Hayes John: Anti-Money Laundering and Countering Financing of Terrorism Bill — First Reading 
Hayes John: Anti-Money Laundering and Countering Financing of Terrorism Bill — First Reading 
[Volume:655;Page:4772] 
JOHN HAYES (National—Wairarapa) 
: 
 I rise to speak to the Anti-Money Laundering and Countering Financing of Terrorism Bill. As the Minister of Justice has set out this bill will help to protect New Zealand’s financial systems from money-laundering and the financing of terrorism. As a member of the Financial Action Task Force New Zealand is committed to having a world-class anti - money-laundering and counter-financing of terrorism system. It is very important that New Zealand continues to meet international standards and that we do our part in the international fight against money-laundering and terrorism financing. People can be inclined to be a bit offhand about that but I can tell members that time as a bureaucrat in this country taught me that these issues are very alive and well including those in some of our territories like Niue where the Panamanian-based bank Mossack Fonseca and Co. operated at will beyond New Zealand’s control and certainly beyond the Niue Government’s control. 
Hon Lianne Dalziel 
: And the Cook Islands. 
JOHN HAYES 
: It was not only there; it was also in the Cook Islands—and in Vanuatu where these issues have been very very real. The Anti-Money Laundering and Countering Financing of Terrorism Bill will place a number of obligations on the financial and casino sectors. Many of these obligations such as reporting suspicious transactions record-keeping and carrying out due diligence are not new. There is also a necessity to ensure that the telephone system is tied up in this arrangement because it was very easy to set up a company in Niue for example with an 0900 number and talk to a hot voice or something in a recording. A call could be made on a Friday afternoon and the phone left off the hook until Monday morning. The caller would invoice himself or herself via the company in Niue send the cheque to Niue and launder the money that way. It is quiet-intelligence reporting of suspicious activity that is crucial in the fight against crime. We know that the reporting of the Financial Intelligence Unit works. It is used to unravel complex organised corporate crime as well as drug-related crime. 
What is new in this bill is that it uses the intelligence of financial institutions to assist in the fight against crime and that is very very important. Businesses understand the risks of their services being abused by money-launderers and terrorism financers and this Government understands that financial institutions are best placed to manage those risks. This bill harnesses the knowledge of businesses. It asks businesses to undertake an assessment of the money-laundering and terrorism-financing risks and once those risks are understood it asks financial institutions and casinos to prioritise those risks. The response is documented in a well-structured anti - money-laundering and counter-financing of terrorism programme. This way the bill applies an effective risk-based approach in a carefully prioritised and deliberate way. It achieves quiet intelligent suspicious-transaction reporting and it will focus on the highest priorities for detecting and prosecuting crime. If this bill had been in place I suspect a lot less money would have flowed in the direction of the conflict in Sri Lanka over recent years. 
This risk-based approach is the key to a successful and cost-sensitive anti - money-laundering and counter-terrorism financing system. Not only does the risk-based approach provide better intelligence but also it allows businesses to direct resources to the areas of highest priority or greatest risk. Financial institutions and casinos can focus their resources on the products situations and customer types that are the riskiest for the fight against crime. 
We recognise that this bill will cost the financial and casino sector but the risk-based approach means that it will not cost any more than is strictly necessary. This Government also understands that the sector is willing and able as a partner in fighting crime. The bill does not over-regulate this sector through prescription. It primarily sets out the risk-based approach and any other minimum requirements to meet our international obligations. Regulations will flesh out any further requirements that need to be responsive to risk. However the framework will also provide for safe harbours for situations in which risks may be too uncertain. Flexibility is built in to allow related entities to organise themselves efficiently. The bill allows related businesses to collaborate to manage their money-laundering and financing of terrorism programmes. They may join together to form a designated business group with not just members within New Zealand but also with parent or subsidiary companies overseas. 
The overall structure of the regime is one of self-management flexibility and light-handedness with the supervisory support brought by Government through constructive interaction. Let us not forget what my honourable colleague the Minister of Justice was saying earlier: the costs of not proceeding with this bill are high not just in terms of borrowing for businesses and the Crown. The obvious cost of not implementing this bill is that we allow organised crime to profit from criminal activities and our financial banking and investment markets will be awash with criminal proceeds from across the globe. This bill will help restrict the destabilising flow of criminal proceeds through the New Zealand economy and although the bill will not stop the proceeds of crime being generated it will empower financial institutions and casinos with the ability to quietly report any suspicious activity they come across. [ 
Interruption 
] Mr Cosgrove may well be their first target. I commend this bill to the House.