Cosgrove Clayton: Anti-Money Laundering and Countering Financing of Terrorism Bill — First Reading 
Cosgrove Clayton: Anti-Money Laundering and Countering Financing of Terrorism Bill — First Reading 
[Volume:655;Page:4773] 
Hon CLAYTON COSGROVE (Labour—Waimakariri) 
: 
 After that riveting speech made by John Hayes I say I share with the Minister of Justice our support for the Anti-Money Laundering and Countering Financing of Terrorism Bill. In my role as the previous Minister I was initially in charge of shepherding the bill through so I commend him for bringing it to the House. He was right when he said it has taken a long process and period of time to get the bill to this point. I want to touch on one of the reasons for that tonight. It is one that I think the Minister and my colleague Lianne Dalziel also touched on: the issue of compliance costs. 
One of the dilemmas we faced in Government and one of the reasons why we delayed this bill coming to the House was that although we were presented by officials with what I think was a good model I had visited the equivalent anti - money-laundering agency in the US which is chopped up between a number of Government agencies and that had created I have to say a bureaucracy with huge resources to deal with this problem. In New Zealand we took the view that we would use existing Government agencies. We decided not to create another department or agency but to use the existing agencies and as my colleague Lianne Dalziel said to try to minimise the costs. One thing I said to stakeholders at the time was that we did not want a “Rolls-Royce” solution. It is not the case that we could get around this obligation; it is an international obligation and we must take action in order to comply with it. There are international reputation issues if we do not comply with it and I think business accepted that. But business also told us not to put another zero on the invoice. 
It was interesting to talk to some of the Australian banks when we said we wanted to minimise the costs of compliance. It was interesting to note that those Australian banks said to us that if we went below the level of compliance in Australia they would have—because our banks are Australian owned bar one—a trans-Tasman compliance cost. I thought that was an interesting point of view. The officials could not at the time tell us the cost of what they were proposing. I had a high degree of discomfort with that. As I was also the Minister for Small Business at the time I thought it was appropriate that Government agencies should tell us that so we could tell stakeholders what the costs of these proposals would be. The difficulty was about trying to elicit the information from the stakeholders because there was competitive information at stake and many of the stakeholders did not want to disclose their costs. Equally of course if one is trying to consult stakeholders but does not want to pre-empt that consultation by coming up with a rigid framework or a proposal it is difficult to cost what one does not know will occur. 
We put up a draft framework and submitted it to stakeholders but I asked that we get independent advice. We obtained that from Deloitte. As I recall events we met in this building with stakeholders and put it to them that the level of assurance that we wanted to give them was encompassed in the independent costings that Deloitte would carry out for us. My objective was that we could go to business and say that we must do this but that we agree not to “Rolls-Royce” it and to provide business with independent advice that says the compliance cost is as minimal as we can get it substantial though as my colleague Lianne Dalziel has pointed out the dollars are: some $96.84 million in the first phase alone. Ultimately those costs will be passed on to consumers. 
Deloitte did a very good job and looked very closely at the framework of the proposal that the Ministry of Justice had put up and Deloitte provided that level of assurance. In some ways that is quite a good model because Governments Ministers and agencies get accused of ramping up costs. To some extent our joint experience I suspect would be that it is self-evident in many cases that agencies do put another zero on the invoice. But in this case this bill arrives in the House with the confidence of the business community. 
I will not reiterate in the time I have available the points that other members have made; they are valid. Some would ask why little old New Zealand at the back end of the Earth is concerned about anti-terrorism money-laundering and organised crime. It is the case and Mr Hayes pointed this out in his contribution that the smaller a country is often the greater the target it is. There is a perception—and some of it is the truth historically with regard to our Pacific Island brothers and sisters in some countries that Mr Hayes mentioned—that the jurisdictions in small countries are slightly more loose in their rules and that those who wish to prey on their Governments and agencies and launder funds for criminal reasons or for more nefarious reasons in respect of terrorism can actually do that. Although New Zealand is robust in our regulatory framework because of our size we can present a target. 
In the light of my visit to the US last year I commend the unit within the New Zealand police force small though it is for the work that its members do. They are world renowned not only because they have limited resources but also because in a good old-fashioned Kiwi way they are very innovative flexible professional and extremely effective in how they investigate and prosecute the crimes associated with this proposal and this bill. The Americans were particularly complimentary about that unit within the New Zealand Police. 
There was a fear and I have to say it bordered slightly on paranoia on the part of some in the Ministry of Justice that if we did not meet the mark somehow our financial position would be in jeopardy. I am sure the Minister may share the view that the gentlemen and women from the Financial Action Task Force on Money Laundering who came over and audited us would maybe give us a slap across the wrist because the previous Government did not present a bill to the House but we were well on the way towards doing that. I do not share the view that our financial position is in jeopardy. 
Hon Simon Power 
: I toughed it out for you. 
Hon CLAYTON COSGROVE 
: Thank you very much Minister. He toughed it out for us. The Minister shares my view obviously given his support for it. 
I recall that the Canadians were visited by the Financial Action Task Force on Money Laundering folk a couple of years ago when they were within I think a couple of weeks possibly even days of passing their legislation through their Parliament. The eminent men and women from that task force knowing what was going to be passed and knowing that it was certain to be passed gave the Canadians a negative vetting. I know the Canadians were particularly upset about that. I have to say I feel that sort of process is a little over the top. 
I do not believe that war will be declared in a financial sense against New Zealand because this bill has arrived slightly later in the piece. I think we have the advantage unlike some countries historically—countries that Mr Hayes referred to—of having a robust banking financial and legal system with a highly professional and world-class police force to back it up. The intent is made clear by this legislation; it has been brought into the House. I believe it will be passed and I hope that will occur without a great deal of time-wasting being associated with it given that we are bipartisan I believe—at least the major parties—on this issue. This measure is something we must take. Perhaps some people will be of the view that we do not need to do this but it is an international obligation that is visited upon us. 
In this day and age certainly since the infamous time of September 11 it is true that the criminal fraternities and the terrorist organisations have become very very sophisticated in how they can launder and dispose of funds. Indeed when I was the Minister I recall the police made the claim that some in the terrorism sector as it were had found it particularly lucrative to use the generic schemes that organised crime has to launder funds and inject funds into the system and cleanse them so they could be used for nefarious means. We have to fight against that every day. The technology improves and the deviousness of those who want to penetrate our system improves. It is incumbent upon us if we want to preserve the good name of New Zealand as a sovereign State and also to preserve the good name of our financial institutions and the associated stakeholders to ensure that we not only meet our obligations but meet them in a robust way while balancing against that trying to minimise the compliance costs that are visited on business and then ultimately on consumers. 
I commend the Minister for getting the bill to this stage. We support the bill and look forward to its passage.