Hodgson Pete: Anti-Money Laundering and Countering Financing of Terrorism Bill — In Committee 
Hodgson Pete: Anti-Money Laundering and Countering Financing of Terrorism Bill — In Committee 
[Volume:658;Page:6951] 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 The Hon Trevor Mallard has raised a number of interesting questions and some of them are deserving of an answer. I do not have the accounting skills of the Hon Trevor Mallard and I do not pretend to have them. But I have had the benefit of listening to a range of advice that came forward to the Foreign Affairs Defence and Trade Committee and I have been part of some of its discussions on the Anti-Money Laundering and Countering Financing of Terrorism Bill. 
I say to the honourable member that I think he has probably got some of the Melissa Lee case wrong. That is to say the suspicious transaction he referred to in relation to the legislation in my reading of it is one that does not get caught by the money-laundering definition. The reason I say that is that in that particular instance as far as I understand it money was shifted certainly. It is a money-laundering activity to shift money from one thing to another. But in this case it was shifted from the contingency line of a company’s accounts through to the profit line and then not shifted back again. The reason I think it is not money-laundering is that it never left the company. 
Hon Trevor Mallard 
: How do you know? 
Hon PETE HODGSON 
: Well I do not know that. It is true that I do not know. But what I do know is that it shifted within the company. 
Hon Trevor Mallard 
: This is a very poor defence. It’s a shocking defence. 
Hon PETE HODGSON 
: I am sorry if it is not a very good defence. Let me just try to continue. 
It has been described as a simple accounting error and I think that probably under-represents it a little. I do not think it is a suspicious transaction according to the legislation that is in front of us but I do think it is a great deal more than an accounting error. The reason I say that is that if it was an accounting error it raises the question of how that accounting error occurred each year—the same error—for 5 years. It was apparently repetitive. Now that is a feature of money-laundering. That is to say money-laundering usually does not occur in one big lump sum. The suspicious transaction that the member referred to in relation to the legislation is usually one of a series of suspicious transactions the idea being to shift small amounts of money on a regular basis and indeed shift some of them back to cause a bit of confusion. 
The CHAIRPERSON (Eric Roy) 
: Can the member just tell me what clause of the bill he is discussing? 
Hon PETE HODGSON 
: The clause on suspicious transactions— 
Hon Trevor Mallard 
: I think the— 
The CHAIRPERSON (Eric Roy) 
: I have asked the member. 
Hon Trevor Mallard 
: Clause 90. 
Hon PETE HODGSON 
: Clause 90—OK. Clause 90 is about failing to report a suspicious transaction. So the suspicious-transaction feature of the legislation can be found right through it. There was a failure to report 5 years ago 4 years ago 3 years ago 2 years ago 1 year ago and 4 months ago. So even when it was drawn to the attention of the transactor there was a failure to report that suspicious transaction as clause 90 refers to. 
I know the member thinks that my defence of Melissa Lee is poor but I hold the view that it is probably not money-laundering although it does have a lot of the characteristics of money-laundering because small amounts of money were moved on a regular basis. I suspect it is not money-laundering because it is yet to leave the company but the Hon Trevor Mallard may be correct when he says it has already left the company. I simply do not know. So I say to the member that I think to accuse Melissa Lee of money-laundering as defined in this legislation may be an error. But to suggest that it is a suspicious transaction is something that I strongly agree with him on and to suggest that there was a failure to report it as mentioned in clause 90 is absolutely the case. And not only that; there was a failure to report it as far as I can see on five separate occasions. So maybe there is a point of agreement between the Hon Trevor Mallard and me but there also remains the point of disagreement. I think it might be worth exploring that point further.