Anti-Money Laundering and Countering Financing of Terrorism Bill

Part 4 of the Anti-Money Laundering and Countering Financing of Terrorism Bill contains the institutional arrangements and regulation-making provisions, including the establishment of the supervisory agencies that, alongside the police, will be responsible for the oversight, regulation, and enforcement of the new regime. As supervisors, the Reserve Bank of New Zealand, the Securities Commission, and the Department of Internal Affairs will support reporting entities to implement and maintain the new regime. These agencies already have supervisory and regulatory roles in respect of most of the industry sectors for which they will be responsible under the bill. Those existing relationships will be used to create efficiencies. The multi-supervisor model within the bill also helps to reduce transaction costs for businesses. They will have to deal with only one agency instead of a separate agency for credential or gambling matters, or another for money-laundering or terrorism financing. These agencies know the sectors they will be supervising and are less likely to pursue strict interpretations of compliance issues than a single regulator that may not have an adequate understanding of the business environment of a particular reporting entity.

Part 4 also enhances the financial intelligence powers and functions of the New Zealand Police. Provisions within this part require the Financial Intelligence Unit to produce guidance for reporting entities on establishing what transactions are suspicious and what should be reported to it. It also gives the Financial Intelligence Unit formal powers to get additional information from a reporting entity when it submits a suspicious-transaction report. This important power will codify important intelligence-gathering tools to combat financial and organised crime.

The select committee made a number of changes to Part 4, the most important of which was the inclusion of provisions for supervisors to delegate some of their monitoring or investigatory powers and functions. Clauses 130A, 130B, and 130C allow supervisors to efficiently and effectively carry out their roles without the undue burden of hiring, for instance, specialist investigators, lawyers, or forensic accountants. The committee reviewed the regulation-making powers in Subpart 2, and moved some of these from clause 147 to clause 148, which deals with regulatory exemptions and has a robust set of criteria that the Minister must take into account when recommending a regulation. The committee also made ministerial exemption provisions within clause 151 subject to the Regulations (Disallowance) Act 1989. These changes to Part 4 make it more responsive and allow greater transparency for decision making.

The institutional framework set out in Part 4 is appropriate to New Zealand’s financial system and is compatible with the framework of our trading partners. A Supplementary Order Paper to schedule 2 will make a consequential amendment to the Reserve Bank of New Zealand Act to make it clear that the Reserve Bank Governor can delegate the functions and powers that the Reserve Bank will receive under this bill. Thank you.

Part 4 agreed to.

Schedule 1 agreed to.

Schedule 2

The question was put that the following amendment in the name of the Hon Simon Power to schedule 2 be agreed to:

to insert in Part 2 after the item relating to the Mutual Assistance in Criminal Matters Act 1992 the following new provision:

Reserve Bank of New Zealand Act (1989 No 157)

Section 41(1): add “and the Anti-Money Laundering and Countering Financing of Terrorism Act 2009”

Section 41(2): insert “, or the Anti-Money Laundering and Countering Financing of Terrorism Act 2009,” after “by this Act”.

Section 51(5): insert “or under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009” after “by this Act”.

Section 51: add:

“(9) To avoid doubt, the Governor’s functions and powers include his or her functions and powers under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.”

Amendment agreed to.

Schedule 2 as amended agreed to.

Clauses 1 and 2