Locke Keith: Anti-Money Laundering and Countering Financing of Terrorism Bill — Second Reading 
Locke Keith: Anti-Money Laundering and Countering Financing of Terrorism Bill — Second Reading 
[Volume:657;Page:6889] 
KEITH LOCKE (Green) 
: 
 I endorse the comments of the previous speakers in that the Foreign Affairs Defence and Trade Committee did work very well on the Anti-Money Laundering and Countering Financing of Terrorism Bill. The committee’s Government members including the chair saw the serious problems in the bill and listened closely to the submissions particularly from the banks. The Labour members and myself as the Green member worked cooperatively to address those problems. The bill that came back from the select committee is quite transformed from the original bill. I congratulate the Minister on not heavying the members of the select committee to go along with the original conception and also on listening to what were obviously sensible suggestions from the submitters and banks. 
The Greens support the bill because it helps to deal with money-laundering which is a serious criminal problem around the world. The Financial Action Task Force whose prescriptions the bill is implementing has put pressure on some tax-haven countries including some Pacific countries to be a bit more transparent and to do proper checks on dodgy transactions. That has reduced the use of money-laundering for crime in the world but there is still a gigantic problem of money escaping into tax havens and also escaping tax in the home country. That is a significant element in the world’s financial crisis. 
I read the October 2008 issue of the  
New Internationalist 
. It estimates that the world’s wealthy have parked $11500 billion offshore. That is $11.5 trillion. By doing so they dodge about $250 billion in tax each year which is an amount that far exceeds what the United Nations has asked from the rich countries for its millennium projects in order to tackle global poverty. I do not think we should necessarily look to the Financial Action Task Force to totally get rid of the tax havens partly because the task force is a creation of the richer nations. It was set up by the OECD—the rich nations—rather than the UN and to a significant extent it represents the interests of big investors in the rich countries including in its aim to make the world safer for investors in and from the OECD countries. 
The reason why we are discussing the bill in urgency tonight is the Government was desperate to get the bill enacted in time for the October plenary meeting of the Financial Action Task Force and the investigation that it will be doing into New Zealand. The fact that we have the bill was not good enough for the Government apparently; the bill has to be enacted in time for that meeting. One of the reasons behind the Government’s decision was that if we do not get a good Financial Action Task Force endorsement then foreign investors will perhaps think we are a little bit dodgy in terms of a home for their investments. 
The work of the Financial Action Task Force helps to reduce corruption which is a big problem but as other speakers have said not so much in New Zealand. The problem of corruption is behind the extra scrutiny that banks are supposed to put on the transactions of politically exposed persons as listed in the bill. It makes sense to look at the transactions of top Government people and judges in places like Nigeria where there is serious corruption if my email is anything to go by. I am getting a hard-to-refuse offer from Nigerians by email every day. The select committee rightly thought that to apply such hard scrutiny to New Zealand’s politically exposed persons would be a bit over the top given our other stringent accountability mechanisms. 
Another particular problem of some interest was the undermining of the traditional independence of the judiciary from the Government. Under the bill as it was originally the New Zealand Government through its different agencies would have a licence to conduct an extra poke into the financial affairs of Supreme Court judges and their families. Of course it is unlikely that here in New Zealand in 2009 a police finance crimes unit would obey a Government directive to search the accounts of judges and their families in a political vendetta but law has to be written for worst-case scenarios when we might have a less benign Government. As we have seen in places like Pakistan and Fiji over the last year or two when Governments start moving in a more authoritarian direction they try to restrict the judiciary. The authoritarian regimes sometimes trump up charges against the judiciary so that they can override the law. Judges are the protectors of democracy against excessive executive power. 
It is quite clear from what was discussed in the select committee that some excessive bureaucratic prescriptions have been coming out of the Financial Action Task Force which were included in the original bill. They are partly a result of the post-2001 war on terror and the prescriptions to try to make sure that no terrorist anywhere in the world transacted over $10000 although I have not seen reports on how much terrorists have actually been restricted by the measures. Terrorists tend not to go down to the local bank and conduct transactions under their own names. They are probably the smartest people in terms of getting round any regulations such as are set up here. 
I asked the bankers and the officials at the select committee who would actually filter the international transactions coming into New Zealand to see whether a terrorist was involved somewhere and I asked whose terrorist list would be applied. Essentially I found out that it would not be a New Zealand list as New Zealand does not have much of a list; it would be an American list. The American Government has a slightly different definition of who is and is not a terrorist from New Zealand and it has quite a few more names on its list. In fact the tracking is done through a United States Treasury - CIA initiative called the Terrorist Financing Tracking Program. The programme with its list is linked up to an international financial transaction system called SWIFT. Virtually all international banking transactions pass through the SWIFT system including most of New Zealand’s international financial transactions. There has been a big fight between the United States and the European Union over the Terrorist Financing Tracking Program in terms of its pulling all the names and transactions off the SWIFT system and running it through the terrorist database. 
The FBI has a terrorist screening centre with hundreds of thousands of names on its database. The Associated Press recently gave the figure of 400000 names of people associated with terrorism on this FBI list. At the moment a shaky accord has developed between the EU and America to try to protect the privacy of people conducting banking transactions. But there is also a huge inconvenience factor of people wrongly caught up in the excessive list that the Americans have. That is a side problem associated with this bill but it is good that the banks particularly the Australian banks engaged with the select committee to try to get away from an overly prescriptive approach whereby they would spend all their time trying to find out the names and details of ordinary New Zealanders engaged in financial transactions. 
We now have a regime in Australia and New Zealand where through the computer systems the banks will focus only on truly risky people. That is a step forward. Although the Greens have often had a lot of criticisms of the Australian banks in terms of interest rates profits and all kinds of things it was interesting to be in a select committee where in some ways the Greens were allied with the banks in trying to bring more sense to the system. It is largely because they did not want the huge cost on their administration that the original bill would have put in. Thank you.