New Zealand has been used to launder millions of dollars of criminal proceeds, Justice Minister Simon Power has told Parliament.
He has introduced a bill that tightens the laws around money laundering and told MPs the international Financial Action Taskforce had set standards and was demanding compliance from all countries.
"New Zealand stands in real danger of being publicly criticised for its lack of progress to date," he said during the first reading debate on the bill last night.
"This bill will demonstrate New Zealand's dedication to global anti-money laundering and counter-terrorism financing efforts."
Power said some might argue it was not a problem in New Zealand.
"Unfortunately, this is not the case," he said.
"Last year, I am advised, New Zealand was used by an offender to launder almost $120 million from Australia through New Zealand and into Vanuatu."
Power said the bill's new powers would enable law enforcement agencies to tackle trans-national organised crime head on and worked alongside the recently passed Criminal Proceeds Recovery Act.
"Conservative estimates put the proceeds of domestic crime at between $500 million and $1 billion every year," he said.
"Organised criminal groups in New Zealand use sophisticated commercial and financial tools as part of their criminal offending."
Power said the bill's provisions would help the fight against illegal drugs, particularly methamphetamine.
The bill works by requiring businesses that deal with the public to put in place systems which prevent or detect transactions made by criminals trying to launder money.
It sets out "know your customer" requirements and puts record keeping obligations on financial institutions and casinos.
It also obliges the financial sector to report all suspicious activity to the Financial Intelligence Unit.
"The Government recognises that the bill will place additional costs on New Zealand businesses at a time when many are coming under strain," Power said.
"However, without this bill we could face increased cost for crown borrowing, higher thresholds for New Zealand businesses trying to access international capital as well as the higher interest rates that may follow such increased scrutiny."
The Anti-Money Laundering and Countering Financing of Terrorism Bill passed its first reading on a unanimous vote.
It has been sent to the foreign affairs and defence select committee for scrutiny and public submissions.
