Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill

I move, That the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill be now read a second time. This bill reflects the Government’s ongoing commitment to combatting money-laundering and the financing of terrorism both in New Zealand and globally. Can I take this opportunity to thank the Law and Order Committee for its work on the bill. Thirty-one submissions were received and considered. The committee recommended that the bill proceed with a number of amendments, many of which are minor and technical in nature, and I am pleased to support most of the committee’s recommendations.

Enacting this amendment bill in a timely manner is important for an effective response to money-laundering and the financing of terrorism in this country. This bill addresses a serious issue that has blighted societies around the globe. Money-laundering feeds many other types of crime. By exploiting unsuspecting businesses and channelling money through different layers of the financial system, money-laundering allows criminals to fund their lifestyles and fuel their criminal ventures. People who finance terrorism use similar methods to channel money to violent causes.

New Zealand’s existing anti - money-laundering legislation applies to banks, casinos, and a range of financial service providers. These institutions were the focus of the first phase of reforms because of the higher risk they faced in being used for money-laundering for crime or terrorism purposes. However, there are still sectors at risk of being exploited by criminals.

The bill before this House is an important step in protecting our businesses and our country’s reputation as being one of the least corrupt countries in the world. The bill extends the Act to additional businesses, including lawyers, conveyancers, accountants, and real estate agents when they carry out certain activities. It also extends the Act to racing and sports betting and businesses that deal in certain high-value goods. Criminals are always seeking new ways to launder the proceeds of their crimes, and these phase two sectors are at increasing risk of being targeted by criminals.

The bill also broadens the reporting requirements to require any suspicious activity to be reported, rather than just suspicious transactions. This is the legislative response to a recommendation made in the Shewan report, from the Government Inquiry into Foreign Trust Disclosure Rules in 2016. The Law and Order Committee recommends a number of amendments to the Anti-Money Laundering and Countering Finance of Terrorism Amendment Bill as introduced, and I would like to briefly touch on some of those key recommendations.

The amendments will apply to phase two sectors in a staggered way, with lawyers and conveyancers coming within the ambit of the legislation first, followed by accountants, then real estate agents, then high-value dealers and the New Zealand Racing Board. As introduced, the bill would have applied the Act to phase two sectors at a date to be set by Order in Council but not later than the date specified. The committee recommends that this be changed so that the sectors become bound automatically on the specified dates if an Order in Council has not been made before that time. This will provide increased certainty to the sectors about when they should be ready to comply.

The committee also recommends that the bill contain definitions that the sectors are familiar with. This means using, for example, the definition of “transaction” as defined in the Real Estate Agents Act. This way sectors can more easily understand their obligations in order to detect and deter financially motivated crime in this country.

The committee considered that the legal professional privilege provisions needed minor improvements to protect privileged information while still enabling the disclosure of non-privileged information. For example, the bill clarifies that a lawyer has a defence to the offence of failing to file a suspicious activity report. This would apply when a lawyer has a reasonable belief that the information was privileged. Similarly, the committee recommends that a lawyer who does provide a suspicious activity report when the information is privileged has a defence to civil, criminal, or disciplinary action. This would apply if the lawyer had reasonable grounds to believe that the information was not privileged. The committee also recommends clarifying in the bill that non-legal staff working for a lawyer are also not obliged to disclose legally privileged material.

The bill proposes to expand the scope of what must be reported to the financial intelligence unit. Instead of reporting suspicious transactions, businesses will now have to report suspicious activity, as I mentioned previously. The committee recommends amending the bill to clarify that these reporting requirements come into effect 12 months from enactment, except for the updates to the legal professional privilege section, which will come into force immediately.

The committee considered that the information-sharing provisions in the bill as introduced were unduly broad. It recommends removing the definition of “regulatory purposes” and the provision allowing inter-agency access to data holdings. This would, in effect, largely retain the existing information-sharing regime as contained in the 2009 Act. However, the definition of “law enforcement purposes”, which is central to the information-sharing regime, is recommended to be updated to include the prevention and disruption of relevant offences in addition to detection, investigation, and prosecution, which are already in the definition. Other statutory references in this definition are also updated by the bill.

The committee also recommends including a regulation-making power to allow information sharing to occur in situations that are not otherwise permitted under the Act, with certain safeguards. The committee recommended clarifying that one of the functions of the Commissioner of Police is to receive and analyse financial intelligence from international financial intelligence units, and that the commissioner is able to order information from a reporting entity that is relevant to analysing information the commissioner receives under the Act. I want to thank the Privacy Commissioner for his valuable comments on the bill, and I thank his office for working with the committee and the officials constructively during the process.

The Act included a process to provide ministerial and regulatory exemptions for entities, specific transactions, classes of transactions, and qualifying circumstances. The bill as introduced would have allowed the Secretary for Justice to approve exemptions from all or any aspects of the Act. However, the committee considered that this was not an appropriate role for the secretary and that the power to grant exemptions should remain with the Minister of Justice.

I am also wanting to indicate tonight that in the Committee of the whole House I will be proposing a Supplementary Order Paper to the bill. This corrects technical drafting oversights in the bill, clears up an ambiguity in the transitional provisions relating to exemptions, and ensures that a partnership of lawyers or accountants can comply with the Act as a single reporting entity, rather than each individual partner having to be a reporting entity in their own right.

The Government is committed to helping everyday people combat criminals seeking to launder money or finance terrorism through the legitimate businesses. We want to ensure that the anti - money-laundering and countering financing of terrorism (AML/CFT) regime is as effective as possible while minimising the impact on lawful businesses and their customers. We need to address the real risks money-laundering and terrorist financing presents while also ensuring compliance costs are as low as possible.

One of New Zealand’s biggest assets internationally is our reputation. New Zealand is viewed as one of the least corrupt countries in the world and as a good place to do business. A strong AML/CFT system is vital to maintain New Zealand’s reputation as a reliable trading partner and enhance our reputation in international fora. While we consistently rank near the top of the Transparency International Corruption Perception Index, and in the top five of the Basel AML Index report, we can never become complacent. We must never take our good reputation for granted.

This bill and the amendments recommended by the committee will, in my view, strengthen New Zealand’s legislative framework. It will better prepare us for our next review by the Financial Action Task Force, an international forum of technical experts on anti - money-laundering and countering the financing of terrorism, when it evaluates our AML/CFT regime in 2020. It will also improve the ability of businesses to help stamp out financially motivated criminal activity, and will enable regulators to investigate those who do not meet the legal requirements. Ultimately, New Zealanders can have confidence that we are doing all we can to protect the reputation of our businesses and the reputation of our country from those who would seek to do it harm. I commend this bill to the House.

There are very good reasons for doing this, apart from the fact that we have got to come up to global standards. First and foremost, as Minister Amy Adams mentioned, is our global reputation. We have a fantastic reputation but we also were seen as a bit of a weak link, as the Panama Papers showed. I think what happened, whether it was real or just perception, was it was reported globally that New Zealand did not have appropriate anti - money-laundering legislation in place. In fact, a paper written by the Ministry of Justice in February 2017 said: “New Zealand can be targeted by international criminal networks as a global weak link to inject the proceeds of crime into the international financial system. New Zealand has an anti-money laundering and countering financing of terrorism regime—but the regime is not appropriate to the level of risk.”

As the Minister outlined, phase one came in in 2013, and that included banks, insurance companies, financial services, money remitters, and casinos. Those are all areas that really were at high risk—well, are at high risk—of money-laundering, but there are a number of other areas through which criminals are laundering money, and they are real estate agents, lawyers, accountants, conveyancers, the New Zealand Racing Board, and some high-value dealers. We found that it is actually reasonably easy to launder money if you have the will, and we just do not have the processes in place to counter this.

New Zealand is a member of what is called the Financial Action Task Force on Money Laundering. This sets standards and undertakes reviews of member countries. The operational effectiveness of New Zealand’s anti - money-laundering regime will be assessed in 2020, and one thing we do know is that if it is found to be wanting, then that could impact upon New Zealand’s global reputation. So this is one of these things that cannot be done unilaterally; it is done on an international basis with a whole lot of cooperation. The Ministry of Justice also undertook a cost-benefit analysis, and it estimated that over a 10-year period, this legislation will stop between $4 billion to $5 billion—that is a lot of money; $4 billion to $5 billion—in reduced criminal activity over 10 years, as mentioned. So we are talking about a substantial sum of money.

But let me just go through the process of how we find ourselves here at the moment, and it is not as rosy as perhaps the Minister made it out to be. My personal view is that we have not done the sort of role that we could have done, and we have not addressed this with the level of urgency that I think it deserved. So, as mentioned, what happened was the Panama Papers came out, and New Zealand was mentioned an awful lot. In fact, as mentioned, it was discussed in the Financial Times article in the UK and in Australia, and we were noted as a soft touch for people who wanted to launder money. That is not a good look for New Zealand’s global reputation, and I do not think anyone would contest that.

What is worrying is not the content of this bill—we are absolutely supporting this bill, and of that there is no doubt. The Law and Order Committee worked very constructively to come up with an improved version of the bill, which was presented to us from the House during the first reading, and it is a good bill. But the process it took to get here—the legislation effectively makes up the implementation of phase two of the anti - money-laundering legislation. As mentioned, phase one has already been implemented. It came into force over 3 years ago, so why it has taken 3 years to get here is a little bit beyond me, considering how important this is to New Zealand’s global reputation, and the Minister did outline this. You know, we do rank No. 1 in the world, I think, at the moment in the global transparency index and in a number of other anti-corruption indices—we are certainly in the top three—so we have an enviable position.

But what happened was in July 2015, officials advised the Minister to begin work on implementing these reforms, and I am informed that Minister Amy Adams actually went against that advice. In his review on foreign trusts early last year, John Shewan, whom the Government appointed to a working group to actually have a look at the impact of the Panama Papers, urged the Government to pass this legislation by the end of 2016. Obviously, that did not happen, because here we are, 8 months later, trying to do this. The reason why John Shewan urged the Government to do this and the reason why the Ministry of Justice urged the Government to do this was that, first of all, they understood the impact on global reputation and, secondly, it was plainly obvious that money was being laundered through New Zealand, but we just did not quite understand the extent of it. But we did not work in an urgent way that I think this sort of problem necessitated.

So what happened? Promises of getting the legislation into Parliament last year—promises were made by both the Minister and the former Prime Minister John Key, and they were made mainly when this was the news. Those who were following this debate would know that this came up in the House—well, this was top of mind for around about a month. It was a long process, and it did achieve a lot of airplay, and of that there was no doubt. But when the heat went off the Panama Papers, and when it moved on to the next scandal the Government was involved in, then it sort of disappeared from the PM’s radar, and the urgent action that had been promised became non-urgent and the Government put on the brakes.

We need to ensure that we do eliminate New Zealand as a place for corruption, and the evidence we were having was that people would come in with wads of cash and buy items—buy houses—and that did not have to be reported. In fact, we discussed this long and hard in the select committee because we sort of wondered—certainly for high-value dealers—what the incentive would be if someone came in with $20,000 worth of cash and actually went to purchase something, only for that dealer to say: “No, no, I have to report this under the law.”

There are a whole lot of reasons why people come in with a whole lot of cash. Maybe it is legitimate—of that there is no doubt. It could be legitimate, so we are not suggesting that everyone who buys something worth $20,000, $50,000, or $100,000 with cash is a criminal, but what we are suggesting is that it is most unusual behaviour. In fact, the threshold, at $10,000, is most unusual behaviour—and anything above that, I think we would all agree—because in this day and age, who carries cash? My daughter wishes I would carry more, and there is no doubt about that. But we operate through the banking system, and the vast majority—not all, but the vast majority—of legitimate business is conducted through the banking system. We have a very robust banking system, actually, partly—well, I was going to say “partly” because of the first phase of this legislation, but also because it is just a very well-run banking system, and of that there is no doubt. The legislation codified what banks did anyway.

But what we need to do is—and I will go back to this global reputation thing, because I have gone on about this for the last 3 years, actually. It does concern me because, in the end, as a small country all we have got is our reputation. That is what we go overseas on—our reputation, whether it is our global brand as “clean, green”, whether it is our reputation as hard workers overseas or honest brokers overseas, or whether it is our reputation for fairness overseas. What we do not want to ever end up with is a state of play where people think they can come over here and do business in a way that they do business in other, more corrupt countries. We never ever want to be in that situation, and we never ever want to have that reputation. That is why we absolutely support this bill, but it is why I am also slightly disappointed that it has taken so long to get here, because it should not have.

One of the things that we did discuss in the select committee—and we debated this long and hard amongst ourselves, actually, in a constructive way, I must admit, but also with officials—is when the regimes actually came into place. How this legislation is going to work is that the Act is passed, it gains Royal assent, and then, once that happens, regulations are written for each sector that is covered—and, as mentioned, we are talking about real estate agents, lawyers, accountants, conveyancers—but what we do understand is that there is a cost to these businesses. What the businesses said to us was that their concern was that they were unsure what they were going to actually have to implement, because until this legislation is passed and the regulations are written, these businesses are not 100 percent sure what they are going to have to put into place.

So we discussed the cost and the impost on this but also how that would be passed on. We came to an agreement on this, but what we also did believe was that we could not have a situation where the cost was so high or the impost was so great that, in fact, it was done in a way that meant that these organisations could not comply with the law. So the bottom line is that we support this 100 percent, but we did have a little bit of a reservation about the process.

Thank you for the opportunity to speak during the second reading of the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill. The previous speaker, Stuart Nash, was just mentioning that it has taken a bit long, but I would like to acknowledge his contribution during the Law and Order Committee process. He knows that a lot of things were discussed, and it took a while before we came to the conclusion of the report, and I think that was the reason why it has taken a bit long. I would also like to acknowledge the Minister of Justice as well as the officials, who have really supported the select committee process in coming out with the report. The Minister has already acknowledged the report, and so has Stuart Nash.

This bill is the second phase of the anti - money-laundering and countering financing of terrorism legislation, which is very important. It has been mentioned by both the Minister and Stuart Nash that it is important because our reputation on the international platform is very important. It is also part of our being signatories to our international commitments that we will be working to reduce these kinds of activities in New Zealand.

We have to understand how these things operate, and it is very important that we have to stop these money-laundering things. What happens is that when some money is sourced illegally, the people try to source it from A to B and pretend that there is a legal transaction—that there has been a sale or purchase of goods, or brokerage, or any kind of legal transaction—so that that money looks like legal money. But, in fact, dirty money is being turned into legal money. So we have to be very careful. And we can see that this is happening everywhere in the world—dirty money is attempted to be cleaned up and brought into the system. That is why this bill is a balance between stopping those types of transactions—it is not only the dirty money—but also money that is used for terrorist acts. We want to make sure that money is not used for terrorist purposes. The bill strikes a balance between combatting crime, minimising the cost of compliance, and meeting international obligations. International obligation is one of the most important things, because we are signatories to some of those commitments.

In the select committee we received 31 submissions, most of which were supportive of what the bill intends to do. But still there were some concerns. We in the select committee recommended some changes, which the Minister has mostly agreed to, and we hope that this bill, when it goes through the parliamentary system, will be one of the bills that will help to stop these money-laundering things.

There were some changes. We have recommended a date when the legislation will automatically come into effect. It will not go through the Executive Council to be enacted. That was very important. Officials as well as some of the submitters were very keen on it. The lawyers, the accountants, the high-value dealers, and the Racing Board all submitted in the select committee process. We heard their concerns and we tried to address some of those during our process.

This whole industry is worth billions of dollars, and we want to ensure that that money does not come into New Zealand. The Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill aims to detect and deter money-laundering and the financing of terrorism so that the criminals cannot enjoy the profits of these activities or reinvest them into further criminal activities. With these words, I commend this bill to the House.

I am happy to join my colleague Stuart Nash in making some comments at the second reading of the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill. The bill was referred to the Law and Order Committee on 23 March of this year. Following 31 written submissions, of which 29 supported the objectives of the bill in general, the report of the Law and Order Committee recommended that it be passed with a number of amendments.

The committee members I think generally took part in the discussions to try to allay the concerns of those who made submissions. Things that were raised as issues by submitters included the time frame for implementation, the scope of activities, obligations for high-value dealers, information sharing, legal professional privilege exemptions, and changes to some definitions, such as recommending a change to the definition of “law firm”. The committee took note of concerns by the submitters that proposed time frames for implementation were too short. It was the time frame that took up a bit of time within the committee. We had debates—I think there were some concerns from the Government members about our desire to bring it forward and bring it quickly, but none the less, I think I am happy that the Government has decided to do this.

In saying this, I think it is important that this is the second part of two-part legislation that aims to combat money laundering and financing of terrorism. I think it is important, also, that the first part was introduced sometime before the release of the Panama Papers. When it was introduced this Government deliberately wanted to exempt these institutions—lawyers and real estate agents—and yet we now know that there was a strong suggestion by the Police. It made a strong recommendation to the Minister saying that the exemption of real estate, the exemption for accounting firms, and the exemption of lawyers actually put the reputation of this country at risk. According to the Police and according to officials who have undertaken research into the matter after the first stage of the legislation, it amounted to about $1.6 million of illegal activities that the Police say took place under what was going on. Here it is. “Police research concludes a loophole is seeing lawyers, accountants, and real estate agents being increasingly used to launder $1.6 billion”—so it was my mistake; it was not $1.6 million—“in dirty money annually—including into New Zealand’s booming property markets.”

I suppose what I am trying to highlight is that the Minister of Justice and the Government had ample time and warning that this was going on to be able to stand up and put a stake in the ground to say: “We’re going to move fast and act quickly in order to protect the reputation of New Zealand.” But they did not, and I think the Minister needs to respond and answer as to why, because Police investigation “ ‘exposed the fact that professional services and the real estate sector are closely linked to organised crime and drug offending.’ … That research, sampling freezing orders obtained to seize the proceeds of crime, found 26 percent of cases involved unpicking the work of accountants and lawyers, and more than half”—or 56 percent—“involved property deals where ‘offenders were ultimately successful in integrating criminal proceeds by purchasing real estate.’ ”

The advice was given to the Minister and the Government way back in 2013, when the first tranche of legislation came into effect. But the Minister did not take action, and reports released under the Official Information Act, which were provided to the Weekend Herald following a complaint to the Ombudsman, show that justice Minister Amy Adams was briefed in June about Police concerns, but substantive policy work to close the loophole was begun only a year later. That is why we find ourselves here now. There has been considerable red flagging, if you like, but for some reason or other they did not do it.

That is one of the reasons why the Opposition members in our discussions with the Government select committee members insisted that it was important that we bring forward the implementation of the bill and not leave it out too far. It is about protecting the integrity and the reputation of our country. As I said, I think evidence that the country was worried about that is the fact that of the 31 written submissions, 29 supported the objective of the bill in general. In fact, I cannot remember whether any of the submitters objected, because of the fact that this was a serious matter regarding the protection of our reputation.

I want to go on further and say that, in terms of the first bill: “The regime was first applied to banks and casinos in 2013—with professional services firms being brought in at a later date—and broadly requires organisations to ensure they know who their clients are and to actively monitor and report suspicious transactions to Police. In a briefing to Minister Adams in March which included Police concerns, officials said that the mismatch in coverage meant the professional services sector was now more attractive to criminals and ‘potentially provides a ‘road map’ for would-be money launderers’.” So there was ample red flagging to the Minister, and I think the Minister needs to answer for why she dragged her feet.

In fact, the Real Estate Institute of New Zealand said it was accepting appropriate vigilance by the department and supports the establishment of suitable compliance provisions. The Law Society said it always recognised the case for lawyers being reporting entities under the anti - money-laundering legislation and was not opposed to it. Chartered Accountants Australia and New Zealand said that it had not lobbied to delay the policy, and while it supported the regime being extended, this support was contingent on the regime being practical, cost-effective, and not imposing excessive compliance costs.

So, you see, even the three core professional organisations—real estate, lawyers, accountants—are raising their hands and saying: “We too are concerned about the protecting of our reputation, so don’t blame us.” It has been the Minister and the Government dragging their feet on this.

“Officials pushing for faster action closing loopholes … have expressed concern that our international reputation may be at risk if changes aren’t implemented quickly enough. Members of the Paris-based Financial Action Task Force—a multinational group formed to fight financial crime—face regular inspections and officials warned New Zealand could get a ticking off. Briefings last year to Minister of Justice Amy Adams noted delaying work on the policy until 2016—as was eventually decided”—by her—“made it ‘less likely to meet FATF’s timing for a positive report…’ ”.

I think, reading through some of these submissions by the public and reading through what the Police have indicated and what officials have said, it has to be said, with the greatest respect to the Minister, that she is at fault and allowed for this to continue. As a result of her dragging her feet and not moving quickly, we ended up tarnishing our international reputation because we were then seen as an easy target for criminals and organised crime to launder our money.

It is my pleasure to stand tonight and speak to the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill in its second reading. This bill was considered by the Law and Order Committee under the careful chairmanship of Kanwaljit Singh Bakshi—

💬 Andrew Bayly: Very good chair.

Very good chair. The current Act is phase one of the changes brought in and applies to the sectors that were at the highest risk of being exploited by criminals. They were the banks, the casinos, and a range of financial service providers. That was the first step in closing the gaps that had the potential to provide opportunities for criminals to launder their money.

This bill is a further step in helping to protect our businesses, and also in ensuring that New Zealand’s reputation remains of the highest standard and that we maintain our position as one of the safest places in the world to do business. This bill is phase two, and it extends the regime to lawyers, conveyancers, accountants, real estate agents, racing and sports betting, and some businesses that deal in high-value goods such as art, jewellery, high-performance cars, boats, etc.

The committee heard from a range of submitters and from those in the affected sectors who were generally in support of this bill. However, some submitters were concerned about the time frames that are proposed in this bill for them to develop the systems that are required and to have them in place in time to meet these required time frames. We did discuss this at some length, and we felt that because the time frames are being phased in over the various sectors, it does give those sectors different implementation dates by which time they have to meet their obligations. It provides sufficient time for them to implement these controls and to train appropriate staff.

For example, the New Zealand Racing Board—its implementation is phased in to be the last of the organisations, which is 1 August 2019. Given the number of small racing clubs around New Zealand, the committee felt that this sector required more time to implement its systems. Lawyers and conveyancers—their implementation date is 1 July 2018, accountants by 1 October 2018, and real estate agents by 1 January 2019. This phased approach also allows for teams within the ministry to work with the various sectors to help them, as they are staggered, to set themselves up and to meet their obligations.

It was also important to the Law and Order Committee, when we were looking at the time frames, that New Zealand is not disadvantaged when we are evaluated by the Financial Action Task Force in 2019, because this could have a direct effect on our international trade reputation. This bill means we are able to meet our international obligations, and it is important that we remain a good and honest place to do business.

The act of laundering money is the way in which criminals clean illegally earned money—dirty money gained through illegal activities like the sale of drugs, the sale of stolen property. The estimated amount of these illegally sourced funds is in the vicinity of about $1.3 billion, such is the scale of this dirty money being laundered through legitimate businesses in our country. So it means that these criminals are then free to reinvest their clean money back into their illegal activities or terrorism activities. The Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill will make it much more difficult for criminals, including international criminals who may have looked to New Zealand as a place to launder their money.

The businesses and organisations that this bill applies to will be obliged to report suspicious activity or cash transactions over a level set by regulation—for example, cash transactions of $10,000 or, for the New Zealand Racing Board, bets of $6,000 cash. Lotto is even restructuring its business, to meet a $6,000 threshold. There is also a requirement for relevant entities to conduct due diligence, and the degree of due diligence is determined by the level of risk. There are three levels of due diligence: simplified, standard, and enhanced. So, for example, a State-owned enterprise, Crown entity, bank, licensed insurer, local government, or any other low-risk entities would require simplified due diligence.

This bill is a big step in protecting our businesses here in New Zealand. It certainly helps to prevent criminal activity and to prosecute those criminals. It tightens the systems used by criminals in the cleaning of their illegally sourced money. This bill protects New Zealand’s integrity, and I commend it to the House.

Tēnā koe, Mr Deputy Speaker—thank you. I am pleased to speak for the Green Party in support of the Anti-Money Laundering and Countering Finance of Terrorism Amendment Bill. I think the problems with laundering money and the—

💬 Hon Ruth Dyson: That’s your time nearly up.

Pardon?

💬 Hon Ruth Dyson: Time’s nearly up, after you say the name.

Ha, ha! The problems with money-laundering and with the financing of terrorism are well recognised by the public, and we are very pleased to support the bill. Like others, we are concerned that it did take some time to actually get it into the House, and we are still only in the second reading, because there have been major problems identified by the Financial Action Task Force. As others have commented, it is an inter-Government forum that deals with money-laundering. It has got a number of international experts on it, it has got the strong backing of Governments, and it also looks at the issue of terrorism financing. It was their very damning report back in 2009 that highlighted the potential for fraud here, the fact that it was happening, and the fact that there was drugs-related fraud, theft, blackmail, and burglaries that were related to the proceeds of criminal action. So that highlighted the need for a major law change in New Zealand.

Because of that damning report we did suffer the consequences when we were struck off the white list of the European Union list of countries that had financial integrity, and that, of course, has had consequences for businesses exporting and operating in Europe and has added to their costs of doing business.

Phase one was some progress. Phase two, I guess, because it is focusing on people like lawyers—the people who are the gatekeepers to our financial system and the people who are often perceived as having a great deal of financial legitimacy and therefore can be quite critical in disguising money-laundering and make it much harder to detect these offences. As the regulatory impact statement made clear, undetected money-laundering has major consequences for our economy. The police estimated that there is about $1.3 billion worth of disruption costs at the moment, and that is probably only the tip of the iceberg. It does reduce the opportunities for legitimate businesses and activities, and it has the potential to significantly distort the market by skewing prices and increasing the cost of borrowing. Of course, if it is not detected criminals get to enjoy the proceeds of their crime, which they may end up reinvesting in further criminal activities. So there are lots of reasons why we need to clamp down on it—not just in terms of protecting our international reputation, but because of the activities themselves.

This phase 2 has been a long time coming. I think the Law and Order Committee—not being on that committee, but looking at the bill as reported back and the number of changes that the committee has recommended—has done a very thorough job. I would note that the Minister of Justice’s Supplementary Order Paper picks up some of those recommendations, and there were quite a lot of concerns expressed by the Privacy Commissioner and others about some of the definitions in the bill and the breadth of some of the provisions, including the ability of agencies to share information, and that that would undermine privacy provisions in other legislation.

So the committee’s recommendation was that phrases like “intelligence gathering and analysis” and “national security and defence purposes”, where those could be used as the basis for sharing information, were far too broad. The recommendations that are being suggested have a much more explicit definition, to ensure that the power of the State to undermine individuals’ privacy, while engaged in the good purpose of trying to prevent money-laundering, does not go too far.

There were other issues, in terms of when the different real estate agents, lawyers, and others would be subject to the legislation, and the concern that this would be done by Order in Council, and that that was not in line with normal legislative practice. The understanding, I think, that I have from reading the bill, is that there is a commitment that there will be quite a lot of detailed guidance that is provided at least 6 months before the law applies to those different sectors, like lawyers. It is another example, I think, of where you get, out of select committee consideration and the whole submission process, significant changes that improve legislation.

But we want for the Government to speed up the pace here, because not only is there a reputational risk, but of course if New Zealand is the weak link, in terms of global efforts around countering money-laundering and the financing of terrorism, then we are potentially targeted by some of those international criminals. There has been a suggestion that money is being invested in New Zealand in property purchases, and the like, because of the current weak regime.

This bill does need to be progressed, to strengthen not only our reputation but also the controls on money-laundering, to make the system a lot more transparent, and to provide for the ability for this to be detected. This is a bill that the Greens are pleased to support. We commend the select committee for the work that it has done on taking submissions into account and making a number of sensible changes to the bill.

If I could just start where the previous speaker, Eugenie Sage, left off and commend the Law and Order Committee that picked up this legislation. I would argue that it should have come to the Finance and Expenditure Committee, and we would have had a full and robust debate and analysis of this bill. But, actually, I stand up, not being a member of the Law and Order Committee, and commend the chairman and the members for the work that they have done.

💬 Jonathan Young: Thank you very much.

You read this legislation, and it is tidy and it does what it sets out to do—and I am glad my compliments have made the evening of Mr Nathan Guy across the way there. It brings me joy.

The point I do want to make though—and the Minister of Justice made a great contribution in her speech this evening. She spoke eloquently about the legislation, but then she spoke of enhancing our international profile and that we cannot be complacent. The Minister of Revenue has spoken to this legislation in this House. I would like to quote from her first reading contribution. She spoke about money-laundering being the lifeblood of organised crime. She spoke about money-laundering enabling lifestyles and funding illegal practices and, in so doing, in the Minister’s own words, she said that we enable and ensure that legitimate businesses suffer. This was in the first reading contribution from the Minister of Revenue, and I could not agree more strongly with words spoken in this House.

Unfortunately, for the Government, the time line on this issue of money-laundering in New Zealand is a lengthy one. I speak specifically to 2003 when this particular problem was brought to New Zealand’s attention and, in fact, subsequently, we were struck off the UN’s white list for financial integrity—although, admittedly, we were put back on, as Mr Woodhouse is very wont to say. He did raise that with me when I brought it up in a debate some time ago, and I acknowledge we were put back on to it. But then we had the Panama Papers and, in the end, we actually had the Shewan report that outlined comprehensively and in detail what the issues were with New Zealand’s financial situation and what this Government—this National Government—has allowed, in terms of money-laundering in New Zealand.

💬 Clayton Mitchell: Disgraceful.

It is disgraceful, and it has been a sad indictment on a Government that has been willing to say that this has been a problem for legitimate businesses in New Zealand—it has. The Government members have said it themselves. In fact, if I go to the words of Minister McClay, who was Minister of Revenue in 2009 when the Government came into power, he spoke about the need for this legislation to be enacted and brought into the House, and he spoke about the need to act. He said: “This bill will ensure that New Zealand’s laws against money-laundering and its laws to counter the financing of terrorism are up to international standards.” He then said: “Well, there is money-laundering in New Zealand.” and it “comes from the illegal drug trade” and, yes, it is “too much, and we must do much more about this.”

That was the Minister of Revenue in 2009 when National took power. This has been a problem since 2003. The Government has known about it since it took office and it has done nothing about it until now. So not only has that compromised New Zealand’s business operation but what that has meant is that terrorism activities and the operations of illegal drug cartels, for example, have been enabled and—dare I say it—empowered by the lack of action from National and its unwillingness to act on an industry that its former Prime Minister described as a great cottage industry that was making a lot of money for the lawyers and the trust managers.

So it is an indictment on the Government. It is a sad state of affairs that we are here only now. I get the impression that we are going to try to get it through this week. So at least we are here now, and I do stand in support of it—in case that was not clear from the start. New Zealand First of course supports this because we have been speaking to this Government and to the public of New Zealand and we have been making it very clear that these lawyers, these real estate agents, accountants—not all of them of course but many of them—have been used to cover up illegal money exchanges and money activities, and that has enabled illegal activity here and across the world. It is frustrating that we have got to this point only now. It has been a decade.

By way of explanation, a police report that was kind of forced to become public, they did not want to release it, outlined that accountants and real estate agents and lawyers have, in their estimation, enabled the laundering of as much as $1.6 billion per year—$1.6 billion per year of illegal funds through New Zealand. That is an absolute indictment on the non-activity, the non-action, and the non-performance from the members and the Ministers opposite. This is because it was not just the police report that suddenly made this issue clear; we and that Government have known about it from 2009. Then we had the Reserve Bank sector risk assessment outline a similar analysis to the thinking of New Zealand First. It outlined very much our thinking for over a decade now—that money launderers and terrorists and terrorist financiers having been using New Zealand lawyers, accountants, and real estate agents or shell companies and their trusts to circumvent our banking sector controls and thereby effectively use New Zealand to hide their money for subsequent illegal use.

There have been good outcomes. This legislation is good. My analysis and the subsequent discussions with caucus have very much highlighted a positive piece of legislation that we do support. It will strengthen the anti - money-laundering, countering financing of terrorism framework. It will ensure that New Zealand steps up in terms of its international obligations. There has been some discussion in the House—and there was discussion in the select committee—around the implementation time frame. At this stage it would be interesting to see what the Committee of the whole House brings—and the Minister mentioned a Supplementary Order Paper. But it will be interesting to see whether we settle on those implementation time frames, because I have some sympathy with some of the industry players around their obligations for compliance.

New Zealand First would support a discussion, but at this stage the 12 months, 18 months, 2 years implementation for lawyers, real estate agents, and the Racing Board seems to be a fair mechanism for asking for compliance. New Zealand First does understand that there will be costs involved with that, but we are talking about $1.6 billion worth of illegal money movement within this country, and no one in this House tonight will—or will they ever—debate the fact that something strong needs to be done about that.

With very limited time to go, I do look forward to the Committee stage. There are some small, minor changes that New Zealand First will recommend to the Committee. I do look forward to that debate. But absolutely we support this bill as written and support the Government despite the length of time it has taken to get to this point. New Zealand First will be supporting this bill to the House. Thank you.

I am very, very happy to hear the comments—or some of those comments, if not all—of the previous member, Fletcher Tabuteau, regarding the quality legislation that is now before the House.

In fact, I can tell you a story of my boyhood. When my family would go to the Bay of Plenty for our holidays from South Taranaki, we would go out—wade out—into the Athenree Estuary with the flounder net and catch breakfast. Every night we would put it out and every morning bring it in, and there were three, four, or five flounder. It used to be a wonderful breakfast when we were on holiday. Then one day we stopped catching fish. One day we would go out there in the morning and they were gone; they were not there. Day after day we wondered what on earth had happened, until we brought in the net and at the end of it found a very large hole.

So this bill is about making sure the net does not have any holes, so that the fish do not escape—those slimy individuals who are slipping through the system, who are taking their ill-gotten gains and laundering them to try to cleanse those funds. And what do I mean by “cleanse”? That means to conceal its criminal origins.

This is what this House does. It is necessary for this House to make sure that we have a system that protects the integrity of our financial systems but also protects our hard-working, tax-paying businesses who comply with the law, who make sure that they do their bit to make sure that New Zealand carries on and that we do not have individuals who take advantage of New Zealand businesses to try to make their quick buck look like a clean buck, because it is not.

We know that the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill—the former iteration of it—focuses mainly on banks and financial institutions, but this one here extends the reach of that net into these phase 2 entities. It is talking about professions that have a high risk of being targeted: real estate agents and conveyancers, people who take their illegally sourced funds and buy products and assets and therefore can then go on and resell them and give the form of legitimacy to those funds. Also lawyers and accountants, betting on sports and racing—these are also these phase 2 areas and industries that can attract these sorts of people. So this bill is to reduce the risk of money-laundering and what it does is to tighten that net.

We understand at this point in time that around about $1.3 billion to $1.5 billion gets through the net in New Zealand, and we have got to stop that. It is from fraud and illegal drugs being bought and sold right through this country. We need to maintain this war on drugs. Not only do they destroy, particularly, our young people and make them unable to succeed in life but it is a black market that destroys our financial integrity and business base. This Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill regime is so important for us to meet our international obligations, to close the gaps that international money launderers can exploit, and to protect our reputation.

We have got a great reputation in the world. We are first for prosperity. We are second for anti-corruption. We are second-best in the world for Government—let us keep it that way. We do have international obligations. We want to close the gaps that international money launderers are trying to exploit and we want to help protect our reputation as a good place to do business. Did I say that we are the best place in the world to do business? That is up there with all of those other great accolades that have come New Zealand’s way under this National-led Government. So it is important to have this bill go through.

💬 Phil Twyford: Did the research unit not provide decent notes tonight?

Phil Twyford has finally woken up. Perhaps it is a depressing day for him. Terrorism financing is where money-laundering methods are used to fund terrorism activities, and here we live at the bottom of the world and we say that we are safe, yet we are in the world where all sorts of activities take place. By and large, across the Tasman Sea we see some of these activities; it has even been reported this past week. So we need to ensure that that cannot happen through our country and through our financial institutions. It cannot happen through our businesses and professions that have been targeted; through real estate agents, conveyancers, lawyers, accountants, and betting on sports and racing.

I would say that it is important that we do not allow people to disguise the source of where their funds come from, but that it is clear and transparent. And where there are suspicious activities, we have in this bill the obligation for those to be reported. I believe there are compliance costs, but the officials have worked with the sector and have been able to halve those compliance costs. We know that this is a responsibility; to have a good, clean, fair, and integral system in this country, and it is a good thing.

The bill extends our obligations to these wider sector businesses and professions that will be better placed to detect red flags. In many regards, these second-phase institutions are the first point of entry into the money-laundering process. They are the places where these people seek to take their funds, take their money, and take their cash in order to get them through into the system. But what we are enabling through this legislation is for those red flags to be lifted sooner and faster so that we can expand the scope of the Act and make it easier for police to access the relevant information, the information they need when investigating money-laundering or organised crime.

I want to say in my closing comments that by working with these affected sectors, refining options to help them meet their obligations, we have significantly reduced the predicted compliance costs. The initial estimate of up to $1.6 billion over 10 years has been lowered to between $800 million and $1.1 billion over a 10-year period. This is a good thing, and I am very happy to commend this bill to the House.

Jan Logie—5-minute call on behalf of the Green Party.

It is with great pleasure that I rise on behalf of the Green Party to offer our support for the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill at this, the second reading. The Green Party really supports these initiatives. We want to see this law happen. We want to see it happen quickly. We want it to be comprehensive legislation.

I do, though, feel compelled, at the beginning of my speech, to point out a bit of a double standard that seems to exist in relation to crime in this country. It seems that our Government has been very slow to respond to crime at the big end of town, compared with the endless harsh treatment of beneficiaries who may or may not, indeed, have committed welfare fraud. I really think that it is a significant injustice in this country.

This legislation that is in front of us is really long overdue. The extensions to the Anti-Money Laundering and Countering Financing of Terrorism Act were signalled early on, and then the Government delayed it for 2 years, between 2014 and 2016, before the Panama Papers publicity basically forced it to put the reforms back on track. This is a very common picture that I am seeing in this country. There are things that we know we need to do—say, build more houses—and yet nothing gets done because that seems to involve active governance, and this Government that we have here to my left does not seem to be very interested in active governance. It seems to be more interested in waiting until we have a crisis before it responds.

In this case, the delay was after 2010 when the Financial Action Task Force on Money Laundering—which is an inter-Governmental forum on money-laundering that comprises international experts and has the strong backing of Governments from around the world and includes, as well as, in its consideration, money-laundering and anti-terrorism financing concerns—issued a damning report on New Zealand, revealing cases of fraud, drugs, theft, blackmail, and burglary that had resulted in criminal funds subject to money-laundering in this country.

Even that report, which ended up for at least a period of time with New Zealand being struck off the prestigious European Union white list of countries that have financial integrity, was not enough to get this Government to fast track these protections. It delayed after that and was really forced, and waited until the public furore after the Panama Papers forced it to take action. It really does blow my mind a bit, and I wonder how it has managed to stay in its place as long as it has.

It is, I think, really important that we have this legislation to build this trust back in. What this legislation does is it amends the Anti-Money Laundering and Countering Financing of Terrorism Act of 2009 to extend its core obligations to include real estate agents, lawyers, accountants, conveyancers, the New Zealand Racing Board, and some high-value dealers in certain objects like jewellery, precious metals, arts, cars, boats, and antiquities, to give the Department of Internal Affairs oversight supervision of these new sectors, to protect against these areas being used to cover money that is actually the proceeds of crime, so that we can as a country be more on top of reducing crime by removing its cover, protecting the integrity, and creating an even playing field for our businesses, as well as bringing back some of the real costs of things, like housing, taking out the money from the proceeds of crimes that are affecting those markets.

Sometimes when speaking in this House, your faith in human nature is restored, and in the case of this bill it has been restored, because we have seen the capacity of people to look at the evidence and change their minds from the fixed positions they held several years ago. I want to commend colleagues on the other side of the House who, just a short number of years ago, were saying things like New Zealand had a full disclosure regime that was “world class”. These words, in fact, were uttered by none other than former National Government Prime Minister John Key, at the time that the Panama Papers first landed in the New Zealand media in early 2016.

That was the first response of this Government when revelations surfaced of huge volumes of dirty money pouring into our country and being laundered for criminal purposes: to write it off, to say that we had a “world-class regime”. Those were his words. And extraordinarily we had Minister Amy Adams here, talking to us about this very good piece of legislation.

Before I go on, I will reaffirm Labour’s support for this piece of legislation. It is a good piece of legislation that closes up holes that we should have closed up a long time ago. But that is the point—we could have closed them up a long time ago. Let me quote here from a very excellent piece by the journalist Matt Nippert, who has done a lot of work in exposing the criminal activity in this area: “In a briefing to Amy Adams in March”, which was last year, “which included police concerns,”—about $1.6 billion of dirty money sloshing around and not being captured by reporting requirements—“officials said the mismatch in coverage”, which means the fact that we left big holes in place when we did not advance phase two of the anti-money laundering legislation, as proposed by John Shewan, as quickly as we should, “meant the professional service sector was now more attractive to criminals and potentially provides a ‘road map’ for would-be money launderers. This noted officials had long-wished to progress work to close this gap, but these preferences had been overruled. ‘Work was due to commence in 2014, but was deferred to competing priorities,’.”

Amy Adams was at least honest about this; she said that the juggling of priorities was not her responsibility—“I wasn’t the Minister at that time, so I can’t speak to that.” So here we have on the record the fact that the National Government has been aware of these problems since at least going back to 2014, when officials warned it, and here we are in the closing days of this Parliament in 2017, finally getting around to it. John Shewan, in his report, said that we should have had this legislation on the books by last year at the latest. This does go to reputation. Members on both sides of the House have spoken passionately and convincingly about this. This goes to our international reputation. We are talking about crooks and drug dealers and arms traders—people who have ripped off their Governments, who are evading taxes, and who are then pouring their “hot” money into our jurisdiction.

One of the ways they have done that—and Matt Nippert’s report is very good in this respect—is they reveal that huge amounts of this, in particular, have gone into the red-hot property sector. Of course, if you have this illicit money pouring into the property sector in New Zealand, it is a double bonanza. Not only are you laundering your money and making it clean but you are making huge capital gains off the back of it as well. So it is absolutely beyond time that we close down on these rorts.

Over the course of this Parliament we have slowly but surely closed down the rort of foreign trusts. What happened when we had disclosure, when the new regime came in a couple of months ago—again, very delayed by the Government? They crashed, from 12,000 down to about 3,000, because these guys do not want the sunlight of the public gaze and public scrutiny on their dodgy activities. That is why this bill is so important, and that is why we should have put it in place several years ago when we had the opportunity. But we are finally getting around to it here.

This bill does some very simple things. It helps us to detect these sorts of transactions and it helps us to deter them. It requires the reporting of suspicious activities above certain thresholds—basic stuff that we should have already had in place—and of course, importantly, it provides protections for those who might be making disclosures as well, because there can be significant pressure put on those people.

When John Shewan issued his report—when he finally issued it—he said that New Zealand’s system was “not fit for purpose” and that it was “open to money-laundering and aggressive tax practices.” Well, finally we are getting around to closing those loopholes. We on this side of the House are happy about that, but it should have been done much, much earlier. Thank you.

It is a pleasure to take a call on the Anti Money-Laundering and Countering Financing of Terrorism Amendment Bill at its second reading. The select committee stage of this bill was very interesting in that we all, I guess, concurred on the eventual outcome of it; it was how we got there that was very interesting. The thing that interested me most was the different questions that were asked by different members of the Law and Order Committee. One who was particularly active in the course of that select committee process was Barry Coates. He spent a lot of time raising issues that were quite pertinent, as it turned out, to the course of the select committee process. So the select committee process for me was an interesting one. It was quite a long one, actually, and our chairman, Kanwaljit Singh Bakshi, did a great job of chairing that committee and taking those submissions through their process.

But I want to talk about a couple of submissions specifically, and one of them is the submission from the racing industry. If you think about money-laundering, it is one of the oldest crimes known to man—or woman, for that matter—and the racing industry throughout its history has been one of the places that was a very easy place to launder money, in that it was one of the earliest forms of gambling that we had in this country and one of the earliest forms of bookmaking that we had in this country. So there were two forms of gambling that took place in the racing industry: the legitimate one and the illegitimate one. The legitimate one is easy to track; the illegitimate one is almost impossible to track.

But, none the less, the thing that interests me most about the racing industry is that you or I—sorry, Mr Deputy Speaker—anyone in this House could go along and put a small bet on a racehorse, and could come away with a return in excess of $10,000. If you did that—and you could actually do it if you were fortunate enough, if you think about it, for $5; you could put a $5 bet on a racehorse and come out with a $10,000 dividend. In the event of that, you would end up being subject to this Act. You would then be part of the disclosure scheme and you would for ever be part of the records or the history of this country. I guess that that is one of the things that concerned me the most—that, from a racing industry perspective, the Act picked up people when they were paid out as well as when they paid in. If you put $10,000 on a horse, for example, you would expect to be picked up in the course of this legislation; if you put $5 on it and took $10,000 out, you would not necessarily expect to be. I think that was an interesting issue for me.

The other thing that was raised in the course of this submission was the amount of time that is allowed in order to comply with this bill. That is very challenging for the industry because if you think about its technology, the only way you can monitor those bets—and there is a large number of them—is through its technology system. It needs time to bring that technology up to date and to be able to get it to comply, so it was concerned about that.

The fortunate thing about the industry’s situation, and I think a number of other situations, is that the Minister of Justice does have the ability to grant exemptions around the time-scale of this thing. He or she also has the ability to grant exemptions around other bits of this bill too. I do not think, for a minute, we should be giving exemptions out too freely, but I do think it will be necessary in the course of the implementation of this bill for some exemptions to be made to enable organisations and businesses to comply, because it is a very complicated thing.

I want to get on to another submission that I thought was equally as interesting, actually, from Farmlands Co-operative Society Ltd, which is a large farmer cooperative and which made quite a compelling submission, although a little bit of that submission was outside the context of the bill. Its submission was based around customer due diligence and the fact that its shareholders, because they are the owners of the company, became part of the compliance of this bill. It was very concerned about that. If you think about the conservative old person who might be a member of Farmlands, they are not that keen on having themselves exposed to some kind of Act that may well eventually involve them in some kind of perceived criminal activity. That was an interesting submission. The select committee got through that, and, in fact, it again is not altogether relevant to the bill. But it was an interesting submission that Farmlands made, and it also has, I think, the potential to be part of any exemption that might be granted in the future.

There were a number of other submissions that were very interesting, including one from an accountant in South Auckland who explained at length a whole lot of alternatives to the bill—

💬 Andrew Bayly: Pukekohe.

He was from Pukekohe. Exactly. One of yours, I think. He must have been one of Bayly’s—he was very complicated. He made a number of submissions around the fact that he thought there were alternatives to this that could very easily short-circuit the system and save the country a lot of money—or save the accountant a lot of money, I think. But that was also ruled out.

A lot of the submissions we heard reminded me very much of a film called The Sting. For those of you who have seen The Sting, I thought it was an amazing film. It was one of the most exciting ones I have ever seen, really. But it is a little bit like what this is all about. Whilst I realise the serious side of this—and, as the two previous speakers pointed out, there are a lot of challenges around how we are perceived internationally and the fact that if we enable people to effectively launder money in any way through this country, it is not in our best interests or in the country’s best interests. But, none the less, it sort of brings connotations of these kinds of those things like The Sting, for me, and whilst I realise the seriousness of it, it is a bit interesting.

The bill really is designed to halt criminal activity in every way. We had a lot of discussion around the alternative forms of criminal activity. Amazingly, for me, it involves everything from buying artwork for half the price of what it is worth and moving it on—you can get involved in anything like that. I was quite surprised, actually, at some of the lengths people go to launder money.

The other thing that was apparent through the course of this bill was the fact that the Police have a financial intelligence branch. I guess its role is to investigate all of this sort of stuff and pick up the issues that create the most difficult challenges for it. It was interesting to think of some of the ways it might look at this, and it was a very challenging situation for the Police. Obviously, this money-laundering allows criminals to fund their lifestyles. It is very difficult for them, I think, to get away with a lot of these things, but none the less this bill will bring it into line.

I think the bill strikes a balance between combatting crime, minimising the cost of compliance, and meeting international obligations. While I do think there are initially some onerous obligations put on things like the racing industry and, you could argue, even on our accountants and lawyers, on the whole it enables us as a country to meet international obligations and to get on top of—[Bell rung] that is fortunate—the potential for crime and the potential for our international reputation to be damaged. I think we have done a pretty good job at the select committee. I think the chairman has done an outstanding job of chairing the select committee and getting the bill to this point. I look forward to the discussion as it moves on through the House in the next two stages. Thank you.

Tēnā koe, Mr Deputy Speaker. First of all, can I confirm our support for this bill. I will not read out its title. But I would like to pick up on some of the points made from the other side of the House. One of them was by Mr Young, who talked about red flags going up, and having the ability to make sure that you have got the powers and the legislation on your side to make sure that you are able to stop corrupt activities.

I recall living in a small town in the Far North where the town was known for peddling a little bit of drugs—some heavy, some not so heavy, but illegal drugs regardless. One of the members of that community used to drive around in a quarter of a million dollar Rolls-Royce Phantom. We told the police: “Do you think there’s something a little odd here, that in the township of Moerewa, with a median income of some $11,000 or $12,000, you’ve got a gentleman driving around in a Rolls-Royce Phantom?”. I can tell you that that gentleman still has a Rolls-Royce Phantom, but he has upgraded. He has upgraded to the new Rolls-Royce Phantom.

The point of my story is this. I think this is a good piece of legislation, and members across the House have spoken out about how it will close the holes in the net and it will tighten up security and increase our reputation to get us back to the standard where we once were with regard to anti-corruption. But if we cannot do it at the ground level in reality, I cannot help but sit here and question why we think and consider, when we read this bill, that it is going to solve all the problems and close all the holes in the net.

One of the points I want to raise is the staggered approach to enacting this particular bill, and putting compliance times upon different sectors that this bill is widening the scope to capture. I cannot help but wonder why the lawyers and conveyancers would be bound by the provisions by 1 July 2018 and accountants would be bound by the provisions by 1 October 2018. That is a long way off. I do not think that those particular professions are suffering from any shortage of money to allow them to build their capacity to make sure that they are able to be compliant under this legislation.

Sure, I can understand some of these small places—and it was mentioned about the Racing Board in some small little place. Let us just take the Ruakākā raceway, for example. I would be surprised if they had the internet—I am not too sure. But, sure, I can see that they would want to be able to build their capacity, and network together to make sure that they are able to become compliant. But I wonder why it would take so long for the lawyers and conveyancers to be up and running by 1 July 2018. That is over a year away—over a year away—and we are allowing them this time? Sure, there must be some sort of a reason, but I have not heard that from the House tonight. I did not hear from the Minister with any great detail. All I heard was that there is this staggered approach to make sure that when we widen the scope of this particular bill, these occupations will be able to have time to become compliant.

Look, I am no expert when it comes to laundering money. If I was, I probably would not be working here. [Interruption] Mind you, I could have a Rolls-Royce Phantom, living in Moerewa—quarter of a million dollars. It would be bloody fantastic. But, look, the point is, we support the notion that we will once again be put back up on a pedestal as the country that makes sure that we do things fairly and we do things right. You cannot come to this country and hide your money, launder your money through our different institutions here in this country. I think it is important that we (1) fix the legislation, and (2), just as importantly, make sure that we have the forensic and technical abilities to find where these people are hiding their money through what I would consider—and I am sure most of New Zealand would consider—reputable occupations. You do not go to a lawyer and think straight away that they are going to be laundering money. You might suspect it, but that is not the general thinking by the New Zealand public. So I wonder about the forensic abilities for us to police whether or not we are actually closing the net, or whether or not there are still a few sprats, as Mr Young spoke about, slipping away through the net.

But I will not go on much longer, other than to say we do support this bill. Just for the purposes of this House, I will read the title of the bill, and that bill is the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill. We support it. Thank you.

I rise in support of this Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill. You know, some years ago a politician in New Zealand made an absolute blunder by claiming that we live in a benign strategic environment. It is true that the State-initiated conflicts of previous centuries, including in the first half of the 20th century, have reduced a great deal. However, terrorism is a real and present threat to many parts of the world and, unfortunately, we see all too much of that on the newsfeeds. As responsible global citizens, we have a duty to make sure that we do our best to prevent such terrorist organisations from using our financial systems, people, businesses, and economy, in fact, to launder their money to finance their nefarious objectives.

Beyond terrorism, we need to take care that organised crime is also not able to use New Zealand as a way to channel, funnel, and launder its ill-begotten proceeds, and also other individuals and groups with nefarious intent, particularly those people or groups that might look to exploit people, particularly youth—promising them great rewards and futures, but instead delivering them the nightmare of exploitation and almost slave-like conditions, particularly when they also seek to hide the funding of such operations through very opaque means. These labour camps are as dangerous as other forms of organised crime, so it is important that as good global citizens, we make sure that such operations find it very difficult to move their money around and launder it through our economy and financial systems. I commend this bill to the House.

Bill read a second time.