3 JUL 2018
Around the world, governments, organisations and professionals are faced with the challenge of identifying and mitigating the risks posed by corruption, bribery, money laundering and terrorist financing.
Even with strict laws criminalising these activities in most countries, activities to legitimise proceeds of illegally obtained funds continue.
We are currently consulting with professionals and stakeholders on a new professional statement Countering Bribery and Corruption, Money Laundering and Terrorist Financing.
The professional statement aims to provide the profession with a clear description of how to manage these risks. It lays out professional and ethical behaviour by providing practitioners and firms with clear and consistent principles, informing them about what constitutes a breach of conduct.
New Zealand is perceived as one of the most corruption-free countries in the world, sitting at first place on Transparency International’s Corruption Perceptions Index.
Australia and New Zealand present two contrasting environments. New Zealand is perceived as one of the most corruption-free countries in the world, sitting at first place on Transparency International’s Corruption Perceptions Index. Meanwhile, its neighbour Australia has been called a ‘place of choice’ for money laundering by one of its biggest banks, ANZ. However, both countries are at risk due to perceptions that they’re easy places to do business.
Last year, New Zealand ranked highest in the Corruption Perceptions Index – which ranks the perceived levels of public sector corruption in 180 countries. But as Transparency International’s New Zealand chairperson points out, these risks are ever-present and the need to safeguard against them should be continuous.
"We want to be open and transparent, a good place to do business. But we have to back it up with preventative methods, because inevitably scoundrels want to exploit our innocence. We haven’t got as strong safeguards as we need," says Suzanne Snively.
New Zealand’s Anti-Money Laundering and Countering Financing of Terrorism(AML/CFT) legislation is extensive. However, the country remains a target due to its trade links with Asia and reputation as being an open and conducive environment to do business.
Real estate is a well-known target for converting money from illegal activities into legitimate assets because large sums of money can be ‘cleaned’ in a single transaction.
From January 2019, real estate agents will have to comply with New Zealand’s AML/CFT legislation. By shifting emphasis from investigating offenders directly, to placing obligations on intermediaries and professionals, the NZ government hopes to strengthen its AML/CFT legislation.
In the property sector, real estate agents, conveyancers and bankers are often the gatekeepers or facilitators of financial transactions, as a report by the internationally-recognised Financial Action Task Force (FATF) has found. FATF works with governments to support legal and regulatory requirements to root out money laundering, terrorist financing and related threats to the integrity of the global financial system. In the 2007 report called Money Laundering and Terrorist Financing Through The Real Estate Sector, FATF points out the following:
"FATF experts have observed in recent years that money launderers are increasingly forced to develop elaborate schemes to work around AML ... controls. This has often meant seeking out the experience of professionals such as lawyers, tax advisors, accountants, financial advisors, notaries and registrars in order to create the structures needed to move illicit funds unnoticed. These professionals act as gatekeepers by providing access to the international financial system, and knowingly or not, can also facilitate concealment of the true origin of funds."
Even with its Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) laws, organisations in Australia still struggle – as recent news headlines have reflected.
December 2017 saw CBA, Australia’s largest bank, admit to breaching money laundering and counter-terror laws more than 53,000 times. The month before, NAB, Australia’s third biggest bank, announced that they were investigating, and attempting to fix, a number of issues relating to its AML/CTF laws.
While the Australian financial regulator that enforces anti-money laundering and other financial crimes covers the financial sector, gambling sector, and bullion dealers, it does not cover the property industry. In a 2015 Mutual Evaluation Report of the measures Australia is taking to combat these risks, FATF called on the Australian government to do more to give its legislation more bite, especially in the real estate sector.