Adams AmyANTI-MONEY LAUNDERING AND COUNTERING FINANCING OF TERRORISM AMENDMENT BILLSecond ReadingHon AMY ADAMS (Minister of Justice): I move That the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill be now read a second time. This bill reflects the Government's ongoing commitment to combatting money-laundering and the financing of terrorism both in New Zealand and globally. Can I take this opportunity to thank the Law and Order Committee for its work on the bill. Thirty-one submissions were received and considered. The committee recommended that the bill proceed with a number of amendments many of which are minor and technical in nature and I am pleased to support most of the committee's recommendations.Enacting this amendment bill in a timely manner is important for an effective response to money-laundering and the financing of terrorism in this country. This bill addresses a serious issue that has blighted societies around the globe. Money-laundering feeds many other types of crime. By exploiting unsuspecting businesses and channelling money through different layers of the financial system money-laundering allows criminals to fund their lifestyles and fuel their criminal ventures. People who finance terrorism use similar methods to channel money to violent causes.New Zealand's existing anti - money-laundering legislation applies to banks casinos and a range of financial service providers. These institutions were the focus of the first phase of reforms because of the higher risk they faced in being used for money-laundering for crime or terrorism purposes. However there are still sectors at risk of being exploited by criminals.The bill before this House is an important step in protecting our businesses and our country's reputation as being one of the least corrupt countries in the world. The bill extends the Act to additional businesses including lawyers conveyancers accountants and real estate agents when they carry out certain activities. It also extends the Act to racing and sports betting and businesses that deal in certain high-value goods. Criminals are always seeking new ways to launder the proceeds of their crimes and these phase two sectors are at increasing risk of being targeted by criminals.The bill also broadens the reporting requirements to require any suspicious activity to be reported rather than just suspicious transactions. This is the legislative response to a recommendation made in the Shewan report from the Government Inquiry into Foreign Trust Disclosure Rules in 2016. The Law and Order Committee recommends a number of amendments to the Anti-Money Laundering and Countering Finance of Terrorism Amendment Bill as introduced and I would like to briefly touch on some of those key recommendations.The amendments will apply to phase two sectors in a staggered way with lawyers and conveyancers coming within the ambit of the legislation first followed by accountants then real estate agents then high-value dealers and the New Zealand Racing Board. As introduced the bill would have applied the Act to phase two sectors at a date to be set by Order in Council but not later than the date specified. The committee recommends that this be changed so that the sectors become bound automatically on the specified dates if an Order in Council has not been made before that time. This will provide increased certainty to the sectors about when they should be ready to comply.The committee also recommends that the bill contain definitions that the sectors are familiar with. This means using for example the definition of transaction" as defined in the Real Estate Agents Act. This way sectors can more easily understand their obligations in order to detect and deter financially motivated crime in this country.The committee considered that the legal professional privilege provisions needed minor improvements to protect privileged information while still enabling the disclosure of non-privileged information. For example the bill clarifies that a lawyer has a defence to the offence of failing to file a suspicious activity report. This would apply when a lawyer has a reasonable belief that the information was privileged. Similarly the committee recommends that a lawyer who does provide a suspicious activity report when the information is privileged has a defence to civil criminal or disciplinary action. This would apply if the lawyer had reasonable grounds to believe that the information was not privileged. The committee also recommends clarifying in the bill that non-legal staff working for a lawyer are also not obliged to disclose legally privileged material.The bill proposes to expand the scope of what must be reported to the financial intelligence unit. Instead of reporting suspicious transactions businesses will now have to report suspicious activity as I mentioned previously. The committee recommends amending the bill to clarify that these reporting requirements come into effect 12 months from enactment except for the updates to the legal professional privilege section which will come into force immediately.The committee considered that the information-sharing provisions in the bill as introduced were unduly broad. It recommends removing the definition of "regulatory purposes" and the provision allowing inter-agency access to data holdings. This would in effect largely retain the existing information-sharing regime as contained in the 2009 Act. However the definition of "law enforcement purposes" which is central to the information-sharing regime is recommended to be updated to include the prevention and disruption of relevant offences in addition to detection investigation and prosecution which are already in the definition. Other statutory references in this definition are also updated by the bill.The committee also recommends including a regulation-making power to allow information sharing to occur in situations that are not otherwise permitted under the Act with certain safeguards. The committee recommended clarifying that one of the functions of the Commissioner of Police is to receive and analyse financial intelligence from international financial intelligence units and that the commissioner is able to order information from a reporting entity that is relevant to analysing information the commissioner receives under the Act. I want to thank the Privacy Commissioner for his valuable comments on the bill and I thank his office for working with the committee and the officials constructively during the process.The Act included a process to provide ministerial and regulatory exemptions for entities specific transactions classes of transactions and qualifying circumstances. The bill as introduced would have allowed the Secretary for Justice to approve exemptions from all or any aspects of the Act. However the committee considered that this was not an appropriate role for the secretary and that the power to grant exemptions should remain with the Minister of Justice.I am also wanting to indicate tonight that in the Committee of the whole House I will be proposing a Supplementary Order Paper to the bill. This corrects technical drafting oversights in the bill clears up an ambiguity in the transitional provisions relating to exemptions and ensures that a partnership of lawyers or accountants can comply with the Act as a single reporting entity rather than each individual partner having to be a reporting entity in their own right.The Government is committed to helping everyday people combat criminals seeking to launder money or finance terrorism through the legitimate businesses. We want to ensure that the anti - money-laundering and countering financing of terrorism (AML/CFT) regime is as effective as possible while minimising the impact on lawful businesses and their customers. We need to address the real risks money-laundering and terrorist financing presents while also ensuring compliance costs are as low as possible.One of New Zealand's biggest assets internationally is our reputation. New Zealand is viewed as one of the least corrupt countries in the world and as a good place to do business. A strong AML/CFT system is vital to maintain New Zealand's reputation as a reliable trading partner and enhance our reputation in international fora. While we consistently rank near the top of the Transparency International Corruption Perception Index and in the top five of the Basel AML Index report we can never become complacent. We must never take our good reputation for granted.This bill and the amendments recommended by the committee will in my view strengthen New Zealand's legislative framework. It will better prepare us for our next review by the Financial Action Task Force an international forum of technical experts on anti - money-laundering and countering the financing of terrorism when it evaluates our AML/CFT regime in 2020. It will also improve the ability of businesses to help stamp out financially motivated criminal activity and will enable regulators to investigate those who do not meet the legal requirements. Ultimately New Zealanders can have confidence that we are doing all we can to protect the reputation of our businesses and the reputation of our country from those who would seek to do it harm. I commend this bill to the House."