The Financial Action Task Force (FATF) has praised the New Zealand police force for its ability to prevent and investigate money laundering. They are considered amongst the best in the world at seizing criminal profits.
Since the passing of the Criminal Proceeds (Recovery) Act in 2009, over $1 billion in criminal wealth has been frozen by NZ authorities. The police have managed to seize a substantial amount of cash and assets in the form of property and luxury cars from various criminals and gangs. Many captured the attention of law enforcement thanks to their lavish lifestyles.
One of the more notable cases is that of Comanchero Motorcycle Club gang president, Pasilika Naufahu, who was imprisoned in 2020 for money laundering and drug offences. More than $3.7 million in assets was recovered from the gang boss, his gang, and associates. Multiple bank accounts were identified where large sums of money were deposited and withdrawn. Several trusts were also used in this laundering with the proceeds being used to purchase luxury cars and real estate.
More recently, Auckland-based businessman, Xiaoyu Lu, was arrested for laundering money that allegedly came from drug dealers and is awaiting trial. He is reported to have transferred as much as $24 million to his Chinese bank accounts. He has had over $5 million in assets seized and is facing multiple charges including money laundering, providing a financial service while unregistered, and obtaining by deception.
Despite these successes, the FATF has however noted that more sophisticated technology is needed for the Financial Intelligence Unit to identify new targets and analyse millions of financial transactions. Established in 1989 by the G7, the FATF is an intergovernmental organisation tasked with establishing international standards and policies to combat money laundering and acts of financing terrorism. It designates tax evasion as a predicate offence for money laundering under these standards.
The strong performance by NZ police is estimated to be withholding about 8% of criminal proceeds annually. This is way above the global average of just 2.2%. This has accorded the country a rating of ‘high level of effectiveness’ in pursuing criminal proceeds. Only three other countries have achieved this recognition – Israel, Honduras and the US.
The government has further supported these efforts with tighter controls on company registrations and residency requirements for directors. The FATF however notes that permitting the use of nominee directors and shareholders in shell companies does allow for concealment of the true beneficiaries of those entities.
The national supervisor for the Financial Intelligence Unit, Detective Inspector Craig Hamilton, confirmed that there were already ongoing negotiations to provide the new technology and that they remained hopeful this would be in place by the end of the year.