Hutchison Paul: Anti-Money Laundering and Countering Financing of Terrorism Bill — First Reading 
Hutchison Paul: Anti-Money Laundering and Countering Financing of Terrorism Bill — First Reading 
[Volume:655;Page:4779] 
Dr PAUL HUTCHISON (National—Hunua) 
: 
 Thank you Mr Assistant Speaker for the opportunity to speak on the Anti-Money Laundering and Countering Financing of Terrorism Bill. Like many other speakers before me I note that the purpose of the bill is “to enhance New Zealand’s anti-money laundering and countering the financing of terrorism (AML/CFT) framework and in doing so progress compliance with the Financial Action Task Force’s (FATF) AML/CFT Recommendations and assure the robustness of New Zealand’s financial system.” I note that Minister Simon Power pointed out that this bill is part of the important fight against crime both in New Zealand and internationally and it goes right through the Pacific itself. I understand that the estimates of losses in New Zealand alone are between $0.5 billion and $1 billion a year. That is pretty significant money. 
Undoubtedly organised criminal groups are using more and more sophisticated methods to launder money particularly in relation to the drug trade. I cannot recount all those different types of organisations that Clare Curran brought up. She might go through them again. Fortunately the Russian mafia the Scandinavian mafia the Triads and the Mexican mafia are not here in New Zealand as far as we know. 
Hon Parekura Horomia 
: Yes they are—over there. 
Dr PAUL HUTCHISON 
: They are over here says Parekura Horomia. Well behind every desk there could be a potential Mexican mafia but we hope not and we hope that this bill will act towards countering that possibility. 
There is no doubt that money-laundering involves transforming money from crime known as dirty money into money that first has the appearance of coming from a legitimate source and second makes the criminal origin of the money difficult to trace. It is then known in the vernacular as clean money. 
Paul Quinn 
: Parekura’s going to tell us about the gangs. 
Dr PAUL HUTCHISON 
: Hopefully he will. Hopefully there will be a contribution from Parekura. 
Fraud and financial crimes have changed and increased as rapid technological development means that our laws become easily out of date and this type of crime becomes increasingly easy to commit. It is very important not to underestimate just how sophisticated money-laundering is becoming through the new technologies as Mr Hipkins is readily agreeing across the Chamber. The bill responds to developments in this area and ensures that New Zealand’s anti - money-laundering and countering financing of terrorism laws are up to international standards. These protections are a very powerful tool in the area of drug trafficking and money-laundering where we have previously struggled to trace and confiscate the proceeds of drug trafficking. I understand that this bill will work in conjunction with the domestic Criminal Proceeds (Recovery) Act 2009. 
Some very important international obligations relate to the bill. The National-led Government is committed to maintaining and enforcing effective anti - money-laundering and countering financing of terrorism laws known as AML/CFT laws. As an active member of the Financial Action Task Force New Zealand has spoken out strongly in support of this commitment as did the previous Labour Government which did not quite get round to culminating the enactment of the legislation along with many other things that it failed to do. We must do our part in the international fight against money-laundering and financing of terrorism. The dominant view is that the strongest anti - money-laundering and countering financing of terrorism laws are those based on the Financial Action Task Force recommendations. We stand at risk of being criticised for our lack of progress in this area to date. That is a serious concern as the G20 has recently given its explicit support to the Financial Action Task Force. The United Nations Security Council recently strongly urged nations to comply with the Financial Action Task Force recommendations. 
I note that my colleague John Hayes mentioned just how realistic the problem is in the area of the Pacific. He specifically mentioned the Panamanian bank Mossack Fonseca and Co. which apparently was operating in Niue for up to 10 years. I understand that they were not quite aware of what was going on and how much it benefited them is not clear but it is a great worry when countries close to us that are so intimately involved with New Zealand are involved. It is very important as this bill goes to the select committee that we think of other Pacific countries—the Cooks Tokelau and the wider Pacific. 
There are a variety of benefits of taking action which include the fact that terrorism is a threat to domestic and international business communities. The measures in this bill protect our business communities against those threats by reducing crime and making New Zealand a safer place. Non-compliance would result in costs to our domestic business sector. That aspect is very important to be aware of. Increased costs of borrowing overseas for both the Government and the private sector would result as overseas lenders perceive the non-compliant country as a greater financial risk. There would be difficulties in the form of increased costs or lost business opportunities overseas for companies from the non-compliant country and difficulties in trade negotiations at a Government to Government level as foreign Governments may be reluctant to extend trading privileges to non-compliant countries. 
Other benefits of taking action include impacts on relations with international organisations such as the World Bank the International Monetary Fund and the United Nations. There is the possible perception that the non-compliant country may be seen as a soft touch for money-launderers and terrorism financers. 
I will end my speech by making a couple of comments on Part 2 “AML/CFT requirements and compliance” which deals with standard customer due diligence simplified customer due diligence enhanced customer due diligence and ongoing customer due diligence and account monitoring. Clearly there will be a balance—there was always going to be a balance—between individual privacy and how far the mechanisms associated with the bill can go. 
The very final point I will make is regarding the cost-benefit analysis. I agree with the Hon Clayton Cosgrove and others who have mentioned that the Deloitte independent cost estimation although it talks about start-up costs of financial institutions and casinos is $97 million to be spread over 2 years but the data indicate an upper cost of $249 million for start-up costs. That is pretty wide. We hope it would be more accurate than that. However this bill is a very important bill and I certainly commend it to the House.