs, Defence and Trade Committee about this issue before he came into the Chamber.

The reason why the select committee members took the action they did, and I have to say that we were absolutely united in making our decision, was that we judged that there were sufficient checks and balances in the New Zealand system—including audits, company requirements in legislation, and a whole raft of other obligations on people who are engaged in business and in politics—to render totally unnecessary the sorts of changes that Mr Mallard was talking about.

Furthermore, I report to the House that we have something like 55,000 names of politically exposed persons—

💬 Hon Clayton Cosgrove: Not me.

—including Mr Cosgrove and me. All members of this House and their relatives are already on lists that are held commercially and used by each one of our banks. The suggestions that Mr Mallard is floating are absolutely unnecessary. I support the bill in its present form. Thank you.

I am aware that an amendment has been tabled in the name of the Hon Trevor Mallard to remove four words from the definition of “politically exposed person”. Those words are: “in any overseas country”. The effect of that amendment as proposed by Trevor Mallard would, in essence, be to return the Anti-Money Laundering and Countering Financing of Terrorism Bill to the state it was in as introduced in respect of politically exposed persons.

I oppose the amendment of the Hon Trevor Mallard. I have come to the view that the amendment does not take us forward, and I will lay out to the Committee why that might be. The situation in respect of politically exposed persons was looked at carefully by the select committee, and a number of matters were brought to bear. We looked carefully at the issue of trust and how it may apply to domestically politically exposed persons. We came to the view that because of the existence of a thing called a discretionary trust, it was rather too easy for a domestically politically exposed person to sneak through that particular proposition. It was unknown to us at that time that the Deputy Prime Minister of the land had a discretionary trust in his part of his family trust, which proves the point—I think rather well—that it is not difficult at all for a smart person to sneak through legislation. Therefore, being prescriptive about the legislation may not be the best thing to do.

The second thing is that amending the politically exposed persons lists as proposed by the Hon Trevor Mallard means, for example, that members of the executive of a nation would come under some sort of scrutiny. Members of the executive of this country would come under some sort of scrutiny, but backbenchers would not. People who headed State-owned enterprises would be caught; people who headed district health boards would not. And on it went. Where was the list going to stop? What was so good about a positive list? We threw out that idea of politically exposed persons partly on that basis, as well.

So we come to the issue that Trevor Mallard speaks of in respect of Melissa Lee, who is not a member of the executive but a mere backbencher. We did not give ourselves false comfort that by leaving the domestically politically exposed persons provisions in the legislation, we would somehow be better protected. That idea is given lie to by the fact that Melissa Lee has, in recent times, been determined to have owed $100,000 or thereabouts to NZ On Air, specifically because she moved it from one part of the company’s accounts to another.

That leads me to another point. That is not laundering, because the money has not left the company yet. It becomes laundering at the point when the money leaves one company and moves to another. This was pre-laundering. It was what one might call the “soak” phase. It was the phase where the enzyme stain remover was applied and the laundry had not begun. It follows like night after day that when a company is successful because things have moved from one line item to another—inappropriately, as we now discover—sooner or later laundering might follow and the start switch might get pressed. But this Melissa Lee example is pre-laundering, and it will not be caught by this legislation, although it is true to say that it would never be of benefit to an individual until laundering had taken place.

So for a range of reasons I think the amendment put forward by the Hon Trevor Mallard falls short of the ideal. We have a couple of really good instances in front of us. They are both unfortunate. We used them to demonstrate that the advent of a loophole in the form of a discretionary trust means that seeking the beneficiaries of a trust, which is a requirement of this legislation, cannot work where that trust is a discretionary trust, because the beneficiaries have not been described. The idea of who will be a beneficiary and who will not is discretionary. It cannot be detailed with any particularity.

Secondly, in respect of a positive list, the question immediately arises as to who is missing from that list. Whether it is a district health board chief or a backbencher does not really matter. The point of the story is that the best way to maintain an appropriate supervision of politically exposed persons is to be vigilant in general and not vigilant in particular. The best way this country can keep its high state of transparency, with the very excellent reputation it has against any form of corruption, is to be vigilant generally, not to be specific and say we are looking only at these people and only at the beneficiaries of a trust, etc.

That is the essence of my opposition to the amendment tabled by the Hon Trevor Mallard. I am not even sure that it should go to the vote. My view is that the legislation as reported back from the select committee is in a much better form than that which was introduced. Although I understand the debate put forward by the Hon Trevor Mallard, it is the same debate that we had within the committee for a long time, and that was our resolution.

I concur with my colleague the Hon Pete Hodgson, but on a different aspect of the Anti-Money Laundering and Countering Financing of Terrorism Bill. When we look at the bill that has come from the Foreign Affairs, Defence and Trade Committee, we see it is indeed in better shape than when it went to the committee. I would be grateful if the Minister in the chair, the Hon Simon Power, would perhaps report back to us or let us know why that is, and whether he took his eye off the ball. I note that the committee said that the bill as introduced did not give sufficient emphasis to a risk-based framework for countering money-laundering and the financing of terrorism, and that it had amended it substantially. I am not quite sure whether the Minister may be busy and, unlike some of his colleagues—Mr Brownlee and company—may have taken his eye off the ball.

The Minister will recall that his predecessors who had some stewardship of, and relationship to, this bill embarked on a costing of the legislation. We wanted to give the private sector the assurance that we were taking a precise and risk-based approach to it, that the department was not putting an extra zero on the invoice and trying to “Rolls-Royce” it, and that we were attempting, especially with the monitoring regime, to meet our international obligations in an appropriate way to ensure that we countered money-laundering in any aspect, but that we were not ramping it up like some other jurisdictions have perhaps done by creating new departments and by putting in a lot of cost, which is ultimately passed on to the private sector and to customers. That seems to have been lost in the transition from the bill being authored by the Minister to it being referred to the select committee.

Under one of the Minister’s predecessors, the previous Labour Government got Deloitte to do an independent costing of the proposals that were being put forward. As I said, that was to give the private sector a level of comfort that we were meeting our obligations, but that we were doing so in the most efficient and cost-effective way possible, bearing in mind that even in doing that, there is a substantial cost related to this legislation, which banks in particular and other institutions will have to deal with. I wonder whether the Minister could take another call and tell us what happened to the quality control process in the time between the bill being launched off his desk and it finding its way to the select committee.

I think the select committee has done a very good job in requiring some more precision in respect of the bill’s aims and objectives. Likewise, in terms of the purpose and overview clauses in the bill, I turn to the point that the select committee made when it recommended inserting an overview clause, new clause 3A, to set out in plain English the contents of the bill. The obligations in the bill are complex, but again I ask what happened to the quality control. This bill will affect a large number of stakeholders. I ask the Minister again whether his eye was off the ball, because it is helpful and preferable to draft modern legislation—the Minister is a lawyer; I am not—in a way that is as clear and as user-friendly as possible, even given the constraints of parliamentary counsel around the language that is used. That is necessary so that those who read the legislation and those who have to implement it can see precisely what the aims and objectives are and what their obligations are. So I ask the Minister what happened. What happened between the work that was done by the officials and the legislation that was put in front of us?

A lot of work was done by the officials—I acknowledge them. Originally it was put to the officials that the framework around this legislation was good, but where were the costings? They then had to go away and have a wee look at what was going on. The officials did agree with me at the time that we should engage Deloitte—that we go out into the market place to have the propositions that now form part of this legislation tested independently. This Government, over a whole series of policy platforms, shrinks absolutely from that precedent. Whether it be—not to digress from this bill—the issue of private prisons, whether it be cuts to various Government services, or whether it be propositions around accident compensation, there is a reluctance, unlike the previous Government, to have those propositions tested by independent organisations, like Deloitte. That is what we did in respect of this legislation under my stewardship. We did so because there has always been an accusation when these kinds of international obligations are being implemented by—to be fair—any Government of the day that certain departments try to say it is a great grab bag: a great opportunity to load up the budget for a series of different purposes that they may perhaps see value in, but that business may not, and, at the end of the day, Ministers may not.

So we broke the mould somewhat. I invite the Minister to take a call and indicate whether he may do the same as we did in relation to other things that he is proposing in his portfolio. As I said, we engaged independent consultants, in the form of Deloitte, to go out and challenge our own thinking and our own proposals. The request that I put to them was simply this: given that we have to meet our international obligations, why can we not do that in a least-cost manner, or with the least burden to the private sector?

I recall—I may have brought this up with the Minister before—that I said to the banks that we did not want to create different levels of obligation. The banks put a very interesting proposition to me. They said that if we were to go to a lower level of obligation than, perhaps, our Australian counterparts, we would actually increase the compliance costs. The banks are set up in Australia, which is ahead of us in terms of its legislation, for a number of reasons. The banks said that even if we tried to establish a cheaper proposition for the banks here, that in itself may create an additional compliance cost, because even a cheaper option would require some systems adjustments. But we wanted to give the private sector confidence that we were not simply putting up a proposition to meet international obligations holus-bolus, and we were not going to write our own bill with whatever obligations we thought we should meet that the private sector, and ultimately the customer or the client down the chain, would have to pay for. We did engage Deloitte and it did come up with a substantial report, and that informed our thinking. Also, I believe it engendered a high degree of confidence within the private sector.

I say again to the Minister that I think that is a good thing to do. I wonder why—without digressing from this bill—his colleagues do not test the propositions that they are putting forward regarding accident compensation. Some say the propositions are spurious, some say they are wrong, and some say they are downright deceitful. The way to alleviate that concern is to ask an independent third party like Deloitte or PricewaterhouseCoopers, or whoever it may be, to go and test the Government’s propositions and the Minister’s ideas. If they stack up, then we would have an independent agency with no axe to grind providing some ammunition, I suppose, for the Government. But, equally, if the propositions are bunkum, if they are simply smoke and mirrors, and if they are simply designed to put fear and panic into folk, then that would be exposed by an independent third party with no axe to grind. I am pleased that the Minister, at least when he was the Opposition spokesperson, I think, supported Deloitte coming in and having a look at the propositions in this bill. Well, he says he was benign to the whole issue.

The National Government campaigned on the basis of providing the most efficient solutions for business. We put this issue to Deloitte, but again I say to the Minister that I wonder whether his colleagues will do the same on other issues. I wonder whether his colleagues the Minister of Corrections, the Hon Judith Collins, or the Minister for ACC, the Hon Dr Nick Smith, will do the same as we did. If they believe in the robustness of their arguments, I ask what the problem is. They should put the propositions out to an independent third party, have them costed, roll the dice, and see how they go. But I sense there is a reluctance on the part of this Government to do that. It talked fast and tough before the election about providing least-cost options to business, but I note that over a whole series of portfolios it is very reluctant to have its propositions and its theses tested by anybody other than its own officials, whom, of course, it can control. It can tell them what to say and they are required to follow the Government line of the day; that is the professionalism of the public servant. But, oh, no, this Government is very, very reluctant to have third parties examine, at the very least, the cost-effective nature of the propositions it is putting forward.

I ask the Minister again to take a short call. I hope he will tell us why the wheels went off the rails, and why the bill went from his desk to a select committee when it was so imprecise and unclear that the select committee had to put a bit of plain English into it in order to explain to the folk who will have to use the legislation what it means.

I move, That the question be now put.

I raise a point of order, Mr Chairperson. It was a matter of courtesy to let the Government take the call, because the Opposition took two calls in a row, and, indeed, the speaker before that was another Opposition speaker. We have plenty more to say on this bill. If the matter is one of whether we have challenged the chair sufficiently, then I guess we are guilty. But the fact of the matter is that we thought that the member who has just resumed her seat, Jacqui Dean, wanted to make a contribution. She is on the select committee; it was her turn.

The CHAIRPERSON (Hon Rick Barker): The member makes a fair point. I was considering accepting the motion simply because I did not think the Opposition was interested in taking any more calls. If the Opposition members are interested in having some more calls, then in the interest of debate the Opposition had better start to call. Do I have any bidders?

I rise to make my first contribution to the debate on the Anti-Money Laundering and Countering Financing of Terrorism Bill in the Committee stage. I am a member of the Foreign Affairs, Defence and Trade Committee. In fact, I am the senior Labour member on that committee, and I am really pleased to make a contribution.

I begin my contribution by praising John Hayes, the chairman of the Foreign Affairs, Defence and Trade Committee. John and I, of course, have our political differences, but I want to tell the Minister in the chair, Simon Power, that Mr Hayes acted in a very non-partisan way during the process of this legislation.

Mr Hayes was receptive to Opposition suggestions, and he was very accommodating to experts from the banking sector. He worked particularly closely with my colleague, the Hon Pete Hodgson, who, in my view, made a first-class contribution as an Opposition member of the select committee. Pete Hodgson is a master of detail—I guess that is because of his scientific training—and he really focused the whole select committee’s attention on the details of this bill, and especially on the processes of working with the banking industry on this piece of legislation, which I am proud to say was introduced by the previous Labour Government.

My colleague the Hon Lianne Dalziel was a driving force in getting this issue dealt with. It is an important national issue. We are faced with the spectre of global terrorism as well as with the efforts of organised crime to launder illicit funds through the global financial systems of the world. New Zealand and Australian banks, with their fine reputation for honesty and stability, along with being away from the financial centres of Europe and North America, have been a target, an opportunity for international criminals to launder funds through our system.

In our confidential briefings from the police we were told that this is, in fact, a real issue within the South Pacific. There have been significant issues in Vanuatu and elsewhere where illegal funds have been moved globally and money has been washed through financial systems, including New Zealand’s. This legislation will go a long way to putting in better systems to ensure that that does not happen.

Sadly, we also have a global political framework whereby different groups, be they in South Asia—Sri Lanka comes immediately to mind—the Middle East, within the Russian Federation, or elsewhere have moved funds to finance global terrorism. As part of the global community we must make an effort to make sure that our financial systems are not used for this illicit activity. All of that sounds fine. Nobody would disagree that we must have more robust and effective systems. Indeed, we have global obligations to make sure that our systems are up to scratch and that they address these issues, which are so important.

The Financial Action Task Force has been looking at how effectively we can do this, but that then comes down to the practical issues that the Foreign Affairs, Defence and Trade Committee struggled with. How do we make these noble intentions actually work within our banking system, so that we do not place too onerous a financial burden on banks and so that we have effective systems? Particularly in the context of our close economic relationship with our largest market and closest neighbour, Australia, our systems need to be in sync with the Australian systems.

I have to say that it was quite a laborious process for the select committee to ensure that this legislation fitted as closely as possible with the Australian system and that the banking sector was comfortable with what we were doing, because we will be relying on that sector to make it work. Through a process of negotiation we set up a group of banking experts, who came in on a regular basis to look at the legislation. They moved through it carefully. At times they came up with suggestions that we took on board, and on other occasions they made suggestions that we felt were not appropriate. The consideration of the bill provided one of the best examples I have seen in my 12 years as an MP of the select committee process and of a cross-party opportunity where people worked really well together.

I want to make some initial comments about clause 3A. If I recall correctly, the original idea came from the Legislation Advisory Committee. If it did not, then it came from the chairman of the Foreign Affairs, Defence and Trade Committee, John Hayes; and, if it did, then it was the chairman, John Hayes, who picked it up and ran it through. What that provision does—it is called an overview, in the chapeau—is tell the reader, I think in something getting pretty close to plain English, what the bill is about, and that is not a bad thing for us to adopt as a legislative practice. It takes us through, in a page and a half, something that would have been the early part of the explanatory note when the bill was introduced. Therefore, the question that arises is whether in the future we will, as a nation, get into the habit of having an explanatory note in legislation. I know that there is a possibility of lawyers claiming that because it is part of New Zealand law, they can therefore take a look at the explanatory note, or the overview, and determine that therefore it means that clause 16 in Part 2, or something or other, means something other than what it says it means. I know that there is danger in that, but the benefit is that for someone like me who does not have a law degree, and does not read law easily—my brain does not read law easily—this part is pretty meritorious.

I wonder whether the Minister in the chair, the Hon Simon Power, who happens to be the Minister of Justice, might like to indicate to us whether he thinks it is good drafting practice for us to take an overview clause, like clause 3A, and make it something more than the routine we have at the moment.

Needless to say, my second contribution to this legislation has to be about the issue of politically exposed persons. I think my colleague the Hon Trevor Mallard has made a grave mistake. I think my colleague the Hon Trevor Mallard should be invited to withdraw his amendment. He certainly has good intentions in putting the amendment forward. Indeed, the bill as introduced was exactly what the Hon Trevor Mallard would now have it be. But I think my colleague the Hon Trevor Mallard was not party to the select committee hearings. He was not party to an exploration of how these things were managed in Australia. He was not party to an exploration of how these things are done in other jurisdictions—such as Britain, Canada, the US, and so on—and, as a result, I think he is the poorer for it.

I would like to say briefly, in order to bring my beloved colleague the Hon Trevor Mallard up to speed, that we run the risk of giving ourselves false comfort if we think that by delineating a certain number of domestically politically exposed persons we are therefore able to take a lighter or easier approach to people who are not on that list. Furthermore, we need to take into account the fact that politically exposed persons are as likely as anyone else who is laundering money to try a bunch of falsehoods in order to achieve that laundering, whether it is just making one’s trust a discretionary trust so that there can be no see-through to who the beneficiaries are—and the legislation allows for that see-through, for that piercing of the veil, if one likes, of a trust—or whether it is the issue that if a person is not on a list, somehow he or she cannot be at risk. Either of those options might lull us into a sense of false security that we have the issue of the politically exposed person covered when, I think, demonstrably we do not.

The two issues in front of this House over recent weeks, involving the Deputy Prime Minister of this country, and involving a backbencher, Melissa Lee, draw specific attention to how it is that one can be lulled into a false sense of security. Neither of those issues would be caught if the Hon Trevor Mallard’s amendment were to be put and were to pass. In the case of the Deputy Prime Minister, it is because he has chosen the vehicle of a discretionary trust. In the case of Melissa Lee, it is because she is not a member of the executive. So let us not be lulled into a sense of false security on the basis that we might have a nice, positive list, in the bill as introduced, of politically exposed persons and therefore we need not bother, because we have two instances involving two members of this House, neither of whom would be caught if the Hon Trevor Mallard’s amendment were put and passed. And that is the point; it is general vigilance, not particular vigilance, that matters. It is an overview that matters, and not a degree of particularity. It is a culture of supervision that matters, not the names and addresses of these named and addressed people.

Of course, there are other reasons why a politically exposed domestic person would be a difficult one to cover, and that is that the legislation as introduced said we needed to cover the wives of such people, or their husbands, or their spouses in general, including their de facto partners. It also included the children of that politically exposed person, including, presumably, the children of the de facto partner of the politically exposed person. Nobody knows that list, so we were kidding ourselves that we could have known it.

When the honourable chairman of the select committee made his brief remarks he pointed out that commercially there are available internationally lists of thousands of people who may or may not be suss. No doubt those lists will be altered every day. They are used by financial institutions now. There is no doubt that New Zealanders are on that list, either because they are thought to be suspect or because they are politically exposed. There is no doubt that that list is in use and contains the names of New Zealanders now. The view that the chairman came to, and the view that I came to, is that such a list and such an approach is the more viable way of keeping a degree of vigilance, and that it is not appropriate for us to give ourselves the conceit that we have this thing covered by a particularly narrow approach to politically exposed persons domestically.

For that reason I shall be voting against the amendment in the name of the Hon Trevor Mallard when it is put. I think it is a bad amendment. I think it is one that was put up with the best of intentions and that it does mimic precisely the bill as introduced. It is not that the Hon Trevor Mallard has made some foolish suggestion; it is just that with the benefit of examination and the benefit of international experience or international comparison, we think we have a better way forward. For that reason I think the amendment in the name of the Hon Trevor Mallard should be resoundingly defeated.

The question was put that the following amendment in the name of the Hon Trevor Mallard to clause 4 be agreed to:

to omit from paragraph (a) of the definition of “politically exposed person”, “in any overseas country”.

Amendment not agreed to.

Part 1 agreed to.

Part 2 AML/CFT requirements and compliance