Firm used to launder drug cash fined $55,000

An Auckland foreign exchange company that was used by a crime syndicate to launder drug money has been fined $55,000.

In the Auckland District Court, E-Trans International Finance pleaded guilty to 11 breaches of the Financial Transactions Reporting Act.

The company failed to verify the identity of a person making five separate transactions of more than $10,000 and failed to keep proper verification records as required under the act.

It also failed in its obligations to report that it had suspicions about the final transaction.

E-Trans blamed a rogue dealer for failing to follow procedures.

More than $200,000 passed through E-Trans.

Police say it was the proceeds of large-scale Ecstasy importing.

A number of people are still to face trial on drugs and money-laundering charges.

Passing sentence, Judge Fred McElrea said that a deterrent sentence was needed to prevent money laundering and to preserve this country's reputation in financial markets.

The breaches came to light during a police investigation into large-scale Ecstasy importation in Auckland and Christchurch.

Police believe the drug syndicate distributed the Ecstasy throughout the country and hid the money by buying businesses, properties and vehicles and through money laundering.

When police closed the operation they found documents relating to transactions at E-Trans in Queen St.

Prosecutor David Johnstone said that this was the first sentencing of a financial institution whose principal business was the provision of financial services.

Previously two solicitors were prosecuted under the act.

He said that financial institutions that flouted their obligations to do more business should be penalised.

"A deterrent sentence is required to ensure that prosecutions under this act do not become regarded as simply one of the relatively minor costs of the foreign exchange business when compared to the cost of complying with the act," he said.

E-Trans lawyer Greg Blanchard said it was clear that the company's actions were not intentional and it made little gain out of the transactions.

The company took steps to ensure compliance with the act, but was let down by one employee.

"Even with the best policies and procedures, it is very difficult to completely eradicate the risk created by a rogue employee," he told the judge.

The employee, who had only worked for E-Trans for a couple of months, failed to verify the customer's identity.

The company had since instituted more comprehensive policies, procedures and training, in association with the police proceeds of crime unit, to ensure no further breaches occurred.