Huo Raymond: Anti-Money Laundering and Countering Financing of Terrorism Bill — First Reading 
Huo Raymond: Anti-Money Laundering and Countering Financing of Terrorism Bill — First Reading 
[Volume:655;Page:4782] 
RAYMOND HUO (Labour) 
: 
 I rise to support the Anti-Money Laundering and Countering Financing of Terrorism Bill being referred to the Foreign Affairs Defence and Trade Committee. In the era of globalisation no country is immune from issues such as money-laundering terrorism financing and tax evasion etc. For countries like New Zealand there is often initial scepticism in some quarters that money-laundering or financing of terrorism even exist here. That scepticism may pose a question as to whether this is legislation in search of a problem that will incur additional compliance costs. A straight answer to that question is no and yes; like any other measure legislation will inevitably incur compliance costs. 
Many financial institutions are very concerned about those compliance costs. Earlier this evening I briefly scanned the 132-page Deloitte report that was commissioned by the previous Labour-led Government. The front page of that report unlocked the true cost of compliance. It suggested compliance costs of $111.8 million for initial start-up costs and $42.7 million potential incremental costs per annum. A breakdown of the compliance costs into the two phases shows that the first phase of the reforms that relates to the bank and non-bank financial sector and casinos is estimated to cost those industries a total of $96.84 million in establishment costs and $20.67 million per annum in ongoing costs. Of the affected sectors the banking sector is expected to bear 84 percent of the start-up cost and 75 percent of the ongoing costs. Across most sectors the compliance programmes for account and transaction monitoring and anti - money-laundering and countering terrorism financing are expected to account for around 90 percent of start-up costs and 80 percent of ongoing costs. Phase two of the reforms that covers the New Zealand Racing Board and professionals such as lawyers and accountants is estimated to cost those industries a total of $14.96 million in establishment costs and $22.03 million per annum. 
On the other hand some experts believe that a number of participants surveyed by Deloitte had a moderate view. They thought that the actual compliance costs could be more than double those amounts given in the report. The complexity of the costs of compliance was one of the main reasons why the introduction of this bill was delayed in the first place—if the honourable member Dr Paul Hutchison who spoke previously wishes to know. However it was slightly disappointing that the bill could not be introduced earlier this year in time for a scheduled revisit of New Zealand’s compliance by the Financial Action Task Force on Money Laundering of which New Zealand is a member. 
Currently New Zealand has limited compliance with a number of its recommendations on anti - money-laundering and countering of financing of terrorism. On my take of this bill I see two aspects. On the one hand this bill is largely driven from offshore multilateral party nation efforts to eradicate money-laundering which is led by the Financial Action Task Force on Money Laundering. This was founded in 1989 by the G7. The Financial Action Task Force on Money Laundering issued 40 recommendations in 1990 and completely revised them between 1996 and 2003. The 2003 version of the 40 recommendations among other things requires countries to implement relevant international conventions criminalise money-laundering and enable authorities to confiscate the proceeds of money-laundering along with requirements to implement customer due diligence record-keeping and suspicious transaction reporting. Subsequent to the September 11 terrorist attacks in the United States the Financial Action Task Force on Money Laundering issued nine special recommendations on terrorist financing in October 2004. It broadly extended the application of the 40 recommendations to terrorism financing and introduced new requirements relating to services such as alternative remittance transfers cash couriers and non-profit organisations. Therefore the current financial sector reform encouraged by the 40 recommendations plus the nine special recommendations will now involve measures in detecting and deterring money-laundering and terrorism financing on a scale of intrusiveness not seen before in New Zealand. On the other hand the bill is an essential component in New Zealand’s ability to investigate organised crime to follow the money trail through financial systems and to enable the police to use the Criminal Proceeds (Recovery) Act passed in April to attack those profits. In order to do so the affected sectors including banks finance companies casinos professionals etc. will have to consider some immediate issues such as implementing anti - money-laundering reforms including enhanced due diligence enhanced reporting and fuller record-keeping measures. 
Money-laundering and terrorism financing undermine the economy and creates instability in the financial sector. It is very important for the private sector that New Zealand meet the Financial Action Task Force on Money Laundering standards but more directly failure to comply with those recommendations could result in the Financial Action Task Force on Money Laundering declaring New Zealand a high-risk country for money-laundering and terrorism financing. This would potentially impact on our credit rating and on the cost of borrowing for New Zealand. 
Australia has had anti - money-laundering laws for over a year now. It is now our turn to implement similar measures to enhance New Zealand’s anti - money-laundering and countering the financing of terrorism framework thus strengthening New Zealand’s international reputation and reinforcing public confidence in the financial system. Thank you.