$1.5b laundered through NZ
Sun, 19 Aug 2012 10:08a.m.
A bill to close loopholes that allow around $1.5 billion to be laundered through New Zealand every year may not go far enough, Business, Innovation and Employment Ministry officials have warned.
A report prepared for Commerce Minister Craig Foss and obtained by the Sunday Star-Times under the Official Information Act, says those wishing to conduct unlawful activities are increasingly seeking to incorporate companies in New Zealand.
It says lax company registration procedures and non-compliance with international money-laundering agreements were causing a problem that had made the country a domicile of choice for international criminals wanting to launder money and traffic arms and drugs.
Ministry officials concede that measures to stamp out the practice do not go far enough. The report makes it clear that abuse is occurring and that the potential impact on financial markets and to our reputation is increasing.
The report says that in August 2010, cabinet noted there was a risk New Zealand could become a jurisdiction of choice for criminal interests.
Mr Foss said he commissioned the report in response to criticism about Government action over the issue.
"I've made it a mission to understand more about it, and understand why some legislation has not progressed as quickly as we would have liked."
He said loopholes allowing international criminals to set up shop here would be closed by the middle of next year, when his Companies and Limited Partnerships Bill passed, accompanied by new anti-money laundering regulation spearheaded by the Ministry of Justice.
It would require all New Zealand-registered companies to have a local director or agent responsible for keeping records on beneficial owners, something that had long vexed authorities.
The bill has passed its first reading but ministry officials are concerned it does not go far enough.
"There is a risk that the media and submitters will say the bill in its current form does not address the deficiencies identified. This is true, as the bill was only intended to undertake some interim measures while further work continued."
Mr Foss said the bill tried to strike a balance between cracking down on organised crime and not penalising legitimate business.
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20/08/2012 7:40:52 a.m.
Typically if one loophole is closed, it introduces more legislation creating more loopholes.Fighting international crime is an ongoing problem which NZ has been behind the rest of the world in catching up.Why did one prominent international criminal currently fighting extradition chose NZ? Because our laws are lax, and our enforcement is worse, and the public attitude is more sloppy!Take our copyright laws. For distribution you can get up to 5 years imprisonment for distribution of copyrighted material. Over 10 years ago a government departmental audit found that over 90% of the departments computers had illegal copyrighted material! Now while NZ law and enforment is a joke, that illustrates the public attitude to things like international copyrights!How many cases of distribution have been brought to the courts and by whom? Its been a law which has basically been ignored by the public, police, and the the courts. 'Siones Wedding' is one of the few times this law was taken as far as court in NZ.Dotcrim wouldn't be liable under that if they had done nothing, but staff of Megaupload aided distribution of illegal (copyrighted) material. Staff working inside the US were more minor breaches, but staff outside the US like its Hongkong based staff were following company procedure with massive and deliberate copyright breaches.Megaupload had its own sites selling illegal material for download for the tiniest fraction of its legal price - and that completely fits NZ law as a breach which can give upto 5 years jail. Of course with so much criminal proceeds being thrown at legal, media, PR ...
20/08/2012 2:36:11 a.m.
New Zealand rules are a joke. Most other nations require a resident director, publishing of annual accounts and identification checks. We live in a global economy now - time to step up controls.
19/08/2012 4:40:36 p.m.
About time. The Russians have been laundering through NZ for years, they think our laws and rules are a joke and openly laugh about. Their criminal activities are all below the radar.
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