Police made 10 arrests and their Asset Recovery Unit restrained more than $10 million in assets as part of Operation Ida. Video / New Zealand Police
Police are now able to use AI-driven software to analyse millions of suspicious financial transactions which investigators hope will uncover professional money launderers helping criminals wash dirty cash.
A deal has been signed between the Financial Crime Group and Acumen BI, a local data analytics company, for an intelligence platformto help investigators identify previously unknown patterns and targets.
The new technology is a response to criticism by the Financial Action Taskforce (FATF), a global body which audits the anti-money laundering performance of member countries, in a report published in April.
Relatively few money laundering investigations in New Zealand were triggered by the police Financial Intelligence Unit (FIU), according to FATF, whose work was mostly used to strengthen existing operations.
"The FIU does not fully exploit the potential of financial intelligence to detect criminal activity by persons not already known to law enforcement," the report concluded, recommending the police buy more sophisticated software to analyse millions of financial transactions reported to them each year.
"This would significantly enhance the FIU's ability to identify new targets and trends."
The deal with Acumen BI allows police to dig deeper into millions of transactions reported each year by banks, lawyers, accountants, casinos and real estate agents under the Anti-Money Laundering and Countering the Financing of Terrorism Act (AML/CFT), said Detective Inspector Craig Hamilton.
"There's so much data coming and going, this technology is about being able to look for trends, patterns, risk, to help us find undetected financial crime or non-compliance with the law," said Hamilton.
"Preventing criminals from being able to use financial systems, to stop them from enjoying the benefits of crime, is just as important as recovering the dirty money. 'Follow the money' is how the saying goes, and this will help us draw together the reporting obligations under the AML/CFT, our money laundering investigations, and the proceeds of crime. It's a powerful trio."
More than $1 billion in alleged criminal wealth has been frozen in New Zealand since the powerful Criminal Proceeds Recovery Act came into effect just over a decade ago, which the FATF report described as "impressive" and among the best in the world.
New Zealand is estimated to be restraining around 8 per cent of criminal proceeds annually, according to the FATF report, compared to the global average of around 2.2 per cent.
A Lamborghini Huracan was among the $21m of assets seized in a trilogy of linked money laundering investigations. Photo / Supplied
The FATF report also noted the strategic shift by the police to focus on money launderers.
In a previous audit in 2012, FATF noted New Zealand had a poor rate of prosecuting money laundering offences.
Investigations into financial affairs were more likely to support asset recovery cases, or focus on the crime generating the funds to be laundered - usually drug manufacture or supply.
As a result, there had been a lack of attention on identifying "high risk" money laundering targets such as lawyers and accountants, who help criminals hide their money through companies and trusts, or money remittance firms taking dirty cash and wiring funds overseas.
The earlier FATF criticism led police to establish specialist money laundering teams in 2017 with a deliberate focus on professional money launderers.
These so-called "third party" launderers are not involved in making money through criminal activity, most often drug dealing in New Zealand, but are engaged as contractors solely to get the dirty cash out of the country.
Instead of reconstructing the financial transactions through forensic accounting alone, the money laundering teams have used investigative techniques more commonly found in covert operations.
Hidden cameras, physical surveillance, tracking devices and the interception of private conversations have been used to gather evidence in prosecutions where police alleged hundreds of millions of dollars were laundered.
Bundles of cash seized in Operation Menelaus which was the first prosecution undertaken by the new specialist money laundering units. Photo / Supplied
The first was Operation Menelaus in August 2019 where $9 million of assets were seized including three homes in Remuera, bank funds of $750,000, another $250,000 cash and luxury European vehicles such as a $280,000 Bentley Bentayga.
Three people have pleaded guilty to money laundering offences and are scheduled to be sentenced in January 2022
This was followed by a trilogy of linked investigations - codenamed Brookings, Martinez and Ida - into alleged professional money launderers in 2020 and 2021.
More than $21m in assets were restrained across the three operations and 28 people were charged with 103 offences of money laundering, structuring to avoid the anti-money laundering reporting requirements, fraud, drugs and firearms.
"These investigations focused on the activities of semi-legitimate businesses that we allege were engaged in a staggering amount of money laundering," Detective Inspector Lloyd Schmid said in a statement when Operation Ida terminated in March.
"This serves as a warning to offshore drug dealers and organised crime groups that police are no longer just targeting the importation of the drugs, but increasingly we will be targeting the money trail which fund it as well."
