Anti-money laundering bill passes second reading

A bill that enhances measures to counter money laundering and the financing of terrorism passed its second reading in Parliament today.

Justice Minister Simon Power said the Anti-Money Laundering and Countering Financing of Terrorism Bill is also designed to help tackle financial and drug-related crime by detecting, tracing, and seizing profits of domestic organised crime groups.

"This bill is an essential component in our ability to investigate organised crime, to follow the money trail through financial systems, and goes hand in hand with the Criminal Proceeds (Recovery) Act, passed by the Government in April, which can be used to attack those profits.

"New Zealand cannot be seen as a target for organised criminals and terrorists.

"This bill will allow us to better contribute to the international fight against money laundering, tax evasion, and terrorism financing."

Mr Power said the changes to the bill were in response to the concerns of submitters.

"The bill, as reported back, aligns more closely to the Australian regime and gives more flexibility to industry managing money laundering and terrorism financing risks.

"The select committee's recommendations have made the bill more operationally savvy by refining the requirements for existing customers, giving industry the opportunity to delay verification of a customer's identity, and allowing foreign politically exposed people to be identified through back-office functions."

The bill formally recognises that effective control of money laundering and the crimes that lead to it require a collaborative approach between industry and government.

It also sets out regulatory changes to enable New Zealand to comply with the Financial Action Task Force (FATF) - an inter-governmental body that sets international standards for combating money laundering and terrorist financing.

"Most of New Zealand's financial trading partners are included in the task force, and not implementing its measures puts our reputation and our access to international financial markets at risk," Mr Power said.

"The reform needs to be widened beyond the financial sector.

"There will be two phases of coverage. The first will cover financial institutions and casinos, and the second will include other industries and professions where money laundering could occur - including lawyers, accountants and real estate agents.

"The Government does not want to tie the financial sector up in red tape. Our approach is flexible and enlists the skills of the sector to help to manage money-laundering risks."

Businesses will be required to make more robust checks on customer identity and verification, and have better systems in place to identify and track suspicious activity.