It is always good to put money laundering in perspective for your clients. Money laundering is the process whereby funds generated illegally or in support of terrorism are put through a series of transactions so the tracing of funds to the illegal activity is difficult or impossible.
Behind this activity are some of the worst crimes committed on the planet today – slavery, forced prostitution, drug trafficking, fraud, theft, and diversion of aid or government funds.
The OECD estimates that 2-3% of the worlds GDP is tied tothese activities. To provide perspective, that’s about the same as the totaleconomy of Russia or Australia.
As a highly traded currency, it is certain that New Zealand dollar is being utilised for money laundering, both by domestic criminals and those offshore.
New Zealand is a part of a worldwide effort to identify and stop money laundering and the financing of terrorism. Various international agreements require New Zealand to enact and enforce legislation relating to this.
Reports on suspicious activities are coordinated by The New Zealand Financial Intelligence Unit (FIU) which is a special unit with NZ Police. The FIU helps the New Zealand government fulfil its obligations to the inter-governmental Financial Action Task Force (FATF). Reporting entities must use the FIU’s goAML Web application to report activity that is suspicious in nature or prescribed in the Act.
As a general rule, a suspicious transaction will often be one that is inconsistent with the customer’s known activities and profile or with the normal business expected for that type of client.
A Reporting Entity must identify any suspicious transactions and raise the appropriate report to the Police if it has reasonable grounds to suspect a transaction may relate to specified money-laundering or terrorism offending, or is the proceeds of a crime.
Beneficial ownership or ‘controlling mind’
The New Zealand regulations are aimed at ensuring the beneficial ownership or controlling mind behind any financial transaction is transparent, so the risk of money laundering can be assessed.
Most individual customers, beneficial owners and persons acting on behalf of customers are required to provide evidence of their identity and residential address. You are required to ensure that all documentation supplied for customer due diligence purposes satisfies the standard set out in the AML/CFT Act and the Identify Verification Code of Practice 2013 (Code).