Money Laundering and Dirty Money

I love how technology makes some daily tasks faster and relatively effortless.  Intuitive accounting software, online banking, smart whiteware, an unlimited digital library, online shopping… my list is long.

Criminals also love technology.  Some use technology to execute their crimes via identity theft, or ransomware where businesses lose access to their data unless they pay a ransom.  More old school is the Nigerian “prince” emailing for your personal help to transfer funds.  However, criminals also use technology to launder dirty money so they can buy legitimate goods and services with it.

Dirty money laundered each year in NZ is estimated to be in excess of $1.5 billion.  To put the problem in perspective the total duties and taxes (GST, income taxes, FBT, duties etc) paid in NZ for the year ended 30 June 2017 was $69 billion.

Dirty money is a massive global problem that needs a sophisticated global approach.

NZ’s Anti Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT for short) requires certain NZ businesses to have risk minimisation processes in place, confirm the true identity of their customers, and report suspicious transactions.

Phase 1 of the Act came into force in 2013 and applied to banks, casinos and a range of financial services providers.  That is why it is so hard now to open a new bank account without multiple documents to prove your identity.

Phase 2 of the Act is now being rolled out and applies to:

  • lawyers and conveyancers (from 1 July 2018),
  • accountants (from 1 October 2018),
  • real estate agents (from 1 January 2019),
  • sports and race betting (from 1 January 2019), and
  • businesses that deal in certain high-value goods (from 1 August 2019)

Certain high-value goods include buying or selling jewellery, precious metals, precious stones, watches, motor vehicles, boats, art or antiquities for $15,000 or more in cash.

NZ has a reputation as one of the least corrupt nations in the world and a good place to do business.   We must protect that reputation even if it means that once simple tasks such as opening a new bank account now requires a personal appointment and at least an hour of your time.

Q2 Ltd will be putting new systems and processes in place from 1 October 2018.  In some instances, we may be asking for identification from clients for whom we have been working for over 20 years!  Frustrating I know – but worth it if the new rules help to stop criminals laundering their dirty money!

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