New Zealand’s $1.4 billion money laundering problem


New Zealand has long been viewed as a soft spot for money laundering, high end fraud, among other crimes. Across the last few years numerous examples of money laundering activity in New Zealand or linked to New Zealand businesses have appeared

  • In 2016 an expert said that New Zealand banks were missing large numbers of suspicious monetary transactions
  • Also in 2016 the so called Panama papers showed how a steady flow of foreign cash into New Zealand became a flood as its holders sought to avoid it being taxed in the proper jurisdictions
  • The same year John Shewan’s report found 12,000 foreign trusts existed in New Zealand – a number that plummeted to 3,000 within a year suggesting many were used for money laundering or other improper monetary purposes
  • In August 2019 $9 million was seized in an anti-money laundering sting in Auckland
  • Just a few days ago the Chief Executive Officer of Westpac resigned after allegations that Westpac failed to pick up 23 million individual breaches including payments to Philippine based child exploiters

Now it has emerged that New Zealand has a N.Z.$1.4 billion money laundering problem. This estimate does not include the domestic cheats who do not pay due taxes to Inland Revenue Department. Globally it is part of what the International Monetary Fund believes to be a $6.5 trillion problem.

New Zealand needs to crack down hard on money laundering. As the resignation of Mr Hartzer shows, money laundering can be linked to some extremely dark criminal activities including child exploitation. A significant part of the crack down would need to ensure a long term budget increase for the police unit investigating financial crime. There would also need to be a revisit of the amendments made to the Anti Money Laundering and Countering Financing of Terrorism Act 2009.

The Government seems to be rising to the challenge. It has made changes that took effect in January for real estate agents. In August changes for the racing industry and businesses with high value products regarding the need to comply with the A.M.L.C.F.T. Act took effect. In 2018 the obligations for businesses providing trust services, lawyers, conveyances and accountants were changed.

But there is more that can be done. I believe that tightening the sentencing regime for those convicted of money laundering, conspiracy to participate in money laundering and providing support for those involved in it can be tightened up. Whereas many of the people who commit offences against the human body are disturbed, come from messed up backgrounds or may simply not have had a loving family to show them right from wrong, organized crime is quite different. The victims of money laundering – although individual victims certainly exist – are whole communities, businesses and in the worst cases the reputation of entire nations.

Whereas the impacts of rape, murder and so forth – certainly not trying to put any of these crimes down in terms of their gravity – on the individual, the family and their lives are well documented, how well do people know about the absolute worst of white collar crime? How well do we know what we as a society, as a nation and as a people are missing out on by not tackling money laundering and the people who engage in this kind of activity?

I fear the answer is not very well at all.

Sorry Grace


Dear Grace Millane

This is a horrible article to write. It is horrible by virtue of the circumstances leading to it, which should have never happened.

So, your killer has been convicted by a jury that took 5 hours to reach a verdict. I can only admire their stamina going through that and am not surprised that they have been stood down from jury duty for the next 7 years. They would have seen some horrible evidence of a cowardly brutal murder committed by a person who it appears was a prolific liar.

I can only admire the police that handled the case, who would have had the god awful task of telling your family that they had lost their daughter in what should have been a fantastic once in a life time trip. What an awful job to have to do.

I am sorry Grace. I am sorry that my country was where you took your last breath in what would have been absolutely horrendous circumstances. You should have been safe here. You should have been able to enjoy all that Aotearoa had to offer and you appeared to be having a magnificent time doing exactly that. You met a man who you thought you could have some intimacy with and who appeared to be getting on well with. You should have been able to leave that room and enjoy your 22nd birthday and the hopefully many more that would have followed.

I can only hope as do my fellow New Zealanders that your killer gets the due sentence. I hope that the New Zealand justice system gives your parents a sense of closure on what without doubt would have been the most shocking, horrible experience they and the rest of the Millane family should never have had. It will never bring you back from the dead. It will never make your parents, and siblings lives what they would have been with their vivacious daughter, sister around to cause hilarity, mischief and rain down love.

I am sorry that you will never get to live the full and happy life you so richly deserved to, because of one man’s cowardly act.

Sorry Grace. Except in the eyes of your killer, it really honestly was not meant to be like this. You were meant to be able to go home or continue to travel after finishing in New Zealand happy with what you accomplished, full of awesome memories of the places you went, things you did and the people you met.

You were meant to be able to find a job, a place to live, someone who genuinely loves you and be able to love back. You were meant to be able to be so much more than this, a horrible part of the New Zealand homicide statistics for 2018. The only stat you really should have been was another visitor to these shore who had a great time and went away happy and content.

But because of this cowardly act, you are not.

I am sorry Grace.

Fly with the angels.

Addressing crime in New Zealand


My previous article explored some of the reasons for crime happening in New Zealand. This article explores how to address it.

The idea of what constitutes justice in New Zealand is one that has been controversial since the country was founded. Equally controversial is how sentencing regime under which judges hand down sentences is administered. The question of whether to jail or not is hotly debated as New Zealand often looks to the United States or overseas for ideas instead of coming up with our own.

But jail is just one tool that can be used in New Zealand, and nor is it – as we shall see below – necessarily the best sentence for many convicts. Jailing is expensive and resource consuming. Some prisoners for the first time in their lives might be experiencing order – a clean bed, shower, regular meals and supervision. It is indeed sad and quite wrong that a place of state imposed punishment somehow becomes the preferred accommodation of prisoners. And we as a nation have to look at how it came to be that.

But jail is at risk of being the ambulance at the bottom of the cliff, when solutions are needed to stop people falling down that cliff.

In thinking of how we might address our jail population, I envisage only those who pose a direct and immediate threat to society being imprisoned. I am thinking of Malcolm Rewa, Steven Williams. For offences such as drunk driving an overhaul of how the demerit point system works to enable “residual points” that accumulate if more than one such offence is committed might be better, with harsher sentencing such as jail being restricted to those offences that kill, injure or damage property. When those residual points reach a national limit, that person has to permanently surrender their driver licence.

In many instances it is not the jails or the police that are at fault. Rather it is the courts, whose interpretation of the law, has become archaic. The police are the ones who look for the offender, bring them to trial and collect the evidence. The courts are where the trial is held and the accused is found not/guilty, as well as sentenced. It is this last part of the courts role and responsibilities where the New Zealand justice system fails the public on the issue of sentencing. Judges fail to jail that small percentage of criminals who are simply too dangerous to stay in society, and many of the ones that are there in their place, might not be best suited to jail.

In the first instance, I would be happy if there were considerably expanded community programmes where prisoners are put to work in the community. Some will call it abuse of labour, but when prisoners are released from prison they will be expected to somehow live outside of the institution that released them. That means finding somewhere to live; finding a job with an income that can sustain them in terms of the basic necessities, such as food, clothing, any medical assistance, power, rent and transport. In preparation for life on the outside would it not be best to have them in some sort of prison based preparatory programme?

Many prisoners are quite skilled. They might have been in another time before they derailed builders, farmers, tradespeople and maybe forestry workers. New Zealand is screaming for more trades people and labourers. The safer ones who are not going to behave like Mr Williams, the man who murdered Coral Burrowes, and try to harm their fellow inmates, might appreciate that someone thinks enough of them to provide them an opportunity for redemption. Prison might be their night-time lock up, but during the day, they could be helping the communities that they damaged.

A second idea would be to look at Finland, where authorities have adopted a quite radical approach to jail. Not being able to envisage this myself, I do have questions such as how well would such ideas work here? Would the New Zealand public accept such a radical change in philosophy, and how well conditioned for post-jail life would it leave the prisoners?

A third idea would be to either legalize or decriminalize cannabis. I have not seriously discussed the legalization or decriminalization of cannabis here, but it needs to be made clear now that there is a difference between the two:

  1. Decriminalization in this instance is the removal or loosening of criminal penalties for possessing small amounts of cannabis – it has the effect of telling the authorities to look the other way
  2. Legalization is the removal of laws that criminalize the possession and/or personal use of cannabis; the authorities treat it is as a substance that can be regulated and taxed

Both have their merits and both have their downsides. The legalization of cannabis might be the best move, but it would involve substantial preparation – the criminal laws, the medical framework for treating such addictions and their social, medical, legal and economic consequences would all need to be revisited. The judicial, court and police systems would need to be reoriented. Before that, it is possible we may see a move to decriminalize cannabis.

 

Causes of crime in New Zealand


It is quite fair to say that the New Zealand sentencing laws have multiple flaws to them that undermine not only the course of justice, but in some respects actually cause new injustices to occur. The cracks in the social net designed to keep people out of crime are so numerous that systemic failure is a real possibility and would occur when a critical mass of issues comes to a head causing a large scale collapse of services and functions.

Among these problems are:

  • A failing of the socio-economic conditions necessary to discourage criminal activity in the first place
  • A failure of the justice system to punish convicted offenders appropriately
  • Offenders occur because it suits the lifestyle that they have become accustomed to
  • Massive growth in the market for illegal substances – a seller can make $4,000 a week selling illegal substances in Whangarei
  • Break down of the family unit and a lack of role models for boys
  • Underfunding/scrapping of social welfare programmes causing them to fail or be wound up
  • Systemic underfunding and resourcing of the mental health sector

So how do these factors cause the sentencing regime to fail? There are numerous reasons.

  1. Whilst most New Zealanders are working, tax paying, law abiding people, there is a section of society that have no empathy with or understanding of societal norms. They come from broken families that have no had proper jobs, or have been involved with drugs or criminal elements – to them the law and the people who enforce it are suspect
  2. Despite legislation passing through Parliament in 2010 called the Truth in Sentencing Act, which was designed to make offenders do the full sentence handed down, sentences are becoming increasingly erratic and are rarely suitable for the crime/s committed
  3. It is obvious that the War on Drug has failed when drug dealers can make more money in a week than many New Zealanders do in a month – flow on effects from drug use can include being not suitable for a wide range of jobs
  4. A lack of role models for children with absentee parents or from a family where education and work are low priorities. They might be constantly working, or disinterested in their children’s development
  5. Welfare programmes have suffered from funding not keeping pace with inflation, but also constantly tightened criteria to eligible for assistance in the first place, with the result being more people are either getting cut off or finding the proverbial goal posts have shifted
  6. Mental health issues create highly unstable people whose symptoms may range from acute stress to being prone to physical violence or even killing – several cases have occurred in the last few years where either people not being treated have turned violent; caregiver gone to jail for mercy killing

New Zealand is going to have to address these issues collectively and individually in the near future or risk this nation becoming something other than the tourist friendly paradise many non New Zealanders believe us to be. Soon there could be significant costs to tax payers and companies alike fixing a problem that in some respects everyone is partially to blame for, but which nobody wants to come up with a comprehensive solution.

Revising terror laws for jihadis


Meet Mark Taylor. Mr Taylor is a Kiwi jihadi who went to Syria to fight for Islamic State of Iraq and Syria (I.S.I.S.). For years he . Now, with I.S.I.S. largely defeated, Mr Taylor has been abandoned by them in a part of the world he knows not much about. He has no proper documentation, or the means to get such documentation, with the nearest consulate office where he could go being in Turkey.

Mr Taylor is known as the “bumbling jihadi”. He is apparently someone not really able to think for themselves, easily influenced and wanting a sense of belonging say people who used to know him when he was in the Army.

But at the same time, how do you survive in a war zone like Syria or Iraq for so long, especially in a disorganization militant environment with no clear command structure, logistical capacity or leadership? Mr Taylor managed to do that with no food or money and that basic services were non-existent, which points to a degree of resourcefulness.

At the end of the day though, I side completely with Prime Minister Jacinda Ardern on this. Mr Taylor should face the full force of the law if he makes it back to New Zealand, for several reasons:

  1. He is a member of a terrorist/militant group banned under New Zealand law
  2. In being a member he would have associated with other members, possibly received or given logistical or material support to other members
  3. He has not recanted any of his views, based on which one can assume he still believes in them
  4. Whilst not participating in actions, he boasts of being on guard duty whilst with I.S.I.S., which means that although he was not involved in combat he was enabling other militants to be by relieving them of being guards

That said the legal situation he finds himself in, as do the Police working to establish grounds for prosecution and the Government working out how the new laws should look, is complex. What the “full force of the law” might look like is not immediately clear, though the strongest path to conviction appears to be the Terrorism Suppression Act 2002, because he joined a group internationally recognized as a terrorist organization.

The Green Party, not surprisingly do not believe in tightening up the legislation. They believe his human rights will be breached, which the Government deny. National support the legislation as far as the Select Committee, at which point they will be asking for amendments. New Zealand First are likely to support the legislation as well to ensure it reaches the Select Committee at least.

But how “bumbling” was this guy really? With Kurdistan now under full attack by Turkey and struggling to guard the jails holding jihadi like Mr Taylor, we have to be ready for the prospect that they will be let go or attempt an escape. Some argue that Mr Taylor in the Middle East is more dangerous to New Zealand and the world than if he were released and allowed to return to New Zealand.

Whether we like it or not, as the situation in Kurdistan deteriorates and the Kurds struggle for survival, they might well have no choice but to let Mr Taylor go. What happens then? I do not know, but if he comes to New Zealand the public need to be protected from him and any ideological influences he brought with him. The Police need to be sure he is not going to commit an attack or promote violence. And that most certainly will involve jail time.