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CONTROL OF MONEY-LAUNDERING ACTIVITIES

As a Financial Institution, Lotusfx is committed to observing and enforcing the anti money laundering laws of New Zealand .

 

Details of this act and its operations click here :

http://www.rbnz.govt.nz/finstab/banking/supervision/0094501.html#P705_82425

 

New Zealand has the following laws in place to help detect and combat money laundering:

(i) Proceeds of Crime Act 1991

This Act provides for the restraining of assets derived from serious crime and their eventual forfeiture to the Crown following conviction.

(ii) Mutual Assistance in Criminal Matters Act 1992

This Act implements New Zealand 's international obligations to facilitate requests for assistance in criminal investigations and prosecutions.

(iii) The Crimes Act 1961

This Act creates an offence of money laundering. The money laundering offence refers to proceeds from all serious crimes (i.e. those punishable by a minimum sentence of five years imprisonment).

(iv) The Financial Transactions Reporting Act 1996

This Act imposes obligations on banks and other broadly defined financial institutions to:

•  verify the identity of customers when new bank accounts are opened, when certain transactions are conducted (including cash transactions which exceed $9,999.99), or where money laundering transactions are suspected;

•  retain records of transactions and customer verification details;

•  report suspicious transactions;

•  report certain movements of currency across New Zealand 's border.

The Crown agencies with prime responsibility for controlling money laundering activities in New Zealand are the New Zealand Police, New Zealand Customs Department and the Serious Fraud Office.

New Zealand fully endorses the objectives of the Financial Action Task Force (FATF) http://www.fatf-gafi.org . With the passing of the Financial Transactions Reporting Act 1996 and other recent minor legislative amendments, New Zealand considers it now complies with FATF's 40 recommendations to prevent money laundering occurring in financial institutions.

The RBNZ is a member of New Zealand 's inter-departmental FATF working group that is involved in providing advice to Government and, in liaison with various international agencies, ensuring that New Zealand continues to comply with FATF's 40 recommendations. The working group represents New Zealand at FATF Plenary meetings and meetings of the Asia/Pacific Group on Money Laundering, and contributes to initiatives to encourage adoption of, and compliance with, FATF's 40 recommendations by other countries in the Asia Pacific region.

The RBNZ's role and interest in money laundering stems from its statutory responsibility for prudential supervision of the banking system and its aim to ensure that the legislative, accounting and institutional infrastructure is conducive to the overall soundness and efficiency of the financial system. With a focus on ensuring the continued integrity of the New Zealand financial system, the RBNZ has also been concerned to ensure processes put in place to combat money laundering do not compromise system efficiency unduly (e.g. through the imposition of high compliance costs).

The approach that has been taken to combating money laundering is consistent with the broader approach to financial sector regulation in New Zealand , i.e. to seek to ensure that incentive structures within the financial sector are conducive to minimising the incidence of money laundering.

Measures in place to encourage banks and other financial institutions to comply with their legislative and regulatory obligations as pertaining to money laundering include:

(i) New Zealand company law prevents persons convicted of crimes of dishonesty (including money laundering) from managing companies. The supervision of banks and various regulations governing non-bank financial institutions have the effect of placing character and criminal history restrictions on persons who can manage or direct financial institutions, or persons who may act in a professional capacity with respect to soliciting funds. In the non-bank financial institution sector, these constraints are reinforced by the supervision of governmental authorities, such as the Registrar of Friendly Societies and Credit Unions;

(ii) New Zealand company law places strong obligations on company directors generally and imposes personal liability on them in circumstances such as money laundering. As a result, directors may require regular and intensive systems and compliance audits of companies they govern. Many New Zealand institutions already subject themselves to audit scrutiny of their systems for complying with legislative requirements.

(iii) A bank's "standing" is an important consideration for registration in New Zealand . This means that there is an expectation that banks should be of good reputation and high integrity. A bank involved in money laundering could lose its bank registration.

(iv) For banks, the incentives to comply with money laundering requirements are bolstered by the market-oriented banking supervision arrangements introduced in January 1996. Among other things, these proposals place an increased focus on directors' responsibilities by way of a requirement for public attestations by directors regarding the adequacy of internal control systems which banks have in place to monitor and control business risks.

(v) Fines and prison sentences associated with New Zealand 's financial transaction reporting requirements and the money laundering offence, provide very strong incentives for all financial institutions to comply with the Financial Transactions Reporting Act and related legislation.

In addition to having these incentive structures in place, the RBNZ has, since 1989, required all banks to observe the Bank of International Settlements "Statement of Principles on Prevention of the Criminal Use of the Banking System for the Purpose of Money Laundering". Moreover, the New Zealand Bankers' Association has developed its own guidelines, based on the United Kingdom model (Procedures and Guidance Notes for Banks on Money Laundering). Banks in New Zealand have followed these guidelines since 1991.

The RBNZ also conducts annual prudential consultations with all registered banks. Compliance with money laundering requirements is discussed at these meetings. The RBNZ does not conduct on-site inspections of banks, nor does it undertake or require specific external compliance monitoring with respect to the money laundering regime.

In this environment, the RBNZ has not considered it necessary to promote or implement additional specific compliance monitoring arrangements to reinforce the money laundering regime.

Reserve Bank of New Zealand

 

 

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