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Property helps $1.6b in money laundering

NZ NewswireNZ Newswire 9/09/2016

Police believe about $1.6 billion of crime proceeds is laundered in New Zealand each year and they suspect much it is being cleaned through the booming property market.

Tougher obligations on lawyers, accountants and real estate agents could help turn off the tap, officials told Justice Minister Amy Adams in March, according to documents obtained by the New Zealand Herald.

"Recent police investigations show that these sectors are closely linked to organised crime and drug offending, and the risk of money laundering from these sectors is rising," the Ministry of Justice said.

Criminals had successfully purchased property with ill-gotten gains in more than half of 57 cases where police had confiscated assets, they said.

They had used professional services in 26 per cent of the 57 cases.

The ministry warned maintaining the status quo would put New Zealand's reputation at risk ahead of a evaluation by the intergovernmental Financial Action Taskforce in 2019-20.

A second phase of anti-money laundering and financing terrorism laws, first passed in 2009 but which exempted lawyers, accountants and real estate agents, would allow police to "follow the money" and disrupt illicit money flows and discourage crime.

Banks might not be suspicious of many transactions involving trust accounts, but lawyers, accountants and real estate agents, who had direct contact with clients, could be "gatekeeper professionals".

Law changes would require them to carry out a higher standard of due diligence on their customers - monitor accounts and report suspicious activity to the police financial intelligence unit.

Ms Adams defended her decision last year not to immediately begin policy work on closing the loopholes, instead requesting scoping work on the scale of the problem.

"I wanted to move quickly, but quickly bearing in mind this is not an area you want to get wrong," she told the Herald.

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