Neil Sands
The head of an advisory group that has recommended major changes to the Anti-Money Laundering/Countering Financing of Terrorism (AML) regime has acknowledged “reform fatigue” in the area but says the proposals are carefully targeted and should not result in added compliance for affected businesses.
Steve Symon, chair of the Ministerial Advisory Group (MAG) for Transnational, Serious and Organised Crime, also welcomed a suggestion that seized criminal assets could help pay for the government’s controversial AML levy, although he says using the funds to help victims of crime must be the top priority.
Finance and business groups have raised concerns that the MAG’s recommendations, available here, will create regulatory over-reach and undermine the rule of law.
The proposals include banning cash payments for lawyers and other “at-risk” sectors, allowing authorities to freeze suspicious financial transactions without a court order, lowering AML/CFT reporting thresholds and rewriting the legal definition of money laundering to place the burden of proof on the defence when assets are seized.
Steve Symon
Symon, a veteran Crown prosecutor with Meredith Connell who recently moved to Mills Lane Chambers, said his six months working with the MAG underlined the scale of the organised crime problem and associated money laundering issues facing New Zealand.
He said the problem went far beyond the common perception that organised crime involves domestic gangs trading drugs.
“It’s shifted so that it’s effectively run like international corporations, not caring about the commodity. So if they can make money out of drugs, they’ll make money there, or it could be black markets in tobacco, migrant exploitation or cyber fraud.
“You have these commercial entities making money on a large scale. What was quite daunting and surprising to us was how much you’re fighting a problem that is outside of your borders and trying to prevent it from coming in.”
Targeting criminals, not businesses
Symon said organised crime represents a national security threat requiring urgent action, including chasing the proceeds of crime.
He said the blueprint outlined by the MAG, which also includes appointing a dedicated organised crime minister, was “bold and effective”, aiming to make New Zealand a world leader in tackling money laundering and seizing criminal assets.
By necessity, that involves AML reporting entities, who Symon recognised were already coming to grips with reforms to the regime currently underway, creating apprehension about further change.
“I respect those positions and I also understand that fatigue. I guess where I start from is what I and the Ministerial Advisory Group were asked to do, and that was to provide a solution for the government about how New Zealanders can do a better job fighting organised crime.
“We looked at the size of the problem, both as it is now and what it might potentially turn into. Then we looked at the driver of that problem and obviously the most significant driver is money. So, we looked for solutions that.”
He said changes such as redefining money laundering would have little practical impact on AML reporting entities, likening concerns to those expressed when the AML regime was first introduced.
“I’d expect people to be anxious and they should be thinking about these issues because, of course, we want to have a justice system that works for New Zealanders, but also doesn’t become draconian and allow the state to be oppressive.
“There were similar arguments, of course, brought when the initial AML regime was coming in. Those same ideas – it’ll have a chilling effect; it’ll lead to overreach by the police. That hasn’t proven to be the case and in the same way, I anticipate the changes that have been proposed here actually wouldn’t make a significant difference to most reporting entities. They would only affect a small class of people and those involved in organised crime.”
Similarly, he did not believe the MAG’s recommendations would create a huge compliance burden.
“It shouldn’t necessarily lead to more compliance. What we were aiming to do was to make the compliance clearer, to outline what kind of behaviour is acceptable and what’s not. In some ways, drawing the bright lines for those working in the [affected] industries.”
Paying the bill
Symon supported using funds seized from organised crime to fund the AML levy, a cost which will currently fall on reporting entities.
But he said priority would have remain on programs such as Resilience to Organised Crime in Communities (ROCC), which brings together enforcement and social agencies in a bid to deal with the root causes that allow organised crime to become embedded in communities.
“It’s a good idea. If the bill for the compliance New Zealanders must do because of organised crime can be put at the feet of organised crime, such as through proceeds of crime, that’s fantastic,” Symon said.
Associate Justice Minister Nicole McKee is considering the MAG report, including the proposal to redefine money laundering, although she said the timing of the report meant it was not included in the current round of reform.
Nicole McKee
“Officials considered this recommendation but required more information and time to assess costs and benefits. Therefore, no decisions were made to progress this as part of current AML/CFT legislative reforms. Officials will continue to consider the broader definition as part of wider discussions with AML partners,” she told LawNews.
McKee said the government’s recently announced action plan to combat the methamphetamine trade included establishing an additional AML team in the police service. The plan will also involve tightening the Criminal Proceeds (Recovery) Act.
She added: “My goal with AML/CFT reform is to make the regime more effective at tackling organised crime, while cutting red tape for lawful and low-risk businesses.
“If we get this right, these changes will deliver the most significant regulatory relief since the AML/CFT regime was first introduced in 2013.”
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