Anti-Money Laundering and Countering Financing of Terrorism Bill — In Committee 
Anti-Money Laundering and Countering Financing of Terrorism Bill — In Committee 
[Volume:658;Page:6931] 
Anti-Money Laundering and Countering Financing of Terrorism Bill 
In Committee 
Part 1 Preliminary provisions 
Hon SIMON POWER (Minister of Justice) 
: 
 Part 1 deals with preliminary matters as is normally the case in bills such as this one. The bill as reported back now explicitly describes in the purpose clause the Government’s intention that the private sector and public sector cooperate in the implementation and operation of the bill’s regime. 
I will draw attention very briefly to the interpretation clause and the changes made to it by the Foreign Affairs Defence and Trade Committee. The committee inserted clause 3A “Overview” which is consistent with the advice of the Legislation Advisory Committee. The committee also reviewed and refined a number of the definitions in the interpretation clause to eliminate any confusion or misconceptions about the scope of definitions such as what should be considered an occasional transaction. 
One important amendment is the addition of clause 4A. This clause eliminates any doubt that reporting entities may have about whether other services they offer are captured by the requirements of the bill. For example the bill is not intended to capture the restaurant or hotel services of a casino operator. Clause 4A clearly puts these additional services outside the span of the bill. 
As was referred to in many of the second reading speeches the committee also amended the definition of “politically exposed person” in order to exempt New Zealanders holding prominent public functions. As I mentioned in my second reading speech enhanced scrutiny of domestic politically exposed persons is not a strict requirement of the Financial Action Task Force. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I wonder why the Government has decided to bring this up. We went out with this legislation as we went into the adjournment. We had a long discussion about politically exposed people. We had quite a lot of focus at that time on Bill English and I am sure that there will be more focus on Bill English as we work our way through not only the interpretation but also the rest of this legislation. 
Since that time Melissa Lee has become a politically exposed person as well. I will be interested to know as will my colleagues who sat on the Foreign Affairs Defence and Trade Committee whether Melissa Lee was there under the original interpretation of the legislation. I think that the Government has moved in a smart way to try to exclude her from this Anti-Money Laundering and Countering Financing of Terrorism Bill through the amendments made by the select committee and I am not very happy with some of my colleagues on this side of the Chamber who let the Government get away with it. I want to know from the Minister in the chair the Hon Simon Power why those changes were made. 
I think that we need to look at paragraph (c) of the definition of “politically exposed person” in the interpretation clause clause 4. The paragraph states “having regard to information that is public or readily available—(i) any individual who is known to have joint beneficial ownership of a legal entity or legal arrangement or any other close relationship with a person referred to …”. So I wonder whom that would refer to. I wonder whether the bill as introduced would refer to the circumstances of Bill English and whether he has a beneficial interest albeit a beneficial interest that is discretionary. It is a discretionary beneficial interest that Bill English has in this area. I want to know whether that was something that the Minister carefully considered as he worked through this bill and the amendments that were put to him. 
Did the issue concern the discretionary beneficial interest that Bill English had in the additional funding that he was getting from the taxpayer over and above what he was entitled to as someone who is normally resident in Wellington? Was the reason this bill was narrowed an attempt to take Bill English out of it? If the discretionary beneficial interest that Bill English had was not the reason for the narrowing of the bill then I want to know what was. If it was not to cover up the rorts to stop the money being laundered through trusts in a way to hide it then what was the reason for the change? We have heard nothing about that from members opposite. 
I also want to know about the Melissa Lee situation and about the money that was going through not a trust but a company. In the bill as introduced that member would have come under paragraph (d) of the definition of “politically exposed person” but that provision has been cut out by the select committee. I want to know why Melissa Lee has been protected in that way. Why was it that this money that Melissa Lee has known about since July or 12 June— 
Hon Steve Chadwick 
: June. 
Hon TREVOR MALLARD 
: Since 12 June Melissa Lee has known that she has ripped money off the taxpayer. She has known this for 4 months but did not pay it back. She had that additional money in her laundry for 4 months. I am not suggesting that she was laundering money for terrorism but what was she laundering money for? Why was she keeping it hidden from the public view? Why was she not fronting up? 
I want to know whether Melissa Lee has declared an interest in this bill. Has Bill English declared an interest in this bill? Bill English is certainly caught under the definition of “politically exposed person” in the bill as introduced. He is someone who is politically exposed. He is very very politically exposed—partly to us but mainly to members opposite. 
The CHAIRPERSON (Hon Rick Barker) 
: Just before I call John Hayes I draw members’ attention to Speaker’s ruling 108/5: “Members must focus on the wording of the bill on the intention in this bill and not focus on alternatives that are not part of this bill.” I just draw members’ attention to the fact that what has been done before is not the focus of the debate. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I raise a point of order Mr Chairperson. I want to ask you whether it is permissible to debate in the Committee stage whether it is appropriate to revert to the bill as introduced as an amendment with alternative wording to that which is currently before the Committee. I submit to you that it is quite within the realms of the Committee to put forward and pass an amendment to have the bill reinstated in the way that the Minister originally brought it to the House and if to do that is within the competence of the Committee then to suggest that it is done is also within the competence of the Committee. 
The CHAIRPERSON (Hon Rick Barker) 
: I just remind the member that if there was an amendment on the floor of the Chamber to that effect the member could then start to construct that argument. But as I understand it there is not an amendment on the floor of the Chamber to that effect. The member will appreciate that I did not call for order at the time that he mentioned it because I accept that the Committee is entitled to fair and broad-ranging debate. But I draw members’ attention to the fact that when we are in Committee we are focusing on the wording of the bill and on the intention of the bill and not on alternatives that are not part of the bill. Words that have now been struck out are not part of the bill. As I said we like to have a fair debate. Members are entitled to nudge against things but not make it the focus of their presentation. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I raise a point of order Mr Chairperson. Again I am vaguely apologising for doing this but my view is that your saying that people can debate amendments only when they have been tabled is a new ruling. For as long as I have been a member of the House members have indicated their intention to table amendments or the possibility of amendments being tabled. Very very specifically in this area I say that if it is the wish of the Committee for the Labour Opposition to table some amendments and to withdraw them later or not to withdraw them later then we can do that. My submission to you—and because you are my friend and colleague I do this with some reluctance—is that the ruling that you are making is without precedent. I have certainly never seen it in the time that I have been a member. In the past people have often discussed the changes and the subtleties that have occurred at the select committee and the effect that that has had on a particular clause of the bill and they have discussed whether that has been a good thing or a bad thing. I think that to rule that out would be something that is very new. 
PAUL QUINN (National) 
: 
 In my view the member killed his own argument. He spoke about the intention to introduce an amendment or the possibility of introducing an amendment—those were his words. In this case he gave us a diatribe of why the wording had been cut out and he chastised his own members on the select committee for allowing it to be cut out. I submit that that is not the same thing that he tried to say which related to the prospect of moving an amendment. 
The CHAIRPERSON (Hon Rick Barker) 
: I do not want to carry this on. Without taking the varnish off the matter I say that if the member reflects on this issue and reads his  
Hansard 
 he will see that his speech was more appropriate to a general debate on Wednesday afternoon after 5 o’clock. His speech was getting on to issues that were well beyond the scope of the bill. I have said to the member that I will not rule out entirely the matters that he raised and I have made that point. But I would be concerned if those matters became the sole part of the presentation on parts of this bill. I just draw the member’s attention to what the House has decided by way of Standing Order 292(1): “A committee of the whole House considers a bill to determine whether the bill properly incorporates the principles or objects of the bill as read a second time by the House.” That being the case the Speakers’ rulings are quite clear. We are here to discuss the bill not to discuss what it had been or what it might have been. If a member wants to provide an amendment he or she can do that but that member must talk to the amendment. That is what members must do. 
JOHN HAYES (National—Wairarapa) 
: 
 The last 5 minutes have been a great example of the saying that a little knowledge is a dangerous thing. I would have thought that it would have been helpful to the Committee if the member opposite—experienced as he is given that he is a former Minister—had taken the time to speak to his colleagues on the Foreign Affairs Defence and Trade Committee about this issue before he came into the Chamber. 
The reason why the select committee members took the action they did and I have to say that we were absolutely united in making our decision was that we judged that there were sufficient checks and balances in the New Zealand system—including audits company requirements in legislation and a whole raft of other obligations on people who are engaged in business and in politics—to render totally unnecessary the sorts of changes that Mr Mallard was talking about. 
Furthermore I report to the House that we have something like 55000 names of politically exposed persons— 
Hon Clayton Cosgrove 
: Not me. 
JOHN HAYES 
: —including Mr Cosgrove and me. All members of this House and their relatives are already on lists that are held commercially and used by each one of our banks. The suggestions that Mr Mallard is floating are absolutely unnecessary. I support the bill in its present form. Thank you. 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 I am aware that an amendment has been tabled in the name of the Hon Trevor Mallard to remove four words from the definition of “politically exposed person”. Those words are: “in any overseas country”. The effect of that amendment as proposed by Trevor Mallard would in essence be to return the Anti-Money Laundering and Countering Financing of Terrorism Bill to the state it was in as introduced in respect of politically exposed persons. 
I oppose the amendment of the Hon Trevor Mallard. I have come to the view that the amendment does not take us forward and I will lay out to the Committee why that might be. The situation in respect of politically exposed persons was looked at carefully by the select committee and a number of matters were brought to bear. We looked carefully at the issue of trust and how it may apply to domestically politically exposed persons. We came to the view that because of the existence of a thing called a discretionary trust it was rather too easy for a domestically politically exposed person to sneak through that particular proposition. It was unknown to us at that time that the Deputy Prime Minister of the land had a discretionary trust in his part of his family trust which proves the point—I think rather well—that it is not difficult at all for a smart person to sneak through legislation. Therefore being prescriptive about the legislation may not be the best thing to do. 
The second thing is that amending the politically exposed persons lists as proposed by the Hon Trevor Mallard means for example that members of the executive of a nation would come under some sort of scrutiny. Members of the executive of this country would come under some sort of scrutiny but backbenchers would not. People who headed State-owned enterprises would be caught; people who headed district health boards would not. And on it went. Where was the list going to stop? What was so good about a positive list? We threw out that idea of politically exposed persons partly on that basis as well. 
So we come to the issue that Trevor Mallard speaks of in respect of Melissa Lee who is not a member of the executive but a mere backbencher. We did not give ourselves false comfort that by leaving the domestically politically exposed persons provisions in the legislation we would somehow be better protected. That idea is given lie to by the fact that Melissa Lee has in recent times been determined to have owed $100000 or thereabouts to NZ On Air specifically because she moved it from one part of the company’s accounts to another. 
That leads me to another point. That is not laundering because the money has not left the company yet. It becomes laundering at the point when the money leaves one company and moves to another. This was pre-laundering. It was what one might call the “soak” phase. It was the phase where the enzyme stain remover was applied and the laundry had not begun. It follows like night after day that when a company is successful because things have moved from one line item to another—inappropriately as we now discover—sooner or later laundering might follow and the start switch might get pressed. But this Melissa Lee example is pre-laundering and it will not be caught by this legislation although it is true to say that it would never be of benefit to an individual until laundering had taken place. 
So for a range of reasons I think the amendment put forward by the Hon Trevor Mallard falls short of the ideal. We have a couple of really good instances in front of us. They are both unfortunate. We used them to demonstrate that the advent of a loophole in the form of a discretionary trust means that seeking the beneficiaries of a trust which is a requirement of this legislation cannot work where that trust is a discretionary trust because the beneficiaries have not been described. The idea of who will be a beneficiary and who will not is discretionary. It cannot be detailed with any particularity. 
Secondly in respect of a positive list the question immediately arises as to who is missing from that list. Whether it is a district health board chief or a backbencher does not really matter. The point of the story is that the best way to maintain an appropriate supervision of politically exposed persons is to be vigilant in general and not vigilant in particular. The best way this country can keep its high state of transparency with the very excellent reputation it has against any form of corruption is to be vigilant generally not to be specific and say we are looking only at these people and only at the beneficiaries of a trust etc. 
That is the essence of my opposition to the amendment tabled by the Hon Trevor Mallard. I am not even sure that it should go to the vote. My view is that the legislation as reported back from the select committee is in a much better form than that which was introduced. Although I understand the debate put forward by the Hon Trevor Mallard it is the same debate that we had within the committee for a long time and that was our resolution. 
Hon CLAYTON COSGROVE (Labour—Waimakariri) 
: 
 I concur with my colleague the Hon Pete Hodgson but on a different aspect of the Anti-Money Laundering and Countering Financing of Terrorism Bill. When we look at the bill that has come from the Foreign Affairs Defence and Trade Committee we see it is indeed in better shape than when it went to the committee. I would be grateful if the Minister in the chair the Hon Simon Power would perhaps report back to us or let us know why that is and whether he took his eye off the ball. I note that the committee said that the bill as introduced did not give sufficient emphasis to a risk-based framework for countering money-laundering and the financing of terrorism and that it had amended it substantially. I am not quite sure whether the Minister may be busy and unlike some of his colleagues—Mr Brownlee and company—may have taken his eye off the ball. 
The Minister will recall that his predecessors who had some stewardship of and relationship to this bill embarked on a costing of the legislation. We wanted to give the private sector the assurance that we were taking a precise and risk-based approach to it that the department was not putting an extra zero on the invoice and trying to “Rolls-Royce” it and that we were attempting especially with the monitoring regime to meet our international obligations in an appropriate way to ensure that we countered money-laundering in any aspect but that we were not ramping it up like some other jurisdictions have perhaps done by creating new departments and by putting in a lot of cost which is ultimately passed on to the private sector and to customers. That seems to have been lost in the transition from the bill being authored by the Minister to it being referred to the select committee. 
Under one of the Minister’s predecessors the previous Labour Government got Deloitte to do an independent costing of the proposals that were being put forward. As I said that was to give the private sector a level of comfort that we were meeting our obligations but that we were doing so in the most efficient and cost-effective way possible bearing in mind that even in doing that there is a substantial cost related to this legislation which banks in particular and other institutions will have to deal with. I wonder whether the Minister could take another call and tell us what happened to the quality control process in the time between the bill being launched off his desk and it finding its way to the select committee. 
I think the select committee has done a very good job in requiring some more precision in respect of the bill’s aims and objectives. Likewise in terms of the purpose and overview clauses in the bill I turn to the point that the select committee made when it recommended inserting an overview clause new clause 3A to set out in plain English the contents of the bill. The obligations in the bill are complex but again I ask what happened to the quality control. This bill will affect a large number of stakeholders. I ask the Minister again whether his eye was off the ball because it is helpful and preferable to draft modern legislation—the Minister is a lawyer; I am not—in a way that is as clear and as user-friendly as possible even given the constraints of parliamentary counsel around the language that is used. That is necessary so that those who read the legislation and those who have to implement it can see precisely what the aims and objectives are and what their obligations are. So I ask the Minister what happened. What happened between the work that was done by the officials and the legislation that was put in front of us? 
A lot of work was done by the officials—I acknowledge them. Originally it was put to the officials that the framework around this legislation was good but where were the costings? They then had to go away and have a wee look at what was going on. The officials did agree with me at the time that we should engage Deloitte—that we go out into the market place to have the propositions that now form part of this legislation tested independently. This Government over a whole series of policy platforms shrinks absolutely from that precedent. Whether it be—not to digress from this bill—the issue of private prisons whether it be cuts to various Government services or whether it be propositions around accident compensation there is a reluctance unlike the previous Government to have those propositions tested by independent organisations like Deloitte. That is what we did in respect of this legislation under my stewardship. We did so because there has always been an accusation when these kinds of international obligations are being implemented by—to be fair—any Government of the day that certain departments try to say it is a great grab bag: a great opportunity to load up the budget for a series of different purposes that they may perhaps see value in but that business may not and at the end of the day Ministers may not. 
So we broke the mould somewhat. I invite the Minister to take a call and indicate whether he may do the same as we did in relation to other things that he is proposing in his portfolio. As I said we engaged independent consultants in the form of Deloitte to go out and challenge our own thinking and our own proposals. The request that I put to them was simply this: given that we have to meet our international obligations why can we not do that in a least-cost manner or with the least burden to the private sector? 
I recall—I may have brought this up with the Minister before—that I said to the banks that we did not want to create different levels of obligation. The banks put a very interesting proposition to me. They said that if we were to go to a lower level of obligation than perhaps our Australian counterparts we would actually increase the compliance costs. The banks are set up in Australia which is ahead of us in terms of its legislation for a number of reasons. The banks said that even if we tried to establish a cheaper proposition for the banks here that in itself may create an additional compliance cost because even a cheaper option would require some systems adjustments. But we wanted to give the private sector confidence that we were not simply putting up a proposition to meet international obligations holus-bolus and we were not going to write our own bill with whatever obligations we thought we should meet that the private sector and ultimately the customer or the client down the chain would have to pay for. We did engage Deloitte and it did come up with a substantial report and that informed our thinking. Also I believe it engendered a high degree of confidence within the private sector. 
I say again to the Minister that I think that is a good thing to do. I wonder why—without digressing from this bill—his colleagues do not test the propositions that they are putting forward regarding accident compensation. Some say the propositions are spurious some say they are wrong and some say they are downright deceitful. The way to alleviate that concern is to ask an independent third party like Deloitte or PricewaterhouseCoopers or whoever it may be to go and test the Government’s propositions and the Minister’s ideas. If they stack up then we would have an independent agency with no axe to grind providing some ammunition I suppose for the Government. But equally if the propositions are bunkum if they are simply smoke and mirrors and if they are simply designed to put fear and panic into folk then that would be exposed by an independent third party with no axe to grind. I am pleased that the Minister at least when he was the Opposition spokesperson I think supported Deloitte coming in and having a look at the propositions in this bill. Well he says he was benign to the whole issue. 
The National Government campaigned on the basis of providing the most efficient solutions for business. We put this issue to Deloitte but again I say to the Minister that I wonder whether his colleagues will do the same on other issues. I wonder whether his colleagues the Minister of Corrections the Hon Judith Collins or the Minister for ACC the Hon Dr Nick Smith will do the same as we did. If they believe in the robustness of their arguments I ask what the problem is. They should put the propositions out to an independent third party have them costed roll the dice and see how they go. But I sense there is a reluctance on the part of this Government to do that. It talked fast and tough before the election about providing least-cost options to business but I note that over a whole series of portfolios it is very reluctant to have its propositions and its theses tested by anybody other than its own officials whom of course it can control. It can tell them what to say and they are required to follow the Government line of the day; that is the professionalism of the public servant. But oh no this Government is very very reluctant to have third parties examine at the very least the cost-effective nature of the propositions it is putting forward. 
I ask the Minister again to take a short call. I hope he will tell us why the wheels went off the rails and why the bill went from his desk to a select committee when it was so imprecise and unclear that the select committee had to put a bit of plain English into it in order to explain to the folk who will have to use the legislation what it means. 
JACQUI DEAN (National—Waitaki) 
: 
 I move  
That the question be now put 
. 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 I raise a point of order Mr Chairperson. It was a matter of courtesy to let the Government take the call because the Opposition took two calls in a row and indeed the speaker before that was another Opposition speaker. We have plenty more to say on this bill. If the matter is one of whether we have challenged the chair sufficiently then I guess we are guilty. But the fact of the matter is that we thought that the member who has just resumed her seat Jacqui Dean wanted to make a contribution. She is on the select committee; it was her turn. 
The CHAIRPERSON (Hon Rick Barker) 
: The member makes a fair point. I was considering accepting the motion simply because I did not think the Opposition was interested in taking any more calls. If the Opposition members are interested in having some more calls then in the interest of debate the Opposition had better start to call. Do I have any bidders? 
Hon CHRIS CARTER (Labour—Te Atatu) 
: 
 I rise to make my first contribution to the debate on the Anti-Money Laundering and Countering Financing of Terrorism Bill in the Committee stage. I am a member of the Foreign Affairs Defence and Trade Committee. In fact I am the senior Labour member on that committee and I am really pleased to make a contribution. 
I begin my contribution by praising John Hayes the chairman of the Foreign Affairs Defence and Trade Committee. John and I of course have our political differences but I want to tell the Minister in the chair Simon Power that Mr Hayes acted in a very non-partisan way during the process of this legislation. 
Mr Hayes was receptive to Opposition suggestions and he was very accommodating to experts from the banking sector. He worked particularly closely with my colleague the Hon Pete Hodgson who in my view made a first-class contribution as an Opposition member of the select committee. Pete Hodgson is a master of detail—I guess that is because of his scientific training—and he really focused the whole select committee’s attention on the details of this bill and especially on the processes of working with the banking industry on this piece of legislation which I am proud to say was introduced by the previous Labour Government. 
My colleague the Hon Lianne Dalziel was a driving force in getting this issue dealt with. It is an important national issue. We are faced with the spectre of global terrorism as well as with the efforts of organised crime to launder illicit funds through the global financial systems of the world. New Zealand and Australian banks with their fine reputation for honesty and stability along with being away from the financial centres of Europe and North America have been a target an opportunity for international criminals to launder funds through our system. 
In our confidential briefings from the police we were told that this is in fact a real issue within the South Pacific. There have been significant issues in Vanuatu and elsewhere where illegal funds have been moved globally and money has been washed through financial systems including New Zealand’s. This legislation will go a long way to putting in better systems to ensure that that does not happen. 
Sadly we also have a global political framework whereby different groups be they in South Asia—Sri Lanka comes immediately to mind—the Middle East within the Russian Federation or elsewhere have moved funds to finance global terrorism. As part of the global community we must make an effort to make sure that our financial systems are not used for this illicit activity. All of that sounds fine. Nobody would disagree that we must have more robust and effective systems. Indeed we have global obligations to make sure that our systems are up to scratch and that they address these issues which are so important. 
The Financial Action Task Force has been looking at how effectively we can do this but that then comes down to the practical issues that the Foreign Affairs Defence and Trade Committee struggled with. How do we make these noble intentions actually work within our banking system so that we do not place too onerous a financial burden on banks and so that we have effective systems? Particularly in the context of our close economic relationship with our largest market and closest neighbour Australia our systems need to be in sync with the Australian systems. 
I have to say that it was quite a laborious process for the select committee to ensure that this legislation fitted as closely as possible with the Australian system and that the banking sector was comfortable with what we were doing because we will be relying on that sector to make it work. Through a process of negotiation we set up a group of banking experts who came in on a regular basis to look at the legislation. They moved through it carefully. At times they came up with suggestions that we took on board and on other occasions they made suggestions that we felt were not appropriate. The consideration of the bill provided one of the best examples I have seen in my 12 years as an MP of the select committee process and of a cross-party opportunity where people worked really well together. 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 I want to make some initial comments about clause 3A. If I recall correctly the original idea came from the Legislation Advisory Committee. If it did not then it came from the chairman of the Foreign Affairs Defence and Trade Committee John Hayes; and if it did then it was the chairman John Hayes who picked it up and ran it through. What that provision does—it is called an overview in the chapeau—is tell the reader I think in something getting pretty close to plain English what the bill is about and that is not a bad thing for us to adopt as a legislative practice. It takes us through in a page and a half something that would have been the early part of the explanatory note when the bill was introduced. Therefore the question that arises is whether in the future we will as a nation get into the habit of having an explanatory note in legislation. I know that there is a possibility of lawyers claiming that because it is part of New Zealand law they can therefore take a look at the explanatory note or the overview and determine that therefore it means that clause 16 in Part 2 or something or other means something other than what it says it means. I know that there is danger in that but the benefit is that for someone like me who does not have a law degree and does not read law easily—my brain does not read law easily—this part is pretty meritorious. 
I wonder whether the Minister in the chair the Hon Simon Power who happens to be the Minister of Justice might like to indicate to us whether he thinks it is good drafting practice for us to take an overview clause like clause 3A and make it something more than the routine we have at the moment. 
Needless to say my second contribution to this legislation has to be about the issue of politically exposed persons. I think my colleague the Hon Trevor Mallard has made a grave mistake. I think my colleague the Hon Trevor Mallard should be invited to withdraw his amendment. He certainly has good intentions in putting the amendment forward. Indeed the bill as introduced was exactly what the Hon Trevor Mallard would now have it be. But I think my colleague the Hon Trevor Mallard was not party to the select committee hearings. He was not party to an exploration of how these things were managed in Australia. He was not party to an exploration of how these things are done in other jurisdictions—such as Britain Canada the US and so on—and as a result I think he is the poorer for it. 
I would like to say briefly in order to bring my beloved colleague the Hon Trevor Mallard up to speed that we run the risk of giving ourselves false comfort if we think that by delineating a certain number of domestically politically exposed persons we are therefore able to take a lighter or easier approach to people who are not on that list. Furthermore we need to take into account the fact that politically exposed persons are as likely as anyone else who is laundering money to try a bunch of falsehoods in order to achieve that laundering whether it is just making one’s trust a discretionary trust so that there can be no see-through to who the beneficiaries are—and the legislation allows for that see-through for that piercing of the veil if one likes of a trust—or whether it is the issue that if a person is not on a list somehow he or she cannot be at risk. Either of those options might lull us into a sense of false security that we have the issue of the politically exposed person covered when I think demonstrably we do not. 
The two issues in front of this House over recent weeks involving the Deputy Prime Minister of this country and involving a backbencher Melissa Lee draw specific attention to how it is that one can be lulled into a false sense of security. Neither of those issues would be caught if the Hon Trevor Mallard’s amendment were to be put and were to pass. In the case of the Deputy Prime Minister it is because he has chosen the vehicle of a discretionary trust. In the case of Melissa Lee it is because she is not a member of the executive. So let us not be lulled into a sense of false security on the basis that we might have a nice positive list in the bill as introduced of politically exposed persons and therefore we need not bother because we have two instances involving two members of this House neither of whom would be caught if the Hon Trevor Mallard’s amendment were put and passed. And that is the point; it is general vigilance not particular vigilance that matters. It is an overview that matters and not a degree of particularity. It is a culture of supervision that matters not the names and addresses of these named and addressed people. 
Of course there are other reasons why a politically exposed domestic person would be a difficult one to cover and that is that the legislation as introduced said we needed to cover the wives of such people or their husbands or their spouses in general including their de facto partners. It also included the children of that politically exposed person including presumably the children of the de facto partner of the politically exposed person. Nobody knows that list so we were kidding ourselves that we could have known it. 
When the honourable chairman of the select committee made his brief remarks he pointed out that commercially there are available internationally lists of thousands of people who may or may not be suss. No doubt those lists will be altered every day. They are used by financial institutions now. There is no doubt that New Zealanders are on that list either because they are thought to be suspect or because they are politically exposed. There is no doubt that that list is in use and contains the names of New Zealanders now. The view that the chairman came to and the view that I came to is that such a list and such an approach is the more viable way of keeping a degree of vigilance and that it is not appropriate for us to give ourselves the conceit that we have this thing covered by a particularly narrow approach to politically exposed persons domestically. 
For that reason I shall be voting against the amendment in the name of the Hon Trevor Mallard when it is put. I think it is a bad amendment. I think it is one that was put up with the best of intentions and that it does mimic precisely the bill as introduced. It is not that the Hon Trevor Mallard has made some foolish suggestion; it is just that with the benefit of examination and the benefit of international experience or international comparison we think we have a better way forward. For that reason I think the amendment in the name of the Hon Trevor Mallard should be resoundingly defeated. 
The question was put that the following amendment in the name of the Hon Trevor Mallard to clause 4 be agreed to: 
to omit from paragraph (a) of the definition of “politically exposed person” “in any overseas country”. 
Amendment not agreed to. 
Part 1 agreed to. 
Part 2 AML/CFT requirements and compliance 
Hon SIMON POWER (Minister of Justice) 
: 
 It is worth making a few introductory remarks in respect of Part 2. I will not be making any further remarks about Part 2 other than those matters that I am about to share with the Committee. 
Effectively Part 2 sets out the obligations that will be imposed on reporting entities and the new requirements for the cross-border transportation of cash. The intention of the bill is that reporting entities will take a risk-based approach to their anti - money-laundering and countering of terrorism obligations and this is the part of the bill that enables that to happen. Part 2 is large. It has six subparts and there have been a number of changes to note in Subpart 1 which requires reporting entities to satisfy themselves that customers are who they say they are and that their financial transactions are legitimate. Simply put this process is known as customer due diligence and the bill sets out different levels of customer due diligence depending on the type of customer the nature or circumstances of the transaction and broadly speaking the level of risk that is involved in that transaction. 
The changes to the bill’s customer due diligence requirements recognise some of the operational difficulties and unnecessary costs in conducting customer due diligence on low-risk existing customers. The changes also recognise that it would be difficult for reporting entities to be required to identify a customer as a politically exposed person at the point of first contact. The changes also give reporting entities discretion around verification requirements. Subpart 2 contains the detail on the reporting of suspicious transactions. It is through those reports that financial institutions and casinos will be providing the police with intelligence on possible criminal activities. There are no important changes to note in that subpart. 
Hon Trevor Mallard 
: The Department of Internal Affairs is involved and Ministerial Services. 
Hon SIMON POWER 
: I say to Mr Mallard that we should not start talking about individuals who have been or are in Parliament in that regard. 
Subpart 3 sets out the requirements for a reporting entity to keep relevant records. There are no important changes to note in that subpart. Subpart 4 concerns reporting entities’ internal policies and procedures. It requires reporting entities to have programmes for detecting and managing the risk of money-laundering and the financing of terrorism to carry out risk assessments and to review audit and report on risk assessments. There are no important changes to note in that subpart. 
Subpart 5 provides for the preparation approval and publication of codes of practice. The inclusion of codes of practice is a way to provide regulatory certainty. Again there are no real important changes in that regard. Subpart 6 replaces the cross-border transportation of cash regime in the Financial Transactions Reporting Act to include unaccompanied cash as well as bearer negotiable instruments such as traveller’s cheques. Again there are no important changes. 
I will respond to one remark made by Mr Hodgson in respect of Part 1 and I seek the Committee’s indulgence in that regard. Had he heard my preliminary remarks in respect of Part 1 he would have heard me note the contribution that new clause 3A makes to this legislation. 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 Mr Chairman I was happy for my colleague Jackie Dean to take the next call on the Anti-Money Laundering and Countering Financing of Terrorism Bill—and I am sure she will. 
I will give a serious contribution to Part 2 and it will not take particularly long. Part 2 is the guts of the bill and regrettably the politics are not brilliant although I sure my colleague the Hon Trevor Mallard will be able to give the lie to that. Part 2 is where the major changes occur other than to the definition of “politically exposed person”. In essence in terms of this part members of the Foreign Affairs Defence and Trade Committee believe we took out a huge number of costs got rid of what the chairman called “bureaucracy central” and returned it to something closer to we think a risk-management approach and this was the part about which most but not all of the discussion between officials and the banking advisers took place. 
It is worth putting on the record again that the banking adviser people from the New Zealand Bankers’ Association are not with us but officials are. I want to place on the record the fact that although we initially got ourselves into quite a sticky position where some of us were pretty frustrated with the legislation as introduced the process by which it was resolved in the select committee was a tribute to all involved. And that certainly includes—in fact it is pretty much limited to—the banking association and the officials who served the committee. They got down got talking and got negotiating and they were solution-oriented instead of problem-oriented and that gave us the majority of the changes in the legislation. 
I give members an example. If someone from Zimbabwe—or someone from the North Island who is therefore a bit on the suss side to a South Islander—walks into a bank and if there are politically exposed person questions about the person then the bank does not have to fix that up and satisfy itself then and there. The bank can do that on day two and that means that the transaction can take place. Of course the records of the person will have been made available and the records will be checked in back-office activities the following day but to have that person—suspected of being but almost certainly not a money-launderer—waiting in a long queue at a bank was a bad idea. 
In a simplistic way I am trying to give the Committee some idea of what a risk management approach looks like. I conclude my remarks by saying again that I think those who were involved in getting down and sorting out the clauses and subclauses into what we have now did a very fine job and they ought to be thanked. 
JACQUI DEAN (National—Waitaki) 
: 
 Part 2 of the Anti-Money Laundering and Countering Financing of Terrorism Bill describes the requirements and compliance with the legislation as proposed. The critical part for the Foreign Affairs Defence and Trade Committee was around customer due diligence. The concern expressed by a number of submitters was that the bill as introduced was perhaps overly prescriptive although it would be fair to say that the intention of the bill was well described and very clear. It was the job of the select committee to work through the specific issues and together with the input of members of the banking industry the bill that came out of the select committee better reflects the realities of customer due diligence requirements on behalf of the banking sector. 
Part 2 of the bill describes standard customer due diligence. It also describes the circumstances under which banks and financial institutions might be able to utilise simplified customer due diligence. That would be for customers with a relationship with the bank and again enhances customer due diligence. A number of other subparts to this part of the bill include Subpart 2 “Suspicious Transaction Reports” and requirements around that; requirements around record-keeping on behalf of financial institutions; and compliance with anti - money-laundering and countering financing of terrorism requirements. There are also codes of practices and requirements around cross-border transportation of cash. Part 2 of this bill is quite lengthy and goes into detail on the compliance requirements around the intention of this bill. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I am pleased that we have got to Part 2 of the Anti-Money Laundering and Countering Financing of Terrorism Bill which is the substantive part of the bill. I found it interesting to look through the bill when we dealt with it before the adjournment last month during the adjournment and subsequently today. I have a series of questions for the Minister as to how Part 2 applies and where it is appropriate. 
I note that one of the entities with responsibility for reporting suspicious transactions is the Department of Internal Affairs. I think all members are aware that the Department of Internal Affairs is the organisation that is responsible for Ministerial Services. I want to know how much of a responsibility the department has and where within the department the responsibility lies for reporting suspicious transactions that involve Ministerial Services. I would appreciate an answer on that. 
I see that under clause 9 “Customer due diligence” due diligence must be conducted on “any beneficial owner of a customer”. I want to know whether the Endeavour Trust is a customer of the department and of Ministerial Services. I think it is important that we find out whether the Endeavour Trust is in fact a customer because if it is the next question would be about beneficial ownership. I think it is interesting that this bill concerns that—and “bill” is the appropriate word in this case; there are a number of bills involved in this: there is the legislative bill there is Bill English and there is the unpaid bill for a decade of cash—and I want to know whether the beneficial owner under clause 9(1)(b) is a direct beneficial owner of a customer or is someone with a discretionary beneficial interest in a customer where that customer is a trust. It would be good to work through that. 
Clause 12 talks about reporting entities and their establishment of business relationships with new customers and particularly in paragraph (e) about when in relation to an existing customer there is a change in the level of risk involved. That is stated under subparagraph (i) for example as being where “there has been a material change in the nature or purpose of the business relationship;”. I want to know whether in the particular case where a trust goes from being the owner of a house for which an allowance is paid to being in an arrangement whereby that trust leases a house to the Crown that is regarded as being a material change in the nature or purpose of the business. 
Hon Pete Hodgson 
: Very good question. 
Hon TREVOR MALLARD 
: My colleague Pete Hodgson says he thinks there is a material change in the nature and the purpose of the business relationship. What I then want to know is how that is caught under this legislation and whether in anticipation of this legislation the Secretary for Internal Affairs has issued the appropriate notices with regard to the Endeavour Trust. 
Moving through the bill I jump—I know that within this part we are allowed to go back and forward and it is my intention to do that during the debate on the bill—now to clause 20 “Circumstances when enhanced customer due diligence applies”. Subclause (1)(aa) states that due diligence applies “if the reporting entity establishes a business relationship with a customer that is—(i) a trust or another vehicle for holding personal assets:”. I would have thought that not many cases were clearer than that of Bill English where the Endeavour Trust is an organisation for the holding of personal assets. I want to know what triggers that. Is the trigger the setting up of the trust is it the development of the relationship between the trust and other organisations or is it particular commercial transactions? 
I now go to clause 23 which is a completely new clause on politically exposed persons. It is a rewrite of the legislation. I can accept that the Foreign Affairs Defence and Trade Committee had a look at this area and for reasons that I do not think have been very well explained by my colleagues some changes have been made to the bill. I am willing to hear over a period of time their explanations for the changes that have been made. I want to know what the relationship is between this legislation and overseas legislation. I understand that the relationship is going to be sorted out at a conference and there will be an attempt to pass this bill in time to follow a particular timetable. So I ask whether this legislation has been shared with overseas jurisdictions and if it has been—for example if this legislation applied in Australia and if the Australian legislation was the same as this—whether Bill English would be deemed to be a politically exposed person when he leaves the country. 
We have worked it out that there is an attempt in this legislation and in the changes made in the select committee to take out people who are currently Ministers from automatically being deemed to be politically exposed people. But that does not apply to people from other jurisdictions and I want to know whether if people have been involved in activity that results in enhanced customer due diligence where there are suspicious transactions—as in the case of the Auditor-General versus Bill English at the moment—and if they travel overseas this legislation is triggered for them in those jurisdictions. If it is triggered in other jurisdictions I want to know whether there is a reciprocal arrangement whereby it is triggered in this jurisdiction as well. 
I now turn to organisations that have quite an international background and I will speak in particular about the financing by the New Zealand Government of organisations that appear to be involved in fraudulent activities. These are organisations that have inflated their costs and inflated their overheads and that have over a period of several years presented false invoices to the New Zealand Government and received payment on the basis of them. I refer in this to a television company—one that produces a programme called  
Asia Downunder 
. I understand there is one shareholder in that organisation and that person is a member of Parliament. Is there more than one shareholder? 
Hon Member 
: I don’t know—no I think you’re probably right. 
Hon TREVOR MALLARD 
: I think it is one shareholder. We are then left with a question where we have an international organisation but its ownership is in New Zealand. The organisation has basically accepted that over a period of years it has presented fraudulent invoices to the New Zealand Government and unfortunately been paid out on those invoices. 
As a former Minister of Broadcasting I say I am ashamed about that. It now appears that while I was the Minister of Broadcasting NZ On Air was paying out on fraudulent invoices from Melissa Lee’s company. I think that on occasions I was accused of being a micro-manager and of looking too carefully— 
Hon Parekura Horomia 
: That’s right. That’s right. 
Hon TREVOR MALLARD 
: Well I know that Te Mangai Paho thought I was a micro-manager. It was not particularly happy with me on a number of occasions when I was the Minister of Broadcasting for taking too close an interest in the activities of Te Mangai Paho. I note that Maori Television when it is let off the leash for at least a period of time seems to have some more flexibility these days. 
I now go back to the question of Melissa Lee and the money that her company has received fraudulently as a result of a series of invoices that her company presented to New Zealand On Air. She now accepts that these invoices were fraudulent inflated and bloated and she accepts that there is a six-figure I think sum to be repaid. But I want to know whether that money while it is in her possession is regarded as being in effect in a laundry. 
Hon Pete Hodgson 
: I think it’s in the soak phase. 
Hon TREVOR MALLARD 
: It is in the soap phase? No I do not think it is soap. I think the National Government’s handling of this might be described as a soap but my view is that there is nothing clean about this at all and I regard soap as generally— 
Hon Pete Hodgson 
: Soak—s-o-a-k. 
Hon TREVOR MALLARD 
: Oh the word is soak. I thought the member was putting soap into the laundry. I see; it is in the soak phase. I thought it was one of those soap holes that all the dirty stuff goes down after it has been through the laundry. I thought that was what the member was referring to. 
But I want to know at what stage Melissa Lee is caught in this particular area. Is she caught when she admits there is a problem? Was she caught back on 14 June— 
Hon Gerry Brownlee 
: Where’s the relevance to the bill? 
Hon TREVOR MALLARD 
: This is very clearly relevant to the bill. If the member would like to get a copy of it I will point out to him the particular clauses. I would probably start at clause 4A and if the member Melissa Lee took the money offshore as I sure she has on occasions there is clause 5. The conduct of due diligence is in the first part of clause 9(4). There are a lot of areas where there is particular relevance to the activities of Asia Vision and what it is doing with particular large amounts of cash. I want to know for example whether a material change such as someone shifting from what was previously the role of a full-time executive director to that of a part-time executive director and becoming a member of Parliament as well is a material change that triggers this particular legislation. I am happy to take the word of the Minister in this area but it is important and it has to be sorted through. 
Again the question of whether this is a reciprocal arrangement is something that is subject to further interrogation over a period of time. I still do not understand and my colleagues have still not explained to me why if Melissa Lee travels to Hong Kong or Seoul she is caught by this legislation but if she stays at home she is not. We seem to have a higher standard of behaviour for overseas politicians who come to New Zealand than for New Zealand politicians who stay here and to me that is illogical. Why is it that Melissa Lee can stay at home not go overseas and not be caught by the money-laundering legislation but that a Korean politician who does in Korea exactly what Melissa Lee is doing here in New Zealand will get caught by it if he or she then comes to New Zealand? I generally have a lot of faith in my colleagues and in the work that they do in select committees but I cannot see why they have provided this escape path. 
We have three investigations going now. We have the Melissa Lee investigation the Bill English investigation and the ongoing jobs-for-cash investigation involving Bakshi. We have three people who appear to be benefiting in this particular area and who if they left the country would be in trouble. But because they are staying tight here they are not. I am sure there is a good explanation for that and that Simon Power will be very keen to defend his colleagues and to go on there— 
The CHAIRPERSON (Hon Rick Barker) 
: This is your final call. I am listening very carefully to the member and at times I am struggling to catch where he is actually engaging in debate on Part 2 of the bill. 
Hon TREVOR MALLARD 
: If you like I will keep on referring to some of those provisions of the bill. 
Clause 25 in Part 2 is about wire transfers. I want to know whether if the Endeavour Trust Melissa Lee or Bakshi took some of their ill-gotten gains and attempted to transfer them from New Zealand by way of wire transfer they would be caught under this legislation. That is a pretty simple question. I want to ask the Minister whether this legislation is good enough to catch the money that has been flushed through a company in Melissa Lee’s case or through the Endeavour Trust in Bill English’s case. I do not know how Bakshi handled his jobs-for-cash arrangement: whether there is a trust personal money cash in a jar or how it worked. But I want to know whether if that money was sent offshore by way of wire transfer or more important if it went— 
John Hayes 
: You could ask Taito. 
Hon TREVOR MALLARD 
: The member is saying something about Bill “Taito” English. Why did he say that? Why did he want to bring up Bill English in that way and associate him with Mr Field? I think John Hayes is trying to get into Cabinet. That is why he wants Bill English to be associated with Taito Phillip Field. I thank the member for the interjection. He is laughing; he is happy. He knows that when Bill English goes down there will be a Cabinet vacancy. But I want to tell him that I think it is pretty unlikely that he will become the Deputy Prime Minister and Minister of Finance. I do not really like his chances very much at all. 
The next point I would like to make is around new or developing technologies or products that might favour anonymity. Again this goes right to the case of the Endeavour Trust. What happens when someone takes his or her name off a trust as a trustee and goes from clearly being a beneficiary of the trust to being a discretionary beneficiary of the trust? If there is a new product—a new trust—from which anonymity is gained as is absolutely the case with the Endeavour Trust which Bill English is a discretionary beneficiary of then I want to know why the Government is doing that. Why is it bringing that up now and why are we not hearing from Bill English on this? 
I want to know from the Government whips whether there has been a declaration of interest in this from any National member or whether any of them are at all concerned. I will give the whips an assurance that Labour will vote for this legislation but the question is whether all the National members will. I am pretty tempted to ask my whips for the right to vote against the bill so as to force the vote to be taken in order to see the numbers for National on it. If the legislation goes through on the voices of course we will not be able to tell whether Mr Bakshi Ms Lee and Mr English are all voting for this legislation when there can at least be an argument put that they have an interest in it—and I know they have an absolute interest in this legislation in terms of the differences between the bill that was introduced and the version we now have. So the legislation not generally but in its details affects them differently in different ways. 
The next question relates to reliance on other reporting entities or persons in another country. Again the issue is a very similar one because at least in the case of  
Asia Downunder 
 and in the case of Mr Bakshi Singh there is reliance on people overseas in order to give information back to the New Zealand prosecutorial systems in order to work out whether Melissa Lee and those two individuals should be prosecuted. It is a question of whether other countries are those reporting entities. 
I will leave it at clause 35 which relates to a prohibition on the use of false customer names and customer anonymity. I think if any of the three but in particular Melissa Lee or Bill English were in this area they would be caught by this measure. 
Part 2 agreed to. 
Part 3 Enforcement 
Hon SIMON POWER (Minister of Justice) 
: 
 Part 3 deals with enforcement and contains provisions relating to civil liability acts offences search and seizure penalties and immunity of certain persons from criminal proceedings. In the first instance the bill obliges supervisors to engage in education awareness raising and guidance at the higher end. Supervisors may issue formal warnings and accept enforceable undertakings or initiate civil or criminal proceedings. The bill recognises that in extreme cases it may be necessary to take court actions against businesses that do not comply with their obligations. There are two levels of pecuniary penalty for civil liability. The bill contains criminal offences that range from smaller fines of $10000 to $50000. The penalties are I believe fair and consistent with other business-focused legislation in New Zealand. 
Part 3 also contains the search and seizure powers for the bill which clearly set out the expectations for the way supervisors and police officers should interact with the reporting entities they are investigating and the processes for seizing documents and items as evidence. 
I would now like to address the two significant changes that the committee recommended to Part 3. The first was to give immunity from liabilities to supervisors and reporting entities when they act in line with their duties and obligations under the bill. For example if a reporting entity terminates a business relationship then that reporting entity should not be open to a civil action from its customer. Clause 72A provides protection and certainty to supervisors and their employees. When they are discharging their duties in good faith they cannot be subject to civil or criminal action. Significantly the committee also removed—and the Government welcomes the committee’s recommendation—the explicit liability of senior managers of reporting entities in order to ease the concerns of industry that their managers would be held accountable for matters outside their control. 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 I am going to make some brief remarks I believe. 
Hon Trevor Mallard 
: Not too brief. About four calls. 
Hon PETE HODGSON 
: OK! No I think I will make them reasonably brief. We will see what notes come my way. 
The short of Part 3 of the Anti-Money Laundering and Countering Financing of Terrorism Bill is that the enforcement regime is against not the people who do the money-laundering but the people who try to catch the money-launderers. In case there is any doubt about it that may lay the matter to rest. That is why it is important that a person who is acting in good faith—as a banker a bank manager a bank teller or whatever—is entitled to some freedom from civil action from a disgruntled customer who was perhaps wrongly suspected of being a suspicious transaction - type person. That is they are suspected of being a money-launderer or a prospective money-launderer. It is also the reason why individuals are removed from criminal proceedings under this legislation though the corporate is not. The corporate can be fined a very large amount of money; $5 million comes to mind as the likely figure. 
There were no huge changes to the legislation. Most of the changes came as the result of submissions to the Foreign Affairs Defence and Trade Committee. Some of the changes came especially around the interface between customs and money-laundering. 
Jacqui Dean 
: Due diligence. 
Hon PETE HODGSON 
: OK the member can tell us about the due diligence aspects of it. She is quite right. The bit about customs is quite interesting because it gets into who has what access to software that might be brought across the border. Some changes were made. Some of them emanated from officials some emanated from submitters and they were equally dealt with by the select committee. 
I do not think it is a particularly contentious part. My colleague the Hon Trevor Mallard may think that there is contention in it. 
Hon Trevor Mallard 
: I think about 20 minutes’ worth. 
Hon PETE HODGSON 
: I was not aware of that much contention but I admire my colleague’s almost instant and deep understanding of legislation that is put in front of him. I believe that he has the sort of hawk eye one would expect of a person trained in accountancy; he can spot a rort from 100 miles—indeed 160 kilometres as we say these days. I think that if my colleague can find errors in this part of the legislation then it is really important that we examine them in order to address them before we move to the next phase of the legislation. 
TODD McCLAY (National—Rotorua) 
: 
 I rise to speak on Part 3 of the Anti-Money Laundering and Countering Financing of Terrorism Bill. Part 3 deals in particular with enforcement. I want to focus on two provisions concerning civil penalties. 
Clause 72A is about the protection of supervisors of anti - money-laundering and countering financing of terrorism and the obligations of those supervisors. I believe that this is particularly important because it means that no civil or criminal proceedings may be brought against supervisors when they are conducting their duties. This means that when there is an issue before a supervisor—the supervisor is investigating something—those whom the supervisor is investigating cannot spuriously put obstacles in the way to stop the supervisor’s work. It means that the supervisor can go about his or her duties without fear of interference from civil prosecution. However the bill also states that where the supervisor has acted in bad faith then he or she can face censure or penalty. 
I also want to talk about Subpart 2. In particular it is directly relevant to civil liabilities. Clause 76 states that where the anti - money-laundering and countering financing of terrorism requirements are not met by a reporting body then it could be liable for prosecution. This means that when it fails its due diligence when it has not done enough work it can be prosecuted. In particular when we look at this provision we see that it suggests that a reporting body’s due diligence must be done in such a way that it can be assured of the nature of the person whom it is conducting business with. 
Subpart 1 deals with the issue of what reasonable due diligence is and I think that this is also important to look at. It means that reasonable due diligence would not be intrusive or unnecessary and could be risk-based. We know that a number of New Zealand banks and Australian banks have adopted a risk-based approach to their consideration of this. 
To summarise I want to draw attention to what this really means. If someone has had a relationship with a bank for quite some time and that relationship has not changed then the changes to the bill mean that a bank would not have to do additional due diligence on that person and I think that that is reasonable. But in the case where the relationship does change then it would be upon the bank as a reporting body to do additional due diligence. Let us say that someone has had a bank account for quite some time and has small amounts of money going through that account such as a few hundred dollars a week. And let us say that all of a sudden we find that person might have a patch on his or her back have a new motorcycle and have thousands and thousands of dollars going through the account. One could assume that that person was involved in P and selling P and may be a gang member. 
In such a case the bank would not merely be able to say that it has known the person for a long time that the person has had an account with the bank and that therefore the bank does not need to do any more due diligence. Should the bank not conduct further inquiries and report it could be liable for prosecution. I support this part of the bill along with the rest of the bill and cannot wait for it to enter into law. Thank you. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 Although colleagues have described Part 2 as being the substantive part of the bill and I accept that there is quite a lot of meat in that part within Part 3 there are also some pretty interesting questions that have to be discussed. In clause 85 the question of restraining injunctions is addressed. That goes to an ability to get a restraining injunction against the shifting of cash in a way that people believe is contrary to this legislation. I point out that this is money that could be going out of New Zealand but the other situation could be if it was coming into New Zealand; and if it was money that had previously been laundered and taken out of the country there is an ability to get a restraining order to stop people bringing it back in. Part of my question to my colleagues is why the hell anyone would want to do that. We have money that has been offshore and been washed and now it is coming back in again. You know the $100000 that Melissa Lee had—if she had that money sent it offshore had it laundered and all cleaned up so it is dressed sparkling and ready to go I am sure we would want the ability to let it come back into the country and grab it when it was back here again rather than getting an injunction to stop money coming in. 
Hon Pete Hodgson 
: It might help the current account deficit. 
Hon TREVOR MALLARD 
: I’m not sure that bringing in laundered cash helps the current account deficit. I am not absolutely certain about that. It would probably depend on her liabilities offshore. 
The CHAIRPERSON (Eric Roy) 
: Again I say that I am listening very carefully and I detect the member accusing another member of money-laundering. 
Hon TREVOR MALLARD 
: Oh no. 
The CHAIRPERSON (Eric Roy) 
: Well that is my detection so I ask the member to choose his words a lot more carefully than that. All members are honourable members. 
Hon TREVOR MALLARD 
: Of course. I apologise if there was any indication that I was doing that at all. All I was trying to say was that there is $100000 cash floating around here somewhere. It may or may not have been shifted offshore and may or may not have breached the legislation as it went. I make it clear that in the case of Melissa Lee there is no doubt at all that there is $100000 extra cash because she has said that there is. She has accepted that there is that extra cash and all we are speculating about is what she has done with that cash in the interim. Where has that money been? I ask whether it has been offshore and why anyone would want to have a restraining injunction to stop it coming back in if there is the opportunity for the Crown to grab the money that belongs to NZ On Air as it hits the country. Why would there be a restraining injunction to stop that? 
The next clause I would like to get to is clause 88 and in particular the heading of the group of clauses—and in fact this group is only one clause long. I do not want to criticise parliamentary counsel too much but it is not the normal practice to have a heading over a sole clause. We will take that as it is. This clause is about pecuniary penalties and the definition of pecuniary is something that at the moment is very live within New Zealand. Some of us thought it was a pretty simple thing. I thought it was like cash in that if one had a pecuniary interest it was pretty clear. What has become clear to a number of us now is the fineness of this definition both with regard to the general law and to this bill in particular which is something more detailed than we might otherwise have thought. I want to know where someone who is paying a pecuniary penalty can get the money from. Can that person get it from a trust of which he or she is a discretionary beneficiary? Does that meet the definition of pecuniary penalty? If a pecuniary penalty is applied can someone get that money from a trust in which he or she has an interest as a discretionary beneficiary? 
I would be interested in hearing the interpretation of the former professor of law the Hon Dr Wayne Mapp who is currently sitting in the chair on that. I know that he is more learned in matters of the law than the Minister who has been in the chair until now the Hon Simon Power. If he wants to share with us his views on pecuniary interest I think that would be good for the Committee but possibly career-limiting as far as the Minister is concerned. 
I move now to the provisions on failing to report a suspicious transaction. My old schoolmate Catherine Delahunty is in the Chamber and I want to spread the joy and the love around and ask why she did not report a suspicious transaction when she became aware of it. I ask why she took a few weeks to do that in a similar way to Melissa Lee failing to report for 4 whole months not only one suspicious transaction but years’ worth of suspicious transactions. In fact under clause 90(b)(i) a transaction has to be “relevant to the investigation”. It does not even have to be relevant to a prosecution. It just has to be relevant to an investigation. So that means it is relevant if there is any possibility at all of the money being shifted offshore—and I assure Catherine Delahunty that I do not think her colleagues are going overseas with her superannuation so I do not think there is much danger of her one going offshore. 
I ask how much is involved in this. How much would Bill English have to put in his pockets when he is doing a ministerial trip to trigger this particular legislation? On the face of it we cannot tell. My understanding is that in that case it would be a matter for the regulations that follow. On the face of the bill it is possible that if there is a suspicious transaction while there is an investigation going on and someone makes an overseas trip and has cash in his or her pocket then this legislation could be triggered depending on the level that is set by way of regulation. I understand that sometimes in the past $10000 in cash has been the amount that one has had to declare at customs as one goes through. I ask whether it counts in this particular case if someone loads up his or her credit card. If say someone takes the Endeavour Trust credit card offshore as a discretionary beneficiary because that is apparently allowed with the permission of the trustee my question is whether that triggers this legislation. 
I also ask whether if someone else who is on the trip fails to report that person is in breach of this legislation or whether that would be the case only if he or she were an employee of the Department of Internal Affairs. If someone were a seconded Treasury official would he or she be caught? I am interested in hearing from any of my colleagues who could answer that question and the question of whether if someone were seconded and his or her salary for the time spent was being paid through the Department of Internal Affairs that person would become one of the people required to report that sort of transaction. 
It is not a simple matter. There was a case of someone who was a current Minister who went shopping in New York using a Department of Internal Affairs credit card. To be fair to her after a period of time she repaid the money. 
Chris Hipkins 
: It’s the National Party pattern. 
Hon TREVOR MALLARD 
: Well there is a bit of a pattern emerging here. I ask whether that counts as money-laundering. If someone uses a credit card for a purpose for which he or she is not entitled such as shopping in New York at Saks Fifth Avenue and a number of other places spending a total of about $5000 on the company credit card for personal shopping and that someone is a current National Minister— 
The CHAIRPERSON (Eric Roy) 
: I just ask the member to reflect a little bit on Standing Order 116 “Personal reflections” which mentions personal reflections imputations and so on. The member is on the border and is crossing it now and again. I would be happier if he would desist from using names in that regard. 
Hon TREVOR MALLARD 
: I have just now. 
The CHAIRPERSON (Eric Roy) 
: Yes; you saw me looking at you. OK. 
Hon TREVOR MALLARD 
: I was not naming the woman concerned who was a Minister in the previous National Government and this one but I think people will end up doing that by a process of elimination. 
The CHAIRPERSON (Eric Roy) 
: What about the bill? 
Hon TREVOR MALLARD 
: I will get back to the question. The next clause is clause 92 “Unlawful disclosure of suspicious transaction report”. I want to know whether the whistleblower legislation applies here and if so which legislation takes priority. If someone is a whistleblower “for the purpose of obtaining directly or indirectly an advantage”—I am not going to suggest that he or she gets a pecuniary gain—because a whistleblower is often seen as someone who is of high standing in the community and a very ethical person then is whistle-blowing seen as an advantage under this legislation? What overrules that? 
Clause 93 “Failure to keep or retain adequate records relating to suspicious transaction” is relatively simple I think. There are lots of cases that we could consider at the moment of people who have failed to keep or retain adequate records relating to a suspicious transaction. If we consider one of those we see that in the end New Zealand On Air did an audit and it went through someone’s books with a fine-tooth comb. I will repeat the comments I made when I was the Minister in charge of New Zealand On Air when it was ripped off by  
Asia Downunder 
 when it and its parent company gave inflated invoices to New Zealand On Air. It is something I find particularly embarrassing. Some very senior people chaired the board and it had some very experienced chief executives. But they had the wool pulled over their eyes by  
Asia Downunder 
 and a six-figure sum I understand— 
Hon Pete Hodgson 
: Just over $100000. 
Hon TREVOR MALLARD 
: —just over $100000 was ripped off from that organisation. That was a suspicious transaction. I want to know whether there was a failure to keep records. 
Clause 94 is about obstruction of an investigation. That raises a very serious question. I see that the Minister of Broadcasting is not in a position to answer at the moment but I want to know whether there is a conflict of interest between running a campaign and being the main organiser for an individual and being the person to whom the organisation doing the investigation is reporting especially if that money has gone offshore and is caught by this legislation. Again I do not want to be too critical of Melissa Lee. To be absolutely fair to her she has indicated albeit 4 months after the identification of the shortfall on her part—that is putting it particularly nicely; other people would have called it a misappropriation—she has decided to repay the money that has ended up with her and that should not have 4 months after being informed of it. 
I say to Bill English that that is a very good example for him. If he wants to avoid being caught by this legislation as he takes the Endeavour Trust credit card offshore—and depending again on the monetary level at which the legislation applies—then he should look at the previous decade and pay all the money back. It will not make an enormous difference to the Government deficit but it would help its credibility. I say that a lot of us as we go overseas rely on New Zealand’s reputation. The reason we do not end up on black lists under money-laundering and financing of terrorism legislation is that in New Zealand we have a very good reputation for ethics in Government. If we lose that good reputation under this legislation and in a number of other areas New Zealand Ministers will not be as welcome as they are. 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 The Hon Trevor Mallard has raised a number of interesting questions and some of them are deserving of an answer. I do not have the accounting skills of the Hon Trevor Mallard and I do not pretend to have them. But I have had the benefit of listening to a range of advice that came forward to the Foreign Affairs Defence and Trade Committee and I have been part of some of its discussions on the Anti-Money Laundering and Countering Financing of Terrorism Bill. 
I say to the honourable member that I think he has probably got some of the Melissa Lee case wrong. That is to say the suspicious transaction he referred to in relation to the legislation in my reading of it is one that does not get caught by the money-laundering definition. The reason I say that is that in that particular instance as far as I understand it money was shifted certainly. It is a money-laundering activity to shift money from one thing to another. But in this case it was shifted from the contingency line of a company’s accounts through to the profit line and then not shifted back again. The reason I think it is not money-laundering is that it never left the company. 
Hon Trevor Mallard 
: How do you know? 
Hon PETE HODGSON 
: Well I do not know that. It is true that I do not know. But what I do know is that it shifted within the company. 
Hon Trevor Mallard 
: This is a very poor defence. It’s a shocking defence. 
Hon PETE HODGSON 
: I am sorry if it is not a very good defence. Let me just try to continue. 
It has been described as a simple accounting error and I think that probably under-represents it a little. I do not think it is a suspicious transaction according to the legislation that is in front of us but I do think it is a great deal more than an accounting error. The reason I say that is that if it was an accounting error it raises the question of how that accounting error occurred each year—the same error—for 5 years. It was apparently repetitive. Now that is a feature of money-laundering. That is to say money-laundering usually does not occur in one big lump sum. The suspicious transaction that the member referred to in relation to the legislation is usually one of a series of suspicious transactions the idea being to shift small amounts of money on a regular basis and indeed shift some of them back to cause a bit of confusion. 
The CHAIRPERSON (Eric Roy) 
: Can the member just tell me what clause of the bill he is discussing? 
Hon PETE HODGSON 
: The clause on suspicious transactions— 
Hon Trevor Mallard 
: I think the— 
The CHAIRPERSON (Eric Roy) 
: I have asked the member. 
Hon Trevor Mallard 
: Clause 90. 
Hon PETE HODGSON 
: Clause 90—OK. Clause 90 is about failing to report a suspicious transaction. So the suspicious-transaction feature of the legislation can be found right through it. There was a failure to report 5 years ago 4 years ago 3 years ago 2 years ago 1 year ago and 4 months ago. So even when it was drawn to the attention of the transactor there was a failure to report that suspicious transaction as clause 90 refers to. 
I know the member thinks that my defence of Melissa Lee is poor but I hold the view that it is probably not money-laundering although it does have a lot of the characteristics of money-laundering because small amounts of money were moved on a regular basis. I suspect it is not money-laundering because it is yet to leave the company but the Hon Trevor Mallard may be correct when he says it has already left the company. I simply do not know. So I say to the member that I think to accuse Melissa Lee of money-laundering as defined in this legislation may be an error. But to suggest that it is a suspicious transaction is something that I strongly agree with him on and to suggest that there was a failure to report it as mentioned in clause 90 is absolutely the case. And not only that; there was a failure to report it as far as I can see on five separate occasions. So maybe there is a point of agreement between the Hon Trevor Mallard and me but there also remains the point of disagreement. I think it might be worth exploring that point further. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 Well this situation is rather unusual and it actually takes me back to the days when I was first a member of Parliament and the Committee stage used to be a lot less formal a lot more back and forth. There was a lot more debate with colleagues and there were often amendments from the floor. I think those were more civilised and probably less partisan days and I think we are seeing a little bit of that now. I do want to disagree with my colleague who sees the bright side of life on every occasion. I think that on this occasion he has been far too generous. 
My colleague has gone through the Melissa Lee case and he has shown the repeated appropriation of money—into profit into loss and into profit—that should have been returned to the Crown. There have been a number of instances here so we have established that we have money that has been misappropriated—it has been appropriated wrongly; it has gone into the profit. 
The question then is what happened to that money after that and I think that is where the member and I might start to differ. What I know is that if it has been paid to Melissa Lee as part of dividends and she has spent it offshore then depending on the reporting levels of this it is misappropriated money—money that has been obtained in a way that it should not have been and has then been taken offshore. My view is that unless the levels of reporting of this are so low then the legislation has been triggered. If it is not the case then the member has something to answer for because he along with a number of other members of the select committee did the work to ensure that this legislation does in fact catch people. 
I might go back to clause 104 later because it deals with thresholds and with failing to report “cash over applicable threshold value moved into or out of New Zealand”. But going back to the time limit for prosecution in clause 102 I compliment the select committee because it— 
Hon Pete Hodgson 
: 3 years isn’t it? 
Hon TREVOR MALLARD 
: The committee decided on 3 years—3 years after the time when the matter of the information arose—and that is a more standard approach rather than the 6 months originally. But is that long enough? 
Hon Pete Hodgson 
: It should be 5 years. 
Hon TREVOR MALLARD 
: It is a question of whether it should be 5 years. In the case of Melissa Lee if the money that has been wrongly appropriated has in fact gone offshore it would be 5 years—and it is accepted by Melissa Lee that it has been wrongly appropriated. Melissa Lee has accepted that she has wrongly appropriated money. She calls it an error. Some people say that when one is the managing director and the chief executive of a company one takes responsibility for the errors. When one is drawing money down as a result of having that extra money to draw then it is particularly suspicious. But I am assured by my colleague that this goes back 4 or 5 years. 
I want to say that it is good to share some of the grief with my former colleague Steve Maharey who was the Minister of Broadcasting for part of that time and was also responsible for it. What is the current Minister’s name—the cigar-smoking one? 
Hon Pete Hodgson 
: Jonathan Coleman. 
Hon TREVOR MALLARD 
: I also share some of the grief with Jonathan Coleman who is the current Minister of Broadcasting and the person responsible. 
I want to know whether clause 108 applies in this case. Clause 108 relates to persons who provide false or misleading information in connection with a cash report. If people have some money that they have gained through misappropriation in their pocket or handbag as they leave the country and they do not declare their sources in the way they are meant to is that caught by this provision? That is a very real question. Are they caught by this provision if they put the money on a credit card? What about if they put it in a TAB account? Actually no—a TAB account would not work offshore. But those are the sorts of ways that people launder money around the country and if people take that sort of approach are they caught by that provision? My final comments go and this is— 
Hon Pete Hodgson 
: It’s certainly not my final comment. 
Hon TREVOR MALLARD 
: No it is my fourth call on this particular set of clauses. 
My final comments go to new clause 112A which deals with the duty of persons with knowledge of computers. I ask whether the legislation goes too far or not far enough. It depends on which approach one takes. 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 It is a matter of fact that the Foreign Affairs Defence and Trade Committee worked across party lines and it is a matter of fact that members of the committee from time to time would argue freely with one another even arguing with members of their own side. It is a matter of fact that from time to time the National members went to sleep for long periods of time during the select committee and that is simply being replicated in the Chamber this afternoon as my colleague with his skills and I with whatever skills I have seek to tease out some of the finer points of this legislation. 
I think the member who has just resumed his seat has made some interesting points about the 3-year limit on prosecutions. It is an improvement on the bill as introduced but the member points out that money-laundering can reach back deep into history. We I think have probably come to the view that although that might mean that some people may get off some earlier misdemeanours none the less there is a degree of uniformity in the way that we approach a sort of limitation on prosecution and that that uniformity mattered. 
I do not have anything to offer on whether we have gone too far or not far enough on the issues around computers and access to computers. I am afraid the member did not have time to develop his argument there and I therefore do not have an ability to refute it but I do want to take the member back to clause 90. I say to the member gently and I suppose I am partly to blame here that failure to report suspicious transactions does not refer to the money-launderer but to the person who is supervising the money-launderer. 
Hon Trevor Mallard 
: That’s right—John Key! 
Hon PETE HODGSON 
: That is the point. That failure to report a suspicious transaction is something that might say if we were to use the analogy of the Melissa Lee case take us to New Zealand On Air to the Minister of Broadcasting and to the Prime Minister because all three of those bodies failed to report. The first of those—New Zealand On Air—reported the suspicious transaction to the person who had undertaken it for God’s sake! It was not reported to anyone of authority but to the person who was suspected of the transgression. That same person has now indicated that she will pay the money back. That is the person to whom New Zealand On Air reported. The Minister of Broadcasting tells us that at the time he did not know. Well we might explore that as the weeks go by but he did say that he knew some time in August. And here we are in October. He did not report. 
Then we had the Prime Minister on the TV3 programme  
Breakfast 
 this morning saying that his office knew but that he did not. So somehow his office staff failed to report this suspicious transaction and the only organisation that reported the suspicious transaction according to the obligations in clause 90 was TV3. Now what have we come to in this country where a quango a Minister the Prime Minister’s staff the Prime Minister and indeed the person who is responsible for the suspicious transactions did not report to anybody but TV3 did? That is why probably legislation like this matters and certainly why clause 90 matters because failing to report a suspicious transaction commits an offence. 
The rest of Part 3 tells what those offences might lead to—what sort of pecuniary penalty what sort of fine. Indeed in some cases the fines become very significant indeed. So I think we do have a nice little case in point here where there has been a serial failure to report a suspicious transaction by Government agencies by a Government Minister and by the Prime Minister of the land. If that does not tell us that there is a case for having legislation with clause 90 and the subsequent features of that legislation then it is hard to know what other argument one could adduce for such a necessity as we have in clause 90. 
Part 3 agreed to. 
Part 4 Institutional arrangements and miscellaneous provisions 
The CHAIRPERSON (Eric Roy) 
: The debate on Part 4 includes debate on schedules 1 and 2. 
Hon Dr WAYNE MAPP (Minister of Defence) 
: 
 Part 4 of the Anti-Money Laundering and Countering Financing of Terrorism Bill contains the institutional arrangements and regulation-making provisions including the establishment of the supervisory agencies that alongside the police will be responsible for the oversight regulation and enforcement of the new regime. As supervisors the Reserve Bank of New Zealand the Securities Commission and the Department of Internal Affairs will support reporting entities to implement and maintain the new regime. These agencies already have supervisory and regulatory roles in respect of most of the industry sectors for which they will be responsible under the bill. Those existing relationships will be used to create efficiencies. The multi-supervisor model within the bill also helps to reduce transaction costs for businesses. They will have to deal with only one agency instead of a separate agency for credential or gambling matters or another for money-laundering or terrorism financing. These agencies know the sectors they will be supervising and are less likely to pursue strict interpretations of compliance issues than a single regulator that may not have an adequate understanding of the business environment of a particular reporting entity. 
Part 4 also enhances the financial intelligence powers and functions of the New Zealand Police. Provisions within this part require the Financial Intelligence Unit to produce guidance for reporting entities on establishing what transactions are suspicious and what should be reported to it. It also gives the Financial Intelligence Unit formal powers to get additional information from a reporting entity when it submits a suspicious-transaction report. This important power will codify important intelligence-gathering tools to combat financial and organised crime. 
The select committee made a number of changes to Part 4 the most important of which was the inclusion of provisions for supervisors to delegate some of their monitoring or investigatory powers and functions. Clauses 130A 130B and 130C allow supervisors to efficiently and effectively carry out their roles without the undue burden of hiring for instance specialist investigators lawyers or forensic accountants. The committee reviewed the regulation-making powers in Subpart 2 and moved some of these from clause 147 to clause 148 which deals with regulatory exemptions and has a robust set of criteria that the Minister must take into account when recommending a regulation. The committee also made ministerial exemption provisions within clause 151 subject to the Regulations (Disallowance) Act 1989. These changes to Part 4 make it more responsive and allow greater transparency for decision making. 
The institutional framework set out in Part 4 is appropriate to New Zealand’s financial system and is compatible with the framework of our trading partners. A Supplementary Order Paper to schedule 2 will make a consequential amendment to the Reserve Bank of New Zealand Act to make it clear that the Reserve Bank Governor can delegate the functions and powers that the Reserve Bank will receive under this bill. Thank you. 
Part 4 agreed to. 
Schedule 1 agreed to.  
Schedule 2 
The question was put that the following amendment in the name of the Hon Simon Power to schedule 2 be agreed to: 
to insert in Part 2 after the item relating to the Mutual Assistance in Criminal Matters Act 1992 the following new provision: 
Reserve Bank of New Zealand Act (1989 No 157) 
Section 41(1): add “and the Anti-Money Laundering and Countering Financing of Terrorism Act  
2009 
” 
Section 41(2): insert “ or the Anti-Money Laundering and Countering Financing of Terrorism Act  
2009 
” after “by this Act”. 
Section 51(5): insert “or under the Anti-Money Laundering and Countering Financing of Terrorism Act  
2009 
” after “by this Act”. 
Section 51: add: 
“(9)To avoid doubt the Governor’s functions and powers include his or her functions and powers under the Anti-Money Laundering and Countering Financing of Terrorism Act  
2009 
.” 
Amendment agreed to. 
Schedule 2 as amended agreed to. 
Clauses 1 and 2 
Hon Dr WAYNE MAPP (Minister of Defence) 
: 
 Clauses 1 and 2 set out the bill’s title and commencement provisions for the financial service providers and casinos collectively referred to as the financial entities. The bill anticipates a lead-in time for reporting entities to make sure that they have the measures required by the bill in place before their obligations become law. Because some flexibility is required the commencement provisions relating to important reporting entities’ obligations will be through an Order in Council. The expectation is that at least 2 years will be provided but the Government does intend to consult further with industry on the appropriate lead-in time. 
Certain provisions will come into force immediately following the bill’s Royal assent including the New Zealand Police’s financial intelligence functions and the supervisors’ functions and powers along with the ability to make regulations. This will enable the Government to gear up the regime and allow supervisors to assist reporting entities in the implementation of the responsibilities. 
The provisions relating to the cross-border transportation of cash will come into force 12 months after the bill receives its Royal assent. This aspect of the bill is relatively self-contained and will update and replace the border cash-reporting regime of the Financial Transactions Reporting Act 1996. The commencement provisions of the bill will make sure that the obligations for reporting entities are brought into force within a time frame that is practical for industry and sensitive to implementation costs. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I will speak relatively briefly to this. Again it is to thank officials for the work they have done on the legislation and to congratulate Ministers especially Steven Joyce as he enters the Chamber on their timing in bringing this bill to the Committee in embarrassing times for Melissa Lee and Bill English. I have no doubt whatsoever that Gerry Brownlee was totally ignorant when he put it on the Order Paper but I would not say that the other Cabinet Ministers were. It is a particularly embarrassing time for the Government in New Zealand and for Bill English in particular. Never before have I seen a Minister in place and not suspended while the Auditor-General is conducting this sort of investigation. I can see it. Given the revelation around Melissa Lee last night on TV3—although some of us have known about it for some time—one would have thought that a cautious Leader of the House would have taken the opportunity to defer this legislation. I say thank you and congratulations to Mr Joyce on his promotion. 
Clause 1 agreed to. 
Clause 2 agreed to. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
Bill reported with amendment. 
Report adopted.