New rules forcing banks to alert police to transactions worry rights group

Banks already have to report suspicious cash transactions to police, but new rules will significantly increase the ...

Banks already have to report suspicious cash transactions to police, but new rules will significantly increase the volume of reports.

New rules that will force banks to automatically inform the police if people make cash deposits of more than $10,000 or send or receive more than $1000 via international wire transfer are under fire from civil libertarians. 

The regulations are designed to disrupt money-laundering and terrorism funding, but may also be used to combat tax evasion, police say. They have been consulted on for more than a year and are due to take effect in November.

National Council for Civil Liberties chairman Thomas Beagle said he was concerned about how the rules might interact with other laws that have just been passed or are working their way through Parliament.

"The Government can make quite a good case for each individual bit," he said. But together, law changes were leading to "a steady and quick incremental change" in government powers.

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Banks are already required to report "suspicious" transactions by their customers that involve more than $10,000 in cash. 

That obligation will remain in place and is set to be extended to the likes of lawyers, accountants and real estate agents under a separate law change being considered by Parliament.

But the Bankers Association has forecast the new rule surrounding the routine reporting of "prescribed financial transactions" would increase the number of transactions that had to be reported to police by a factor of more than 100. 

Details of transactions that meet the threshhold will need to be sent electronically to the police's Financial Intelligence Unit.

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Police say the change will make "certain money-laundering and terrorist financing" activities harder to hide, and help detect "organised crime, fraud and tax evasion". 

The data would help build an intelligence picture across the entire financial system and "become a national asset for 'New Zealand Inc'," it said. 

Beagle said a third law change – the New Zealand Intelligence and Security Act – which has just been passed, meant the security services would have automatic access to all data collected by the police's Financial Intelligence Unit without requiring a warrant.

"They get access to the information and that is not even controlled – it is just 'here you go'."

He acknowledged the November regulation might make money-laundering by criminals "a little bit harder", but believed there would be ways around the new reporting regime. 

Beagle said he imagined the obligation to routinely report transactions to the Financial Intelligence Unit would also be extended to lawyers, accountants, real estate agents and the TAB as a result of the amendment to the Anti-Money Laundering and Countering Financing of Terrorism Act which was tabled in Parliament earlier this month.

Law firm Bell Gully said in 2015 that the changes with regard to the reporting of wire transfers and cash deposits had been "a long time in coming for New Zealand" and reflected growing international and domestic concern about corruption issues, and money-laundering in general.

 - Stuff


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