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Civil Proceedings Result In A Total Penalty Of $7.585m Against Two Money Remitters

The Auckland High Court has issued a judgment in the civil proceedings by the Department of Internal Affairs against Auckland based money remitter OTT Trading Group Limited (OTT) and Christchurch based money remitter, MSI Group Limited (MSI).

These proceedings under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act) have resulted in fines of $3.1 million awarded against OTT and $4.485 million awarded against MSI. A restraining injunction has also been granted against OTT.

“An estimated $1.35 billion from fraud and illegal drugs is laundered through New Zealand businesses every year, causing harm to our communities and damaging our reputation,” says Mike Stone, Director AML Group, Regulatory Services, Department of Internal Affairs.

“As one of New Zealand’s supervisors, our role is to help ensure we all have trust and confidence in the integrity of the New Zealand financial system. When a business or individual repeatedly fail to meet their AML/CFT obligations, we will take enforcement action”.

This judgment follows restraining injunctions in May 2020 against three individuals associated with OTT and MSI. One employee was restrained from acting as a compliance officer of any reporting entity, and the respective directors of OTT and MSI were restrained from acting as senior managers of any reporting entity or engaging in any business activity that would make them a reporting entity under the AML/CFT Act.

The penalties relate to breaches of the AML/CFT Act between May 2014 and April 2019 and reflect aggravating conduct. This included failing to cooperate with the Department in its investigation and attempts to mislead the Department, including trying to disguise the status of MSI as a reporting entity.

“There were multiple failings by OTT and MSI and the Department provided many opportunities for them to show how they were meeting their obligations. Our attempts were ignored or obstructed,” says Mr Stone.

“We assess businesses that provide money remittance services to be at high risk of being used by criminals to disguise and conceal the proceeds of crime. In the case of OTT and MSI, the Department provided help and education, but ongoing attempts were made to avoid scrutiny and assurance checks.”

“This judgment reflects the importance of monitoring customer transactions and undertaking enhanced customer due diligence where necessary to ensure funds are from legitimate sources. Working with your supervisor is essential for the overall strength of the AML/CFT system and this judgment also reflects what can happen when a business tries to mislead the Department.”

The Department will seek to enforce payment of the penalty and costs awarded.

This is the fourth civil proceeding by the Department for pecuniary penalties. The Department has also taken one criminal prosecution that has resulted in convictions and fines.

The AML/CFT Act has established a system in New Zealand to detect and deter money laundering and the financing of terrorism, to maintain and enhance New Zealand’s international reputation by adopting recommendations by the international body Financial Action Task Force, and to contribute to public confidence in the financial system.

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