Curran Clare: Anti-Money Laundering and Countering Financing of Terrorism Bill — First Reading 
Curran Clare: Anti-Money Laundering and Countering Financing of Terrorism Bill — First Reading 
[Volume:655;Page:4777] 
CLARE CURRAN (Labour—Dunedin South) 
: 
 I rise in support of the Anti-Money Laundering and Countering Financing of Terrorism Bill. Labour will support the referral of this bill to the Foreign Affairs Defence and Trade Committee. The purpose of this bill is to enhance New Zealand’s anti - money-laundering and countering financing of terrorism framework and in doing so to progress compliance with the Financial Action Task Force recommendations and ensure the robustness of New Zealand’s financial system. 
The Financial Action Task Force recommendations have widespread support and they were established in 1989 by the G7 countries in response to the threat that money-laundering posed to the international financial system. The Financial Action Task Force is a strategic inter-Governmental body. Its broad purpose is to develop international standards and New Zealand with other nations is a member of this organisation. The International Monetary Fund and the World Bank in addition to many other non-governmental bodies work cooperatively with the task force. 
The Anti-Money Laundering and Countering Financing of Terrorism Bill was originally the previous Labour Government’s bill. It was the previous Labour Government that approved the basic framework to underpin New Zealand’s anti - money-laundering reforms and there were compliance obligations in two phases. In the first phase the framework would extend to financial institutions and casinos and in the second phase to certain types of non-financial businesses and professions. It included a regime for supervision monitoring and enforcement of the entities new civil and criminal offences and a set of core requirements including customer due diligence reporting and anti - money-laundering and countering financing of terrorism policies and practices. It also included a set of objectives and criteria to guide ongoing development and implementation of the regulatory framework. The main objectives of the proposed reforms were and remain the effective detection and deterrence of money-laundering and terrorism financing maintaining and enhancing New Zealand’s international reputation and contributing to public confidence in the financial system. 
The New Zealand approach to the reforms is guided by three key principles. The first one is cost-effectiveness. The industry should bear the minimum cost that is necessary to facilitate the effective detection and deterrence of money-laundering. The second is “the best fit” for New Zealand which means that the regime should reflect New Zealand’s unique economy and the risks. The third is concordance as far as possible with the Australian regime. New Zealand and Australia have a close economic partnership and there should not be unnecessary disparate obligations. 
Why did the previous Labour Government delay this bill’s introduction? It was delayed simply because it was necessary to undertake detailed analysis of the costs of compliance. That is what drove the Deloitte report and I am sure that previous speakers on this side of the House have outlined that before me. The bill was planned to have been introduced earlier this year in time for the April 2009 visit by the Financial Action Task Force but the National Government did not meet that timetable. Public input will almost certainly be about the cost of compliance and how it can be minimised. 
Money-laundering is an important issue. It involves transforming money from crime or dirty money into money that has the appearance of coming from a legitimate source and makes the criminal origin of the money difficult to trace. Effective money-laundering is damaging as it allows criminals to mask their activities and makes it harder to prosecute those who undertake it. There are many ways to launder money some of which are sophisticated and complicated. The most common examples include “smurfing” or “structuring” which is depositing cash at various institutions in amounts less than the amount that must be reported to Government and subsequently transferring them to a central account. Another example is currency smuggling or moving funds across borders to disguise their source and ownership by mail courier or body packing often to countries that have strict bank secrecy laws. Others include exchanging transactions or buying foreign currency that can be transferred to offshore banks; purchasing assets with bulk cash which involves purchasing cars boats or real estate in someone else’s name selling the assets and depositing the funds; and gambling which involves buying gambling chips and after placing a few bets redeeming the chips for a casino cheque. 
Money-launderers are very creative at masking their activities as the list I have just mentioned illustrates. The people who engage in these activities do much harm to communities and those who work hard. Looking at this bill compliance with the Financial Action Task Force minimises the threat to business communities from money-laundering and terrorist financing. The overall objective is to reduce crime in New Zealand and therefore to make our communities safer. After September 11 money-laundering became a major concern of the United States’ “war on terror” and here in New Zealand most money-laundering takes place in relation to drug crime organised crime and fraud. Labour welcomes laws that strengthen and prevent the use of such measures. 
Effective anti - money-laundering laws make it easier to detect and investigate money-laundering activities by establishing links between criminal activity and the funds generated by that activity. Restricting the ability of criminals to profit from crime is important and I look forward to further discussion on this at the select committee. Making it hard to engage in organised crime can only be advantageous to New Zealand communities. Here in New Zealand we are fortunate that we do not have organised crime syndicates such as those mafia gangs that include the Russian Mafia the Chinese Triad the Albanian Mafia Japanese Yakuza the Neapolitan Camorra and the Mexican Mafia. 
Hon Simon Power 
: That’s a pretty good sweep. 
CLARE CURRAN 
: Hopefully we do not have many of those here. This bill represents the new international standards that have been put forward by the Financial Action Task Force to prevent and deter money-laundering and terrorist financing. The new legislation will replace the Financial Transactions Reporting Act 1996 which according to the Minister’s press statement no longer reflects international best practice. 
As I said before New Zealand joined the Financial Action Task Force in 1991 and was one of the original members. Domestically a weak regulatory framework in the area of money-laundering and terrorist financing increases the prospect that organised criminals and terrorists will exploit New Zealand’s financial system for criminal ends. This bill attempts to achieve to provide a regulatory framework by offering to undertake due diligence on customers or any person transacting on an account undertaking transaction and account monitoring reporting any suspicious transactions to police and requiring reporting entities to have an anti - money-laundering and countering financing of terrorism compliance programme. I look forward to further discussion on these at the select committee and on how the reporting entities will achieve those obligations. Those reporting entities include banks credit unions currency dealers issuers money transmitters life insurers and stockbrokers and they will be invited to make submissions to the select committee. In a post-9/11 world this bill importantly prevents the financing of a terrorist framework. There is a demonstrated need to pass laws that prevent the financing of terrorist organisations and deter money-laundering. I support the Anti-Money Laundering and Countering Financing of Terrorism Bill at its first reading and its referral to select committee.