Govt moves to close money-laundering loophole

CCTV footage from SkyCity casino's VIP lounge shows Tac Kin Voong (walking) and Ri Tong Zhou (seated wearing glasses). Photo / Supplied

Wealthy criminals have escaped money-laundering charges through a legal loophole which means they can go unpunished for spending their ill-gotten gains publicly.

The Government is pushing through a significant change to the Crimes Act charge of money laundering as part of wide-ranging legislative amendments to fight organised crime syndicates.

Documents released under the Official Information Act show Justice Ministry officials believe the wording of the money-laundering offence may not meet New Zealand's international obligations and are reviewing the "effectiveness" of the charge.

Money laundering is widely considered to include situations where criminals and their associates are prepared to deal with the profits or assets of criminal activity as apparently legitimate income. But court judgments have interpreted the charge to mean the Crown must not only prove the alleged launderer converted assets from one form to another, but did so with the "very purpose" of "concealing" the property.

A consequence of that ruling is that underworld figures have been acquitted of money laundering despite disposing of millions of dollars of cash or assets derived from serious crime such as drug dealing.

And unless the law is changed New Zealand will not meet its obligations under the United Nations' Vienna Convention to fight global organised crime, according to a 2010 Law Journal report by David Johnstone, a prosecutor who specialises in organised crime.

High-level talks between ministry officials and police will lead to legislative changes being recommended in August as part of a multi-agency Government plan labelled Strengthening New Zealand's Resistance to Organised Crime.

In many cases, law enforcement agencies have used the evidence of big spending - such as an unemployed person spending large amounts of money at the casino - to prove serious criminal offending, such as drug supply, rather than charge them with money laundering.

Gambling at casinos is recognised internationally as a money-laundering technique, but is at odds with comments by SkyCity chief executive Nigel Morrison last week.

He said claims that more poker machines, as part of a deal with the Government to build a $350 million convention centre, would lead to more money laundering had "no substance".

He said none of the criminals referred to were convicted of money laundering at SkyCity.

The cases include drug kingpins Tac Kin Voong and Ri Tong Zhou, who received lengthy prison sentences after being convicted of running methamphetamine syndicates from the casino's VIP lounge. They had a combined turnover at the casino of nearly $20 million in six months.

Mr Morrison's comments came after the Herald revealed that SkyCity wanted more cashless gambling machines, which are banned in other casinos, in return for the convention centre investment.

A Department of Internal Affairs report shows the Ticket-In Ticket-Out machines make it easier to launder money.