Intent Declared Summary
In its 2005 assessment, the International Monetary (IMF) indicated that the legislative measures for Anti-Money Laundering (AML) and combating the financing of terrorism (CFT) in New Zealand were sound and that the overall preventive system in place was adequate. However, this assessment was based on the Financial Action Task Force (FATF) methodology of 2002, and there is insufficient information publicly available with regards to New Zealand's compliance with the 40 recommendations and nine special recommendations of the FATF's new 2004 methodology. A mutual evaluation for New Zealand is scheduled for April 2009 to evaluate New Zealand's compliance with the FATF's 40+9 recommendations, and the government has made clear that it will strengthen its AML regime and related legislative framework before the scheduled evaluation. Furthermore, the Ministry of Justice, in a 2006 Jurisdiction Report from the Annual Meeting of the Asia Pacific Group indicated that New Zealand intended to introduce the AML and CFT Bill in Parliament in 2007 and asserted that this would improve New Zealand's compliance with the FATF's 2004 recommendations. However, as of April 2009, the draft Anti-Money Laundering and Countering Financing of Terrorism Bill was reported to be languishing in the legislative process. In its 2007-2008 Annual Report the FATF names New Zealand as one of the jurisdictions that have undertaken to implement the FATF's 40+9 recommendations.
General Overview
Although there is a 2005 International Monetary Fund (IMF) assessment on New Zealand's anti-money laundering (AML) and combating the financing of terrorism (CFT) regime, this assessment is based on the Financial Action Task Force's (FATF) methodology of 2002. In 2004, the FATF introduced a new methodology. Subsequent to this change, there is insufficient information publicly available with regards to New Zealand's compliance with the new FATF methodology. Nevertheless, the Asia/Pacific Group on Money Laundering states that a mutual evaluation of New Zealand is scheduled for April 2009 to evaluate New Zealand's compliance with the FATF recommendations. Moreover the Ministry of Justice (MoJ) on its website clearly states its commitment to comply with all the FATF recommendations. According to this statement "the New Zealand government believes that the national interest requires that New Zealand complies with all FATF Recommendations." Similarly, in its 2007-2008 Annual Report the FATF names New Zealand as one of the jurisdictions that have undertaken to implement the FATF's 40+9 recommendations.
The IMF's 2005 evaluation of New Zealand's compliance with the old FATF methodology said that New Zealand's legislative measures for AML/CFT were sound and the overall preventive system in place was adequate. New Zealand's next FATF evaluation is due in April 2009, and the government has expressed its intention to improve its AML regime and related legislative framework before the scheduled evaluation.
The MoJ is the lead agency that administers the principal Acts and regulations on AML and CFT. In its AML/CFT self-assessment, the MoJ notes that, since July 2005, New Zealand has taken many steps to improve the implementation and level of compliance with the 40+9 FATF recommendations. According to the MoJ, in a 2006 Jurisdiction Report from the Annual Meeting of the Asia Pacific Group, the New Zealand authorities' intended to introduce the AML and CFT Bill in Parliament in 2007, which was to improve New Zealand's compliance with the FATF's recommendations. However, as of April 2009, the draft Anti-Money Laundering and Countering Financing of Terrorism Bill was reported to be languishing in the legislative process. This bill, when implemented, should further strengthen requirements for customer due diligence (CDD), record keeping and transaction reporting along with a regulatory framework for enforcing compliance on internal controls.
According to the MoJ website, money laundering and related crimes in New Zealand are largely covered under four principal laws. The Crimes Act of 1961 (amended in 1995) criminalizes the laundering of proceeds from a serious crime, particularly if the launderer is "reckless" or cognizant that the proceeds have been acquired by way of serious crimes. The Financial Transactions Reporting Act (FTRA) of 1996 ensures that financial institutions identify clients and report suspicious transactions and maintain records. The Proceeds of Crime Act of 1991 allows for the forfeiture of assets of those convicted of a serious offence. The Mutual Assistance in Criminal Matters Act 1992 provides for access to international assistance in criminal matters. In April 2006, the cabinet approved "extensive" amendments to the Terrorism Suppression Act 2002, including changes to ensure the strengthening of the rules for freezing, seizure, and confiscation of assets belonging to terrorists.
The Financial Intelligence Unit (FIU) and the Proceeds of the Crime Unit are part of the New Zealand Police. The monitoring of compliance lies with the AML supervisor of the individual sector. For instance, the Reserve Bank of New Zealand (RBNZ) supervises banks and credit unions, whereas the Department of Internal Affairs supervises casinos etc. According to the 2006 report by the MoJ entitled "APG Annual Meeting 2006 Jurisdiction Report: New Zealand," the MoJ estimates that more than $500 million a year is generated from illegal activity and crimes include drug manufacturing, distribution and smuggling
New Zealand is a party to the 1988 UN Drug Convention. In July 2002, New Zealand also ratified the UN Convention against Transnational Organized Crime. New Zealand is a member of the Financial Action Task Force, the Asia/Pacific Group on Money Laundering, and the Pacific Islands Forum. Its FIU is a member of the Egmont Group. According to the United States Department of State's (DoS) 2005 report, even though New Zealand does not have a Mutual Legal Assistance Treaty with the U.S., it has had "good cooperation" and "information-sharing" in this regard.
The Principles
II1. Legal Systems and Related Institutional Measures
Based on the 2005 Report on the Observance of Standards and Codes (ROSC) by the IMF, New Zealand has a sound legal system in place to counter money laundering and terrorist financing and the institutional system, according to report, is also effective. However, this assessment is based on the 2002 FATF methodology, and there is little information publicly available regarding New Zealand's compliance with the FATF's new 2004 methodology on AML/CFT requirements.
Per the 2005 IMF ROSC, money laundering is criminalized in New Zealand in accordance with the section 257A of the Crimes Act of 1961 and section 12B of the Misuse of Drugs Act 1975. The report also indicates that while the laws adequately address the money laundering offence, the New Zealand authorities "should consider broadening the scope of its predicate offences" (p. 3). The ROSC adds that the financing of terrorism is criminalized by the Terrorism Suppression Act of 2002, which accords with the requirements of the United Nations Convention for the Suppression of the financing of terrorism. The Proceeds of Crime Act of 1991 provides for the confiscation of proceeds and assets of those convicted of serious crimes. The IMF commented that New Zealand has a "generally well developed" legislative framework for the confiscation of criminal proceeds but it does not have provision for a civil forfeiture order.
The FIU and the Proceeds of the Crime Unit are part of the New Zealand Police, which is the main law enforcement agency in the country. According to the 2005 IMF report, the FIU's main function is to issue AML/CFT guidance and regulation, and to receive and analyze suspicious transaction reports (STRs). In 2006, the FIU prepared a "Best Practices Guidelines for Financial Institutions" to help meet FTRA obligations. According to a 2006 MoJ report, the New Zealand FIU processed 1,873 STRs between January 31 and May 2006. According to the MoJ's 2006 report following the APG annual meeting, New Zealand is already in the process of developing an electronic database to receive STRs electronically, recommended by the FATF. The 2005 IMF report notes that the police have the means to legally obtain bank records and relevant information in case of suspected offences. By and large, the report notes that AML requirements are covered by the Financial Transactions Reporting Act of 1996.
II2. Preventive Measures - Financial Institutions
The MoJ produced a self-evaluation of its AML/CFT regime in 2006, but this report does not clearly identify New Zealand's compliance with all of the FATF's 2004 recommendations relevant to this principle. The self-evaluation notes that some institutes and professions listed by the FATF are not adequately covered by the existing FTRA and that New Zealand is not compliant with Recommendation 5 (R5) on Customer Due Diligence (CDD). The FTRA also does not have any requirements for due diligence for politically exposed persons as mentioned in R6. The evaluation finds that New Zealand is non-compliant with R6 as well as R7 (on correspondent banking). New Zealand is also non-compliant with FATF R8, which deals with new technologies and non-face-to-face business relationships or transactions. Furthermore, the FTRA does not have adequate and enforceable requirements with regard to R9 on third parties and R11 on unusually large or complex transactions. The 2006 MoJ self-evaluation notes that New Zealand is also non-compliant with R21on monitoring of transactions and with R12 on CDD and record-keeping. According to the MoJ's self assessment, R 13 was not assessed in the 2005 IMF assessment. That same IMF report found New Zealand "largely compliant with Special Recommendation IV. However, no further information as to New Zealand's current compliance with these recommendations is provided in the 2006 MoJ's self-assessment. With regards to R15 the MoJ self-assessment states that the "FTRA does not contain any obligations for financial institutions to have AML/CFT policies, practices and programs (p. 51). The 2006 MoJ self-assessment finds compliance gaps with the FATF R 22 on requirements on overseas branches and subsidiaries and notes that the Reserve Bank of New Zealand Act of 1989 provides for adequate requirements on R18 on shell banks. However, no information is available on the level of compliance. Regarding R25, which calls for competent authorities to establish guidelines and provide feedback, the self-evaluation finds New Zealand non-compliant.
According to the IMF's 2005 ROSC, AML requirements for customer identification, reporting suspicious transactions, record-keeping, and so on, are largely covered by the FTRA 1996, and the FATF recommends that New Zealand amend the Act in order to achieve full compliance. The 2006 MoJ report notes that a review of the Act is underway and changes are being proposed on requirements for identification of customers and the nature of their business, reporting of suspicious transactions and maintenance of adequate records on transactions for investigations if need be. According to the 2005 IMF report, the STR provision on terrorist financing is covered in sections 43 and 81 of the Terrorism Suppression Act, but notes that it does not meet the requirements of SRVII on wire transfers. The MoJ's 2006 report following the APG annual meeting notes that the New Zealand police FIU processed 1873 STRs between January 31 and May 2006.
II3. Preventive Measures - Designated non-Financial Business and Professions
The MoJ produced a self-evaluation of its AML/CFT regime in 2006, but this report does not clearly identify New Zealand's compliance with all of the FATF's 2004 recommendations relevant to this principle. In a 2006 MoJ self-evaluation on New Zealand's compliance with FATF recommendations, the MoJ notes that the FTRA does not adequately cover Designated non-Financial Business and Professions (DNFBP) as identified by the FATF. This evaluation finds New Zealand non-compliant with R12 and R16 on CDD record-keeping and suspicious transaction reporting for DNFBPs. Also, on the R25 for competent authorities to establish guidelines and provide feedback, the self-evaluation finds New Zealand non-compliant. The MoJ evaluation notes that the FIU guidelines have been updated but there is still a gap in terms of compliance with the FATF recommendations. According to the 2005 IMF ROSC, casinos are regulated and supervised by the Casino Control Authority and Department of Internal Controls, organizations that work in close cooperation with the New Zealand FIU.
II4. Legal Person and Arrangements & Non-Profit Organizations
There is insufficient information publicly available regarding New Zealand's compliance with the FATF's recommendations relating to this principle.
II5. National and International Co-operation
There is insufficient information publicly available regarding New Zealand's compliance with the FATF's recommendations relating to this principle. Nonetheless, there is descriptive information relating to this Principle from various sources, such as the 2005 IMF report, the 2006 MoJ report, and others. According to the 2005 IMF report, New Zealand signed and ratified the United Nations Conventions, the 1988 Vienna Convention (in 1998), the 2000 Palermo Convention, and the 1999 Terrorist Financing Convention (in 2002). United Nations resolutions on prevention and suppression of the financing of terrorist acts have also been implemented by New Zealand. The report also notes that New Zealand has adequate powers to provide mutual legal assistance with regards to money laundering and proceeds of crime activities. The IMF report says that the Extradition Act provides adequate extradition authority and that New Zealand has the legislative framework to respond to requests of foreign jurisdictions. According to the 2006 MoJ AML/CFT report, New Zealand can provide mutual legal assistance in criminal cases and extradition on an ad hoc basis without the need for bilateral treaties. Moreover, according to the same report, in April 2006 New Zealand signed a treaty with China on mutual legal assistance on matters relating to evidence in court, execution of search warrants, and recovery and forfeiture of proceeds of crime. New Zealand is a member of the FATF, the Asia/Pacific Group on Money Laundering, and the Pacific Islands Forum. Its FIU is a member of the Egmont Group. The New Zealand government has played a leadership role in promoting efforts to combat money laundering in the South Pacific region, providing technical assistance and training.
