Anti-Money Laundering and
Countering the Financing of Terrorism

New Zealand's legislative provisions relating to money laundering

A number of key pieces of legislation are designed to prevent money laundering and terrorist financing.

1. Criminal law

Section 243 of the Crimes Act 1961 & Section 12 Misuse of Drugs Act 1975 (Money Laundering Offences)

Money laundering is criminalised under both of these Acts. These offences apply to persons that engage in money laundering transactions knowing or believing that all or part of the property is the proceeds of a serious offence (an offence punishable by 5 years imprisonment or more) or a specified drug offence (controlled drugs, cultivation of prohibited plants or drug paraphernalia), or being reckless as to whether it is the proceeds of such an offence. A person engages in money laundering transaction if that person deals with such property or assists another to do so for the purpose of concealing the property. It is also an offence to possess laundered property

A person may be convicted of a money laundering offence even though they have no connection to the criminal offence that generated the funds (referred to as the "predicate offence"). For instance, if someone generates money from an illegal drug transaction and provides those funds to a "professional money launderer", that launderer may be found guilty of money laundering.

Proceeds of Crime Act 1991

This Act provides that persons convicted of serious offences may be deprived of the instruments and the proceeds of their offending by way of forfeiture orders and/or pecuniary penalties.

The government has recently introduced a new Bill (Criminal Instruments and Proceeds Bill) that, if passed, will establish a non-conviction based forfeiture regime that will allow a recovery agency (the Serious Fraud Office) to freeze and/ or confiscate the instrumentalities of crime or the funds generated from it, even where a person is not convicted of a crime but where they cannot demonstrate that their assets were acquired in a legitimate fashion.

Many overseas jurisdictions, such as Australia, Canada and the United Kingdom already have non-conviction based forfeiture systems like the one proposed in the Bill.

Mutual Assistance in Criminal Matters Act 1992

This Act allows overseas jurisdictions to request assistance from New Zealand in a wide range of criminal matters, including the registration of foreign confiscation and restraining orders in this country. It also enables New Zealand to request similar assistance from overseas jurisdictions.

The Extradition Act 1996 also forms part of a comprehensive framework of legislation aimed at combating money laundering.

2. Other legislation

The Financial Transactions Reporting Act 1996 (FTRA)

This Act is aimed at ensuring that when money laundering occurs, it can be brought to the attention of the Police’s Financial Intelligence Unit (FIU). The FIU has the responsibility for enforcing the FTRA.

The FTRA requires financial institutions to:

• verify the identity of customers when new bank accounts are opened, when certain transactions are conducted (including cash transactions which exceed $9,999.99), or where money laundering transactions are suspected
• retain records of transactions and customer verification details
• report suspicious transactions to the Police Commissioner.

It also requires all persons arriving in or leaving New Zealand to declare to Customs any cash in their possession if it is more than $NZ10,000. The declarations are referred to the Commissioner of Police.

The Commissioner of Police has issued guidelines to assist financial institutions in reporting suspicious transactions. These guidelines set out the features of a transaction that may give rise to suspicion that the transaction may indicate or be relevant to money laundering offences.

Terrorism Suppression Act 2002

The Terrorism Suppression Act 2002 contains a number of key sections. For instance:

• it defines what a 'terrorist act' is
• it establishes a mechanism to designate persons or groups as terrorist entities
• it creates a number of offences such as financing terrorists or recruiting persons into terrorists groups

The Act also requires financial institutions to report suspicious transactions involving designated terrorists to the Police and it allows for the freezing and forfeiture of terrorist assets so that those assets cannot be laundered or used for terrorist purposes.

The legislation referred to can be viewed on the Statues of New Zealand website.