Convicted Drug Dealers Will Beat Laundering Bill

Media Release:

PRC Consulting Limited
Anti Money Laundering Consultants
Wellington

Convicted Drug Dealers Will Beat Anti-Money Laundering Bill

New anti-money laundering legislation is well-intentioned but contains a loophole allowing publicly known convicted drug dealers to slip under the radar.

In a speech yesterday in Auckland, Prime Minister John Key outlined initiatives being undertaken by his Government to get tough on drug dealers.

Included in the legislation to which Mr Key referred is the Anti-Money Laundering and Countering Financing of Terrorism Bill (AML/CFT Bill); the Prime Minister noting that “when enacted this will help detect and trace the profits of domestic criminal groups.”

The initiatives outlined by the Prime Minister, including the AML/CFT Bill, are laudable, and will undoubtedly enhance the ability of Police, Customs, and other government agencies to attack the profits which motivate drug dealers and organized criminal groups.

However, due to the lack of clear legislative guidance in the AML/CFT Bill to affected businesses on how they are expected to assess money laundering risks associated with their customers and transactions, the government has failed to target individuals who, due to prior convictions for money laundering and drug dealing offences, might logically be considered to represent higher risk customers for money laundering purposes.

While the AML/CFT Bill, and related proposals by officials impose stringent obligations on regulated businesses to consider public domain information to identify Politically Exposed Persons (PEP’s) and when assessing related money laundering risks; the Bill fails to impose a clear obligation on businesses to consider similar information relating to customers who have been publicly reported as having already been convicted of money laundering, drug dealing or other related offences. It is a very peculiar situation if, under the Bill, businesses are expected to consider public-domain information indicating that their customer is a foreign politician but not whether they are a convicted money launderer or drug dealer.

If the government is serious about adopting a true ‘risk-based’ approach in the Bill to money laundering; it should start by imposing a clear legal basis on which businesses should take publicly available information such as news reports relating to convicted drug dealers into account in assessing money laundering risks associated with their customers.

ENDS