Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill

on behalf of the Minister of Justice: I move, That the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill be now read a third time. This bill implements a number of measures to strengthen New Zealand’s ability to combat money-laundering and the financing of terrorism. I would like to take this opportunity to thank the Law and Order Committee for its valuable work on the bill and acknowledge the broad support from all parties in the House for the reforms in this bill.

Money-laundering is an insidious crime. It fuels criminal activity, it undermines the integrity and stability of financial systems, it distorts international capital flows, and it allows criminals to profit from their crimes. People who finance terrorism use similar methods to funnel money to violent causes. New Zealand has a strong legislative framework that enables us to detect and disrupt money-laundering and terrorism financing. This bill will strengthen our ability to protect our businesses and our country’s reputation as being one of the least corrupt countries in the world.

The existing Anti-Money Laundering and Countering Financing of Terrorism Act applies to banks, casinos, and a range of financial service providers. When the regime was put in place, these sectors were considered the most at risk of being abused by criminals. However, we know that criminals are always looking for new ways to launder their ill-gotten gains. This means that establishing money-laundering controls in one sector can increase the risk that other sectors are not covered.

This 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 sports and racing betting, and to businesses that deal in particular high-value goods. As traditional methods of laundering money become more difficult, these sectors are at risk of being exploited by criminals to launder money. Extending the regime to these sectors will reduce the avenues available to criminals to launder money without being detected. These sectors and professions often have visibility over certain transactions that banks, casinos, and other financial institutions do not. Therefore, they may be better able to spot red flags for money-laundering than current sectors are able to. This will make it more difficult for criminals to hide their money.

The bill will not only include more businesses and professions within the regime’s scope but also expand reporting requirements to include suspicious activities rather than suspicious transactions. This is the legislative response to the recommendation in the Government Inquiry into Foreign Trust Disclosure Rules in 2016. It will provide the New Zealand Police with additional financial intelligence that will assist it to follow the money and to stop the crime.

The amendments in this bill will have significant benefits. Not only will it be more difficult for criminals to launder money, it will seriously disrupt their ability to re-invest in criminal activities and enjoy their criminal gains. The Ministry of Justice estimates that these reforms will disrupt between $1.4 billion and $1.7 billion of criminal activity over 10 years, and reduce the social harm from illegal drugs and criminal activity by up to $800 million over the same period. Disrupting criminal activity and reducing their ability to re-invest in crime will strike a significant blow to gangs and to organised crime groups in New Zealand. It will reduce criminal activity and result in fewer victims, helping to protect legitimate businesses from being exploited by criminals.

I have great confidence in New Zealand’s law enforcement agencies, which have a history of successful prosecutions against gangs and organised crime groups. However, the measures in this bill will bolster the ability of law enforcement to detect and prosecute criminal activity, including illegal drug offending. This bill will help to protect and prevent more New Zealand businesses and professionals from being unwittingly used by criminals to launder criminal funds.

The benefits of extending the regime are not only domestic. Money-laundering and terrorism financing are global issues. They have blighted societies around the world and have caused untold harm. While New Zealand has a strong anti - money-laundering regime, we are not immune to the threat of international crime. New Zealand businesses trade internationally on our hard-earned reputation as one of the least corrupt countries in the world. We are consistently ranked in the top of Transparency International’s Corruption Perceptions Index, and New Zealand is seen internationally as a great country to do business.

However, we must not become complacent and take our good reputation for granted. Having a strong anti - money-laundering regime is essential to maintaining New Zealand’s international reputation. The amendments in the bill will bolster our regime. They will prevent New Zealand from being seen as a soft target for international criminals to launder their money. We need to ensure New Zealand is not seen as a weak link in international efforts to counter money-laundering and the financing of terrorism. The bill demonstrates New Zealand’s commitment to actively doing its part to prevent international money-laundering and terrorism financing.

New Zealand’s anti - money-laundering and countering financing of terrorism regime is scheduled to be evaluated by the Financial Action Task Force on Money Laundering (FATF) in 2020. FATF is the global standard setter for anti - money-laundering and countering financing of terrorism policy. Extending the new regime to the new sectors will assist in New Zealand’s preparation for the review. The results of the evaluation are likely to have an impact on our international reputation.

This Government recognises that this bill will impact on everyday businesses and people throughout New Zealand. That is why we have worked hard to ensure that the bill strikes the right balance between addressing the risks of money-laundering and terrorism financing and enabling New Zealand to meet its international obligations whilst minimising compliance costs for our businesses.

In conclusion, this bill demonstrates the Government’s commitment to combatting money-laundering and terrorism financing. It will ensure that New Zealand has a robust anti - money-laundering regime that is hostile to money-launderers, criminals, and those who finance terrorism. Ultimately, the bill will reduce crime, help protect our businesses, and enhance our international reputation and standing. I commend this bill to the House.

Debate interrupted.