US embassy cable - 05WELLINGTON950

UNCLAS WELLINGTON 000950 
 
SIPDIS 
 
SIPDIS 
 
JUSTICE FOR OIA AND AFMLS 
TREASURY FOR FINCEN 
STATE FOR EB/ESC/TFS, INL AND EAP/ANP 
 
 
 
E.O. 12958: N/A 
TAGS: EFIN, KCRM, KTFN, PTER, SNAR, NZ 
SUBJECT: 2005-2006 INTERNATIONAL NARCOTICS CONTROL STRATEGY 
REPORT, MONEY LAUNDERING: NEW ZEALAND 
 
REF: STATE 210351 
 
1.  Below is post's input on New Zealand for the money 
laundering section of the 2005-2006 International Narcotics 
Control Strategy Report (INCSR).  This input also will be 
sent via unclassified e-mail to Ed Rindler, INL/C/CP. 
 
2. Begin submission: 
 
New Zealand is not a major regional or offshore financial 
center. Its small number of banks and financial institutions 
can be effectively monitored by government regulatory 
authorities. Although there is evidence that some money 
laundering does take place, it does not appear to be 
significant. Narcotics proceeds and commercial crime are the 
primary sources of illicit funds. International organized 
criminal elements do operate in New Zealand. 
Money laundering is criminalized in New Zealand under two 
laws.  Under the Crimes Act 1961 and Misuse of Drugs Act 
1975, it is illegal to launder the proceeds resulting from a 
serious offense, or to be involved in money laundering 
transactions, if the offender knew or believed that the 
proceeds were derived from a serious offense or a specified 
drug offense.  The acts also apply to a recipient of 
property who was reckless in determining whether it had been 
acquired as the proceeds of a serious offense or a specified 
drug offense.  A serious offense includes any crime 
punishable by at least five years' imprisonment. In 
addition, the Crimes Act criminalizes the receiving of 
property or funds if the recipient knew they had been 
obtained, or was reckless as to whether they had been 
obtained, by any crime. 
The Financial Transaction Reporting Act 1996 contains 
reporting obligations for a wide range of financial 
institutions, including banks, credit unions, casinos, real 
estate agents, lawyers, and accountants. These entities must 
identify clients, maintain records and report suspicious 
transactions.  The Act also requires the reporting of large 
cross-border currency movements and contains a "safe harbor" 
provision, or immunity from civil, criminal or disciplinary 
proceedings for persons reporting suspicious transactions 
and money laundering. 
Proposed legislation, introduced in June 2005 in Parliament, 
would allow the government to freeze or confiscate assets 
generated by crime, even in cases where a person is not 
convicted of a crime but is unable to demonstrate the 
legitimate acquisition of the assets in question. 
The Terrorism Suppression Act, enacted in October 2002, 
criminalizes terrorist financing. This act amended the 
existing law to enable New Zealand to ratify the UN 
International Convention for the Suppression of the 
Financing of Terrorism. The act authorizes the government to 
designate non-UN listed entities as terrorist organizations 
and to freeze, seize and forfeit their assets.  The act, 
which criminalizes the financing of terrorist acts and of 
designated terrorist entities, was amended in June 2005, 
making illegal the intentional financing of non-designated 
organizations that engage in terrorism.   The Prime Minister 
is responsible for designating terrorist entities upon a 
recommendation of the New Zealand Police and in consultation 
with the Attorney General. Once the designation is made, the 
police inform banks and other appropriate parties. A public 
notice is also published. The police and the Crown Law 
Office are developing additional procedures to implement the 
Terrorism Suppression Act's provisions.  New Zealand has 
consistently implemented financial controls against entities 
included on the UN 1267 Sanctions Committee consolidated 
list. No assets from these entities have yet been identified 
in New Zealand. 
Parliament in April 2005 passed the Charities Act, which 
establishes a Charities Commission to register and monitor 
charitable entities.  Registration is not required, but an 
entity must do so to qualify for tax-exempt status.  An 
organization cannot be registered if it is designated a 
terrorist entity or convicted of any offense under the 
Terrorism Suppression Act. 
New Zealand and the United States do not have a Mutual Legal 
Assistance Treaty. However, New Zealand legislation applies 
certain provisions of the Mutual Assistance in Criminal 
Matters Act 1992 unilaterally to the United States. In 
practice, New Zealand and U.S. authorities have enjoyed a 
good record of cooperation and information sharing in this 
area. 
New Zealand is a party to the 1988 UN Drug Convention, and 
in July 2002, ratified the UN Convention against 
Transnational Organized Crime. It signed the UN Convention 
against Corruption in 2003.  New Zealand is a member of the 
 
 
Financial Action Task Force, the Asia/Pacific Group on Money 
Laundering, and the Pacific Islands Forum. Its Financial 
Intelligence Unit is a member of the Egmont Group. The New 
Zealand government has played a leadership role in promoting 
efforts to combat money laundering in the South Pacific 
region, providing substantial amounts of technical 
assistance and training to Pacific Island governments. 
The Government of New Zealand has established a 
comprehensive anti-money laundering regime. It should build 
upon this base by continuing its implementation of its 
Terrorism Suppression Act. Additionally, New Zealand should 
continue its recognized leadership in the international 
arena. 
BURNETT