By SCOTT MacLEOD
More than 3000 suspicious transactions will be reported to police this year as banks eye money laundering, terrorism and organised crime.
Figures obtained by the Weekend Herald show the number of such reports has more than tripled in five years.
Banking insiders mostly attribute the surge to greater awareness and stronger laws requiring banks to report suspicious activity.
But some banking experts suggest the figures reveal an underlying growth in murky activity as the criminal world becomes more sophisticated and moves cash through international accounts.
The reports apply to "financial institutions holding a reasonable suspicion of money laundering or other serious criminal activity, including on occasion suspected terrorist activity".
The figures show 161 suspicious transactions were reported in 1996. Six years later, the figure had exploded 17 times greater, to 2828.
One of the biggest jumps came after the terror attacks of September 11, 2001, when the number of reports almost doubled within a year.
The figures came from the police's financial intelligence unit. Its head, Detective Sergeant Ashley Kai Fong, suggested the growth was partly due to banks having a "heightened awareness of obligations" under laws such as the Financial Transactions Reporting Act 1996 and Terrorism Suppression Act 2002.
That view was supported by most bank officials the Herald spoke to on condition of anonymity.
Some felt there was a growth in illegal activity, but ASB spokeswoman Barbara Chapman said her bank had seen a 16 per cent drop in fraud cases.
Claire Matthews, a senior lecturer in banking at Massey University, said the constant growth in reports of suspicious activity "suggests an actual increase in those activities". She said the growth in legitimate transactions had been much smaller - from just over 1 billion in 1996 to 1.6 billion now.
"September 11 could have made people more suspicious."
Police and banks refused to say what would trigger their suspicions, but the Herald obtained a set of guidelines which gave at least 12 factors.
They ranged from people refusing to give identification to travelling long distances to make deposits, investing for no obvious purpose, choosing a poor deal when better ones were available, and depositing large sums of cash in envelopes to avoid bank staff.
A report lodged with the Asia/Pacific Group on Money Laundering said illegal banking was "largely domestic in New Zealand and relatively small in the international context".
It was mostly related to drug, fraud and property crime, although there was evidence of New Zealand being a transit country for dirty money flowing from eastern Europe.
Authorities were also aware of a growth in organised crime and "some unusual or unexplained movements of cash".
However, the Group's report was written before the September 11 attacks.
Police initially refused to supply the reporting figures but relented after an approach to the Ombudsman.
The national crime manager, Detective Superintendent Rob Pope, said he was unable to give details on which institutions made the reports or the amount of cash involved.
Big growth in suspicious banking
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