Each year about $1.3 billion from the proceeds of fraud and illegal drugs is laundered through everyday New Zealand businesses. So we intend to change the law to prevent money laundering and help combat crime.
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Money laundering is the process criminals use to ‘clean’ the money they make from illegal activities such as fraud, drugs and tax evasion.
They do this by buying, selling and channelling funds through things such as property, luxury goods and financial services.
Criminals launder money so it looks like it comes from a legitimate source, to cover their tracks and avoid being detected. They then spend the money or use it to fund criminal activities.
People who finance terrorism use similar methods to channel funds to violent causes.
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We need some businesses and professions to put measures in place so they don’t unwittingly support criminal activity. These measures are part of the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act.
As well as protecting legitimate businesses, AML/CFT measures make it easier for authorities to find out where ‘dirty’ money comes from, prosecute criminals, seize illegally earned money and assets, and stop crime. They also protect and help New Zealand live up to our reputation as being corruption free and a good place to do business.
The Government is proposing extending the AML/CFT Act to more businesses that evidence shows are at high risk of being misused by criminals.
Phase 1 of the Act came into force in 2013. It currently applies to banks, casinos and a range of financial service providers.
Phase 2 will extend the Act to cover real estate agents and conveyancers; many lawyers and accountants; some businesses that deal in expensive goods; and betting on sports and racing. There will be compliance costs, so we’re working with business sectors to minimise the red tape and expenses – we’re looking to balance compliance costs with the need to reduce known money laundering risks.
A Bill will be introduced to Parliament in early 2017 and the Government intends to pass the law about the middle of the year.
After that, businesses will have a period of time to prepare for the changes: it’s proposed lawyers and conveyancers will start after 6 months, accountants at 12 months, real estate agents and the New Zealand Racing Board (which administers sports and racing gambling) after 18 months, then high value dealers after 24 months.
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