Neil Sands
Property lawyers will be tired of the endless anti-money laundering reforms announced in recent years, but must maintain due diligence as authorities are adopting a tough approach to enforcement in the sector, AML/CFT specialist Gary Hughes has warned.
Addressing The Law Association of New Zealand (TLANZ) Property Law Conference on Thursday, Hughes admitted he was feeling reform fatigue too, saying keeping on top of AML/CFT changes had become “overwhelming”.
“It’s tricky when you get asked to talk about anti-money laundering and financial crime and property things – responses range from a grunt to a sort of downcast, frowny emoji, to a string of swear words,” he said.
Hughes said there was no doubt AML-CFT laws were needed to combat criminal elements in society, but added: “It’s getting more and more complex, and I’m somewhat dismayed at the successive waves of law reform.”
Lawyers in New Zealand have been subject to the anti-money laundering regime since 2018, and Hughes said tasks such as undertaking customer due diligence should be second nature by now.
However, a complicating factor has been the churn of legislative and regulatory reform that followed a Ministry of Justice review released in 2022, which contained more than 280 recommendations.
Since then, three separate pieces of legislation have been submitted to Parliament and Hughes said a fourth was being considered.
Only one – the Statutes Amendment Bill – which simplifies customer verification processes has actually passed.
“It shows you the logjam in Parliament that it’s taken three years to get one improvement, around address verification… that’s the first bill, there’s two more bills, and the ministry is actually threatening a fourth one,” Hughes said.
“I don’t know why they couldn’t just put this all into one place for law reform purposes.”
There have also been separate strategies unveiled since late December on dealing with organised crime and implementing AML/CFT reforms.
‘Sharper’ enforcement
Hughes, who is convenor of TLANZ’s AML/CFT Law Committee, said keeping on top of the changes was not easy but it was vital for property lawyers because real estate remains the number one way to launder money.
“If you’re a criminal, or involved with others [who are criminals], and you’re getting a whole lot of money that you need to dispose of, then real estate is really the way to do it,” he said.
“They can clamp down in other areas, other types of investments, but the challenge for property lawyers, and all of us really, is that [criminals’] motives and the way in which they go about it looks pretty much indistinguishable, much of the time, from somebody legitimate who also wants to buy a house, or an apartment, or a beach house.
“You see this all the time in the criminal proceeds cases, the asset recovery and forfeiture claims that come through the courts. As as well as the Harley-Davidsons and expensive sports cars, there’s always property under restraint and often forfeited.”
He said this would lead to closer scrutiny of the sector from police and regulators.
One of the bills currently working its way through Parliament – the AML/CFT (Supervisor, Levy, and Other Matters) Amendment Bill – means the Department of Internal Affairs (DIA) will become New Zealand’s sole AML/CFT supervisor, a role previously split three ways between the DIA, the Reserve Bank and the Financial Markets Authority.
Hughes said it appeared that DIA was becoming “a larger, more grumpy supervisor”, with a greater emphasis on enforcement.
“Much of my work in that sort of regulatory space is trying to defuse or handle an investigation, trying to work with the client, hoping it’s not going to court, but we are seeing a sharper enforcement focus on those matters too,” he said.
He said police have also been active in chasing suspect money, citing two major investigations, Operation Beach – focused on the construction industry – and Operation Martinez – which targeted professional money launderers.
Hughes said property lawyers should be aware of the risks when clients requested complex ownership structures involving elements such as offshore trusts, cross-border transactions, shell companies, or holding companies.
He said money launderers could look and sound legitimate.
“You have to be even more careful in your law firms if you’re dealing with those accountants… financial brokers, financial advisors, wealth advisors, money-remitting businesses.
“There’s a whole plethora of financial institutions that we need to interact with, but you need to really stay on your game in terms of due diligence.”
Check out The Annual Property Law Conference 2026 (On Demand) screening here – The Annual Property Law Conference 2026 (On Demand) – The Law Association
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