The Financial Transactions Reporting Act 1996 seeks to combat money-laundering through financial institutions in New Zealand. The Act imposes various obligations on 'financial institutions' (defined widely), including the obligation to report suspicious transactions to the police.
The duty to report suspicious transactions applies whenever a transaction is conducted through a financial institution and there are reasonable grounds to suspect that the transaction involves money-laundering or the proceeds of serious crime. The commissioner of police, as required by Section 24 of the Act, recently issued guidelines to assist financial institutions to recognize suspicious transactions. Given the difficulties with detecting money-laundering, these have been awaited by many in the financial community.
The police have adopted a cooperative approach to the new regime and have consulted with various industry groups in preparing the guidelines. The guidelines acknowledge that there is great difficulty in defining what a suspicious transaction is. However, as a general rule it is suggested that a suspicious transaction will often be one which is "inconsistent with a customer's known, legitimate or personal activities or with the normal business for that type of customer".
Rather than prescribing the application of specific rules, the guidelines suggest financial institutions and their employees adopt a common sense approach to the detection of money-laundering. Accordingly, the guidelines seek to create an awareness of how money-launderers operate. This is achieved by the use of numerous examples to illustrate the symptoms of money-laundering and the different techniques commonly employed.
Denis Clifford and Chris Maher