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:6934] 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 I am aware that an amendment has been tabled in the name of the Hon Trevor Mallard to remove four words from the definition of “politically exposed person”. Those words are: “in any overseas country”. The effect of that amendment as proposed by Trevor Mallard would in essence be to return the Anti-Money Laundering and Countering Financing of Terrorism Bill to the state it was in as introduced in respect of politically exposed persons. 
I oppose the amendment of the Hon Trevor Mallard. I have come to the view that the amendment does not take us forward and I will lay out to the Committee why that might be. The situation in respect of politically exposed persons was looked at carefully by the select committee and a number of matters were brought to bear. We looked carefully at the issue of trust and how it may apply to domestically politically exposed persons. We came to the view that because of the existence of a thing called a discretionary trust it was rather too easy for a domestically politically exposed person to sneak through that particular proposition. It was unknown to us at that time that the Deputy Prime Minister of the land had a discretionary trust in his part of his family trust which proves the point—I think rather well—that it is not difficult at all for a smart person to sneak through legislation. Therefore being prescriptive about the legislation may not be the best thing to do. 
The second thing is that amending the politically exposed persons lists as proposed by the Hon Trevor Mallard means for example that members of the executive of a nation would come under some sort of scrutiny. Members of the executive of this country would come under some sort of scrutiny but backbenchers would not. People who headed State-owned enterprises would be caught; people who headed district health boards would not. And on it went. Where was the list going to stop? What was so good about a positive list? We threw out that idea of politically exposed persons partly on that basis as well. 
So we come to the issue that Trevor Mallard speaks of in respect of Melissa Lee who is not a member of the executive but a mere backbencher. We did not give ourselves false comfort that by leaving the domestically politically exposed persons provisions in the legislation we would somehow be better protected. That idea is given lie to by the fact that Melissa Lee has in recent times been determined to have owed $100000 or thereabouts to NZ On Air specifically because she moved it from one part of the company’s accounts to another. 
That leads me to another point. That is not laundering because the money has not left the company yet. It becomes laundering at the point when the money leaves one company and moves to another. This was pre-laundering. It was what one might call the “soak” phase. It was the phase where the enzyme stain remover was applied and the laundry had not begun. It follows like night after day that when a company is successful because things have moved from one line item to another—inappropriately as we now discover—sooner or later laundering might follow and the start switch might get pressed. But this Melissa Lee example is pre-laundering and it will not be caught by this legislation although it is true to say that it would never be of benefit to an individual until laundering had taken place. 
So for a range of reasons I think the amendment put forward by the Hon Trevor Mallard falls short of the ideal. We have a couple of really good instances in front of us. They are both unfortunate. We used them to demonstrate that the advent of a loophole in the form of a discretionary trust means that seeking the beneficiaries of a trust which is a requirement of this legislation cannot work where that trust is a discretionary trust because the beneficiaries have not been described. The idea of who will be a beneficiary and who will not is discretionary. It cannot be detailed with any particularity. 
Secondly in respect of a positive list the question immediately arises as to who is missing from that list. Whether it is a district health board chief or a backbencher does not really matter. The point of the story is that the best way to maintain an appropriate supervision of politically exposed persons is to be vigilant in general and not vigilant in particular. The best way this country can keep its high state of transparency with the very excellent reputation it has against any form of corruption is to be vigilant generally not to be specific and say we are looking only at these people and only at the beneficiaries of a trust etc. 
That is the essence of my opposition to the amendment tabled by the Hon Trevor Mallard. I am not even sure that it should go to the vote. My view is that the legislation as reported back from the select committee is in a much better form than that which was introduced. Although I understand the debate put forward by the Hon Trevor Mallard it is the same debate that we had within the committee for a long time and that was our resolution.