Wellington: The New Zealand government rejected on Tuesday a proposal for industries to police new money-laundering rules themselves, and will instead leave one government department in charge of supervising thousands more businesses.
The Department of Internal Affairs (DIA) would scrutinise the new professions covered by the rules, including lawyers, real estate agents, accountants and car dealers, according to a proposal released by the Ministry of Justice on Tuesday.
The new rules will be introduced next year.
The government has come under pressure to tackle money laundering since the release in April of the Panama Papers, which showed how offshore companies often use New Zealand trusts as a way to create a secretive untaxed vehicle in the South Pacific nation.
The Ministry of Justice said “self-regulating bodies” had no experience in tackling money-laundering and the financing of terrorism.
“Having multiple agency supervision by self-regulatory bodies isn’t considered appropriate in New Zealand,” the ministry said.
Money-laundering experts had called for a dedicated supervisory body similar to Australia’s Austrac to streamline operations for New Zealand’s limited number of compliance experts and ensure consistency in applying the rules.
Professional industry groups for the law and real estate sectors had asked to be allowed to enforce the rules, but experts said that could lead to watered down compliance.
Though the Financial Markets Authority and the Reserve Bank would still oversee banks and some financial institutions, the majority of businesses covered by money-laundering rules would be supervised by one agency.
“Overall this will be positive for the (anti-money-laundering) industry because the concentration of supervision means a more cohesive direction,” said Claire Piper, director of compliance company Fiducia.
“A disadvantage could be the Department of Internal Affairs’ lack of expertise in some of the niche industries they will be working with. The legal industry in particular is concerned that the DIA will not understand the intricacies.” The government will introduce a bill in Parliament to update the rules in the new year and expects it to pass mid-2017.
Lawyers will then have six months to comply, while accountants and real estate agents will get 12 months and 18 months respectively.
Former Prime Minister John Key promised in May to speed up the extension of anti-money laundering rules, which now only cover financial institutions and casinos.
The change will bring New Zealand into line with standards already in force in countries such as Canada and Britain.
