Anti money laundering - countering the financing of terrorismForensic Focus - December 2008 |
Money laundering only became an offence in New Zealand in 1996. Prior to that hiding or attempting to hide illegally gained funds was technically not a crime in New Zealand. Also, providing financial services to a designated terrorist entity only became an offence in New Zealand in 2002, after the Terrorism Suppression Act 2002 came into force. Compounded by a number of international incidents e.g. ‘9/11’ and the ‘London bombings’, there has been an increased focus to prevent money laundering and the financing of terrorism.
One of the initiatives that has been set up is the Financial Action Task Force (“FATF”), that includes an international watchdog of which New Zealand is a member country. FATF establishes minimum global standards in relation to preventing money laundering and terrorist financing (more commonly known as the FATF Recommendations). In 2003, FATF reviewed New Zealand’s level of compliance with the FATF Recommendations – several areas were found wanting.
The changes recommended by FATF include strengthening the current legislation surrounding identification of individuals, conducting ongoing due diligence and increasing penalties on institutions and individuals for cases for non-compliance. The scope and coverage of the new legislation will be considerably broader than the existing Financial Transactions Reporting Act 1996 and therefore widens the catchment of industries responsible for complying with the legislation.
New Zealand is still ‘behind the 8 ball’ as far as making the appropriate changes and becoming compliant with FATF recommendations. It would seem that there is a real ‘lets wait and see’ attitude surrounding the industries affected. However what we are failing to recognise is that we are lagging behind the rest of the world.
The draft legislation is currently expected to be introduced to Parliament around April 2009 (only weeks before the next scheduled review by FATF), with the legislation passed into law later that year. It will be interesting to see how the industries affected react when these changes to the legislation are finalised.
This is a constantly evolving space and like the rest of the world it certainly wouldn’t hurt for New Zealand to start planning and implementing the appropriate changes now.
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