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Cablegate: 2005-2006 International Narcotics Control Strategy

VZCZCXYZ0009
RR RUEHWEB

DE RUEHWL #0950/01 3460141
ZNR UUUUU ZZH
R 120141Z DEC 05
FM AMEMBASSY WELLINGTON
TO RUEHC/SECSTATE WASHDC 2113
INFO RUEAWJA/DEPT OF JUSTICE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS WELLINGTON 000950

SIPDIS

SIPDIS

JUSTICE FOR OIA AND AFMLS
TREASURY FOR FINCEN
STATE FOR EB/ESC/TFS, INL AND EAP/ANP

E.O. 12958: N/A
TAGS: EFIN KCRM KTFN PTER SNAR NZ
SUBJECT: 2005-2006 INTERNATIONAL NARCOTICS CONTROL STRATEGY
REPORT, MONEY LAUNDERING: NEW ZEALAND

REF: STATE 210351

1. Below is post's input on New Zealand for the money
laundering section of the 2005-2006 International Narcotics
Control Strategy Report (INCSR). This input also will be
sent via unclassified e-mail to Ed Rindler, INL/C/CP.

2. Begin submission:

New Zealand is not a major regional or offshore financial
center. Its small number of banks and financial institutions
can be effectively monitored by government regulatory
authorities. Although there is evidence that some money
laundering does take place, it does not appear to be
significant. Narcotics proceeds and commercial crime are the
primary sources of illicit funds. International organized
criminal elements do operate in New Zealand.
Money laundering is criminalized in New Zealand under two
laws. Under the Crimes Act 1961 and Misuse of Drugs Act
1975, it is illegal to launder the proceeds resulting from a
serious offense, or to be involved in money laundering
transactions, if the offender knew or believed that the
proceeds were derived from a serious offense or a specified
drug offense. The acts also apply to a recipient of
property who was reckless in determining whether it had been
acquired as the proceeds of a serious offense or a specified
drug offense. A serious offense includes any crime
punishable by at least five years' imprisonment. In
addition, the Crimes Act criminalizes the receiving of
property or funds if the recipient knew they had been
obtained, or was reckless as to whether they had been
obtained, by any crime.
The Financial Transaction Reporting Act 1996 contains
reporting obligations for a wide range of financial
institutions, including banks, credit unions, casinos, real
estate agents, lawyers, and accountants. These entities must
identify clients, maintain records and report suspicious
transactions. The Act also requires the reporting of large
cross-border currency movements and contains a "safe harbor"
provision, or immunity from civil, criminal or disciplinary
proceedings for persons reporting suspicious transactions
and money laundering.
Proposed legislation, introduced in June 2005 in Parliament,
would allow the government to freeze or confiscate assets
generated by crime, even in cases where a person is not
convicted of a crime but is unable to demonstrate the
legitimate acquisition of the assets in question.
The Terrorism Suppression Act, enacted in October 2002,
criminalizes terrorist financing. This act amended the
existing law to enable New Zealand to ratify the UN
International Convention for the Suppression of the
Financing of Terrorism. The act authorizes the government to
designate non-UN listed entities as terrorist organizations
and to freeze, seize and forfeit their assets. The act,
which criminalizes the financing of terrorist acts and of
designated terrorist entities, was amended in June 2005,
making illegal the intentional financing of non-designated
organizations that engage in terrorism. The Prime Minister
is responsible for designating terrorist entities upon a
recommendation of the New Zealand Police and in consultation
with the Attorney General. Once the designation is made, the
police inform banks and other appropriate parties. A public
notice is also published. The police and the Crown Law
Office are developing additional procedures to implement the
Terrorism Suppression Act's provisions. New Zealand has
consistently implemented financial controls against entities
included on the UN 1267 Sanctions Committee consolidated
list. No assets from these entities have yet been identified
in New Zealand.
Parliament in April 2005 passed the Charities Act, which
establishes a Charities Commission to register and monitor
charitable entities. Registration is not required, but an
entity must do so to qualify for tax-exempt status. An
organization cannot be registered if it is designated a
terrorist entity or convicted of any offense under the
Terrorism Suppression Act.
New Zealand and the United States do not have a Mutual Legal
Assistance Treaty. However, New Zealand legislation applies
certain provisions of the Mutual Assistance in Criminal
Matters Act 1992 unilaterally to the United States. In
practice, New Zealand and U.S. authorities have enjoyed a
good record of cooperation and information sharing in this
area.
New Zealand is a party to the 1988 UN Drug Convention, and
in July 2002, ratified the UN Convention against
Transnational Organized Crime. It signed the UN Convention
against Corruption in 2003. New Zealand is a member of the


Financial Action Task Force, the Asia/Pacific Group on Money
Laundering, and the Pacific Islands Forum. Its Financial
Intelligence Unit is a member of the Egmont Group. The New
Zealand government has played a leadership role in promoting
efforts to combat money laundering in the South Pacific
region, providing substantial amounts of technical
assistance and training to Pacific Island governments.
The Government of New Zealand has established a
comprehensive anti-money laundering regime. It should build
upon this base by continuing its implementation of its
Terrorism Suppression Act. Additionally, New Zealand should
continue its recognized leadership in the international
arena.
BURNETT

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