Anti-Money Laundering and Countering Finance of Terrorism
Speech to Anti-Money Laundering and Countering Finance of Terrorism Professionals
Thank-you for this opportunity to address this year’s annual conference for Anti-Money Laundering and Countering Financing of Terrorism Professionals.
This is a really important area of work not just for law enforcement and the wider financial sector but also for the community, which we all want to keep safe from this type of crime and the crime it can be used to finance.
So it’s great to see you all getting together to talk about how we can be even better at detecting that offending and preventing further harm.
As the Minister of Police, I am keenly aware of the need for co-operation and collaboration to reduce victimisation and keep our communities safe, so it’s very pleasing to see you focusing this year on the importance of partnership.
I’d like to acknowledge in particular the Financial Intelligence Unit and the Association of Certified Anti-Money-Laundering Specialists for hosting this event along with the international and domestic experts who’ve made time to share their expertise.
Theme and Context of the Seminar
This year marks 20 years since the commencement of the old Financial Transaction Reporting Act and the beginning of the first anti-money laundering regime.
Those measures represented the first steps in our journey to create a partnership between law enforcement and the wider financial sector to keep dirty money out of the sector and, in doing so, detect, disrupt and prevent offending.
For financial institutions, that first regime was obviously superseded by the more robust Anti-Money Laundering and Countering Financing of Terrorism Act 2009.
With public consultation currently underway on extending that legislation to include lawyers, accountants, real estate agents and other businesses it’s timely to think about the value of that partnership.
The full commencement of the Act in 2013 significantly increased the resilience of the financial sector. From next year, the richness of data received by Police’s Financial Intelligence Unit will again be significantly increased by the commencement of international and large cash transaction reporting.
Each of these legislative changes have been matched by Government investment in the Financial Intelligence Unit so that the intelligence available will be transformed in just a few years.
Running alongside the reforms to combat money laundering and the financing of terrorism, is the asset recovery legislation, which also commenced in 2009 and has made it even harder for criminals to profit from crime.
This has allowed Police to hit organised crime groups in the pocket, and hit them hard. Since 2009, about $95 million worth of assets have been forfeited, with a further $269 million worth of assets restrained.
Not only has this severely curtailed the profits these criminals make from the harm they cause in our communities, it has also prevented them from reinvesting their ill-gotten gains into further offending.
Recent research has found that for every dollar worth of assets restrained, $3.30 in social harm is prevented and for every dollar of assets forfeited, $3.50 worth of harm is prevented.
That means the use of the Act has so far prevented more than $1 billion of additional harm, and I commend the determination of Police and their partner agencies and organisations to use this ability to stop further offending.
Together, the Financial Intelligence Unit and the Assets Recovery Unit are a potent combination, providing on the one hand the means to pick up and track criminals’ financial networks and, on the other, the ability to remove illicit gains through asset recovery.
This combination provides powerful tools to disrupt economically-motivated crime at its heart and Police is looking to continue to build on the success of these tools in the future.
That prevention value is why we are all here today.
Those dollar figures I mentioned regarding the restraint and seizure of assets and the circumventing of criminals reinvesting in further offending are more than just numbers.
They represent the very real contribution that everyone in this room is making to the community.
As Minister of Police, I’ve been impressed by the work I’ve seen being done to protect New Zealanders and their property and the work of the Financial Crime Group is no exception.
The work to detect and address money laundering, the financing of terrorism and the recovery of ill-gotten assets supports Police’s prevention focus by using innovation, new tools and partnership to disrupt, derail and deter serious crime.
Financially-driven crime victimises a wide spectrum of society.
When we think of ‘white collar’ crimes such as money laundering, we can sometimes fall into the trap of focusing on the means of offending – shady accounting practices, obscure shell companies and accounts in exotic ‘offshore jurisdictions’, to name but a few.
But money-laundering and terrorism financing is more than that.
If we think about the ends of money laundering and terrorism financing rather than the means, we see the process by which criminals hide the money that they’ve defrauded from vulnerable members of society.
The legitimate businesses that fail because a ‘front’ company has been set up in competition; the process by which gangs obscure the source of money they’ve extorted from communities or obtained by trading in the misery of methamphetamine and other drugs; the means by which terrorists gain the ability to take innocent lives.
Every profit-motivated crime has a victim and potentially involves funds that need to be laundered.
Just like the victims of any other crime, victims of financial crime deserve justice – and preferably not to be victimised in the first place.
The regime to combat money laundering and terrorism financing is a valuable law enforcement tool to achieve these goals. Alongside other policing forensic tools such as fingerprints or DNA, ‘following the money’ is also a very valuable investigative tool in the identification and investigation of organised crime.
But what’s really exciting about the new regime is that by targeting the financial base of crime we can make some real contributions to preventing crime in the first place.
Organised crime and financial crimes have a financial motive. That’s generally why criminals commit these offences. To them, it’s business.
It has business-like practices, and like legitimate businesses organised criminals will generally engage in activity that has a good cost/benefit ratio. And in a billion dollar industry, some of these crimes can have very good rates of return for criminals, with the victims paying a very high price.
The Anti Money Laundering and Counter Financing of Terrorism regime provides a mechanism for the public and private sectors to work in partnership to make profiting from crime more difficult.
The risk of getting caught, of going to prison or having criminally-obtained assets seized is going to go up. All of a sudden, the cost/benefit equation may not look so appealing.
Importance of Partnerships
Bearing in mind the victimisation that is perpetuated by money laundering, the work of all the sectors represented here today is important because curbing it and the financing of terrorism relies on the partnerships in this room.
It is not just a law enforcement responsibility. The regime will work only if Government, law enforcement agencies, Sector Supervisors and the private sector work together to ensure an environment that is uninviting, hostile, and ultimately unprofitable for criminals.
The partnerships between the private sector, Police and the Sector Supervisors are at the heart of the regime.
The private sector sits at the crucial interface between law enforcement and New Zealanders – the private sector’s prevention and detection role makes it much harder for criminals to exploit the financial system, while the reporting line to the Financial Intelligence Unit helps law enforcement agencies further detect and investigate criminal exploitation when it does happen.
We know from the past that without the work that the private sector is doing in this partnership, law enforcement’s ability to disrupt, derail and deter serious financial crime would be a whole lot harder.
Extending the regime to new sectors – and new partners
But while it has become harder for criminals to place proceeds of crime in the financial sector, there remain ways to get around these controls.
I know that speakers at previous conferences have discussed how criminals seek to use professional services as gatekeepers to the financial sector, such as setting up complex trust arrangements to move assets offshore.
And as you all know, buying and selling of high value goods is also a common method used by criminals to get around controls. Unfortunately, we’re not just talking about a few ‘bad apples’; criminals may seek to exploit professionals or high value dealers without their knowledge, just as they seek to do with financial institutions.
A lack of coverage can undermine the robustness of the regime, allowing criminals to enjoy their ill-gotten gains and leading to proliferation of offending and victimisation.
It also affects the sectors that the criminals abuse by undermining the reputation and integrity of the professionals and the professions themselves.
To prevent this, Police needs to build partnerships with these new sectors just as they have with financial institutions. The ongoing cross-government consultation on how to extend the regime is the bed-rock for that partnership.
The Government is seeking your goodwill and assistance to help us prevent harm for all.
I know that the next few days will give you ample opportunity to reflect on the depth and breadth of the partnerships and work involved in combating money-laundering and the financing of terrorism.
This is a regime that encompasses public and private sectors and sees small institutions rubbing shoulders with some of our biggest companies. The agenda shows also some of the diversity of crime that this work seeks to prevent; from corruption, to terrorist financing, drug dealing, tax evasion and even human trafficking.
That very breadth of this sector means there are few opportunities for you all to come together like this. So please make the most of the next few days.
As a conference focusing on the value of partnership, this is a tremendous opportunity for practitioners to network and find new opportunities to co-operate and collaborate to stop criminal abuse of financial services by building the most resilient sector possible.
Thank you once again for the opportunity to address you today, and for the great work all of you are doing in your respective sectors and areas.
My very best wishes for a productive and energising conference and best wishes for the challenges ahead.