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New Zealand Fights Back Against Money Laundering

By Bryan

New Zealand businesses are expected to spend $1 billion over the next 10 years in order to comply with New Zealand’s new ANTI-MONEY LAUNDERING (AML) and Countering Financing of Terrorism (CFT) Act. The Police Financial Intelligence Unit has estimated that the $1.35 billion laundered in New Zealand every year comes from drug and fraud related activities. Justice Minister Andrew Little stated “The impact of that is to give greater assurance that over $10 billion of the cash is clean,” in order to assure that money isn’t connected to any criminal activities. Under New Zealand’s new AML laws, lawyers have been required to report suspicious activities to authorities since the beginning of July 2018 and accountants will be expected to do the same starting on October 1st, while real estate agents aren’t expected to comply until the beginning of 2019

However, according to Dr Ron Pol, a lawyer who holds a PhD in political science and focuses on international money laundering, the legislation will do little to prevent the funding and profits of criminal activities because although Britain has implemented the same reporting requirements for lawyers, accountants and real estate agents for a decade already, there has been no difference in the country’s ability to detect money laundering. On the other hand, Little believes the legislation is a step in the right direction and has stated that “the more scrutiny you apply to transactions of a certain minimum value-you might not eliminate this sort of activity altogether, but you certainly make it harder. ”

The estimated COMPLIANCE cost to real estate agents is approximately $5,000 to $15,000 a year and customers are expected to add an extra half hour to the average property transaction and only an additional $200 overall to the cost of buying a house. Richard Manthel, director of an AML/CFT consultancy based in New Zealand called AML Solutions, believes that the general public and customers in general will barely notice a difference and, as for banks, the expected amount banks are estimated to pay to meet their AML obligations should be no more than $5 per bank account a year.

Although COMPLIANCE costs per transaction are relatively low, the cost of non-compliance can be great. For example, in 2012, HSBC was fined $1.9 billion for laundering money connected to Mexican drug cartels and, just this past May, the Commonwealth Bank of Australia was fined $700 million after its ATMs allowed 53,000 deposits that were over the $10,000 limit which should have triggered suspicious activity reports to authorities. After reviewing the Commonwealth report, a Reserve Bank spokesperson stated it was “comfortable with the preventative and detective controls that exists for cash deposit transactions via ATMs in New Zealand.” Real estate agents in Britain have also been hit with large fines for non-compliance with AML regulations, however, Bindi Norwell, CEO of the Real Estate Institute of New Zealand, believes that real estate agents in New Zealand have been warned multiple times of their reporting obligations in order to avoid the harsh fines.