Hayes John: Anti-Money Laundering and Countering Financing of Terrorism Bill — Second Reading 
Hayes John: Anti-Money Laundering and Countering Financing of Terrorism Bill — Second Reading 
[Volume:657;Page:6883] 
JOHN HAYES (National—Wairarapa) 
: 
 Thank you for the opportunity to address the House this afternoon on the Anti-Money Laundering and Countering Financing of Terrorism Bill. I say the previous speaker Lianne Dalziel was absolutely off the planet in her assertions that my good friend and colleague the Minister of Justice had taken his eye off the ball. That is absolutely wrong. You had 9 years to sort this out and you did not do so and I know that you had 9 years in which to do it because I was a bureaucrat under your Government. 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker.  
The ASSISTANT SPEAKER (Eric Roy) 
: I know what the point of order is. 
Hon Trevor Mallard 
: Well it is mainly for reasons of the member’s health actually. 
The ASSISTANT SPEAKER (Eric Roy) 
: The member did bring the Speaker into his comments. I ask him to please desist from doing that. 
JOHN HAYES 
: I did not intend to do that but I can assure this House that as a bureaucrat who worked under the previous administration I know it stymied the progress of this bill which is in accordance with what is required under our international obligations. This is not the current Minister of Justice’s problem. I would like to put the problem squarely where it belongs: with the outgoing Government. It had 9 years in which to fix the law; it did not. Within 6 months of the election our Minister of Justice had gone through the legislation and brought a very good bill to this Parliament and that is significantly different from the messing around by his predecessors.  
While I am on my feet I want to thank my colleagues on the Foreign Affairs Defence and Trade Committee. I thank the three members who are in the House now from our side of the committee and my colleague Keith Locke from the Green Party. I would have liked to thank the other members in person but they are not here. I would particularly like to thank Pete Hodgson for making a very serious contribution to the work of the committee. He did an extremely good job and I thank him for that. Our committee decided to work very closely together and one of the problems that we had to overcome was the inculcated habit in the bureaucracy of writing things for nanny State. They were far too prescriptive—way too prescriptive in terms of what this country needs. So the main reason that our select committee had to make changes to the bill was that the over-drafting of the nanny State had been inculcated in the bureaucracy for the past 9 years. We had to straighten up that issue.  
In order to do that and given the importance of making sure that this legislation was hand in glove with Australia’s banking legislation because of the Australian connection with our banks we decided to appoint as advisers to the committee four representatives of the banking community. I want to particularly thank them. They brought a degree of expertise to the committee that is not available in the Public Service and that process worked out very well. When we decided on the game plan for reviewing this bill we wanted to return to the House a bill that was future-proofed that was forward-looking and that was risk-based because we wanted to minimise compliance costs for the banks. That was a constant thread that came through from submitters and as far as practicable we wanted the legislation to be in harmony with Australia’s.  
One of the things that we decided after consultation particularly with the bankers appointed to assist us was that the bill as introduced did not give sufficient emphasis to a risk-based framework. Although the Minister had given us a very good bill to work from we needed to move the bill a little further in the direction of a risk-based framework so that we could minimise compliance costs for all concerned. Contrary to the figures bandied about by the previous speaker Lianne Dalziel I say the national interest analysis paper that came to the select committee said the cost of introducing this legislation will be in the order of $97 million. We were quite conscious of it being very expensive.  
Another issue that came through in the work of the select committee was that in Australia there is one entity that manages entirely the operation of monitoring money transactions. In New Zealand we have three entities. One of the informal suggestions we made in our report to the Minister is that consideration be given to setting up one entity in New Zealand rather than having the work spread across three entities. We also wanted to make sure that there were really seamless links with the Australian financial sector and we considered that if we had just one entity here that seamless arrangement could be sorted through.  
The bill is very complex and because of that we think that the financial entities required to comply with this legislation which are not just banks will need a reasonable time in which to develop systems and procedures to comply with the provisions of the legislation.  
The majority of submitters wanted us to adopt a flexible approach. I will give one example of an issue where we have done that. It was on the question of politically exposed persons. For the benefit of members of the House who may not fully understand the detail of this as well as the select committee members do I say the issue goes like this. A Financial Action Task Force grew out of the OECD and the desire to stop corruption in banking systems. As a result of that rules were set up to be applied to all countries. This was done in a mixture of pressure from banking systems which for example resulted in the closure of banks in Niue and the Cook Islands. In New Zealand and globally the rules were going to require all politically exposed persons—that is everybody in this Chamber—to be subject to special scrutiny. The draft that came to us from officials included not just members of Parliament but also their partner their partner’s children their partner’s children’s partners and their children.  
When we stood back and looked at this issue we thought that trying to apply one rule to all politically exposed persons across many countries was nonsense. I do not particularly want to annoy any other country but let us say that if there is a deep dark African country where the standards of accounting law and other issues are not as well developed as they are in New Zealand then one might want to implement rules on the basis of the legislation that was given to the committee. In practice however we decided that New Zealand had very high standards of accounting practice legal practice and public scrutiny and that what would apply in say Nigeria did not necessarily need to apply in New Zealand. For that reason the committee decided to recommend to the Minister and to this Parliament that we should not include politically exposed people as part of this legislation unless they are foreigners who are making financial transactions in New Zealand. We made that a very strong recommendation.  
Those are really the points that I would like to make to the House at this time. I again thank my colleagues who contributed to a very serious work programme. I thank the bankers who advised us because without their help we would not have ended up with the excellent report on this bill. Thank you very much.