NZ needs to act on cash laundering

Roger WIlkins.

New Zealand would do worse than Australia if it was audited right now by the body that sets standards for combating money laundering and the financing of terrorism, says the organisation's former boss.

Roger Wilkins, immediate past-president of the Financial Action Task Force (FATF), said criticisms of Australia after an audit by the Paris-based organisation earlier this year should be a wake-up call for this country.

"Because the main discrepancies or main weaknesses in the Australian system I think are probably replicated in New Zealand, "said Wilkins, who is the keynote speaker at the AML Solutions anti-money laundering conference in Auckland this week.

"New Zealand won't be assessed for another couple of years but if you were to assess New Zealand today it would probably do worse than Australia in a lot of ways," he said.

Rules to combat money laundering and the financing of terrorism have been in force in New Zealand for the last two years.

Under them, some 2000 institutions, from fund managers and derivatives issuers to debt collectors, money changers and casinos, need to have systems guarding against money laundering.

Non-compliance can mean fines or even jail time, though so far regulators have only issued warnings.

But the Government doesn't appear to be in any rush to widen the anti-money laundering rules to include lawyers, accountants, real estate agents and businesses.

Wilkins said New Zealand officials should not wait until the FATF audit.

"New Zealand should move on it as quickly as possible and not sit around and do it at the last moment because otherwise people will say 'you just stuck something in place, this is just recently arrived at, who knows whether it is working and functioning properly'. So that will be a source of criticism."

Wilkins said moves to deter money laundering and terrorism financing work to stop these activities and are not just about passing FATF's tests.

When speaking in Auckland this Thursday, he says the theme of his address will be the problem of "regulatory arbitrage".

"The ability to use weak or non-compliant jurisdictions anywhere in the world to launder money or divert assets to terrorism is real threat to anyone in the world because we've got a truly global financial system and we've got technology which allows people pretty freely to move capital round the world," he said.

"New Zealand can't take the view that they're a long way from the Middle East, that they're a long way from places where corruption is going on, and that they're somehow protected by distance from this stuff - they're not."

NZ AML Summit amlsolutions.co.nz