Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill

Second Reading Hon NICOLE McKEE (Associate Minister of Justice) (15:48): I move, That the Anti-Money Laundering and Countering Financing of Terrorism (Supervisor, Levy, and Other Matters) Amendment Bill and the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill be now read a second time. I am pleased to speak again today in this House to these two bills amending the Anti-Money Laundering and Countering Financing of Terrorism Act 2009. The anti-money laundering and countering of financing of terrorism (AMLCFT) system, which, from now on, I’m going to refer to as the AML system, has drifted into expensive box-ticking that creates delays, frustration, and compliance costs for New Zealanders and businesses. Too often, effort is wasted on low-risk paperwork, while serious criminal activity risks slipping through the cracks. That means unnecessary hurdles for everyday transactions without better outcomes for tackling crime. These bills refocus the system to be genuinely risk-based, cutting red tape for low-risk customers and businesses while strengthening our ability to detect, deter, and disrupt serious crime. At the same time, maintaining an effective AMLCFT regime is critical to New Zealand’s access to global financial markets. These reforms ensure that we continue to meet international expectations in a way that works better for New Zealanders. I will start with what the Anti-Money Laundering and Countering Financing of Terrorism (Supervisor, Levy, and Other Matters) Amendment Bill will do, but, again, I’ll just call this one the supervisor and levy bill. First, we have three very different regulators supervising the businesses that have obligations under the Anti-Money Laundering (AML) Act, meaning that support to industry such as guidance is slow in coming, and it can be disjointed. Second, the system is far too prescriptive, and we cannot adequately adjust requirements to reflect different levels of risk of money laundering. Third, the agencies with functions under the AML Act are not sufficiently resourced to properly undertake their functions and support businesses to comply with ease. To address these shortcomings, the supervisor and levy bill makes three major amendments to the principal Act. It replaces the three supervisors with a single agency, the Department of Internal Affairs, and provides the supervisor with sufficient powers to successfully carry out its mandate. It realigns the use of secondary legislation to enable a more nimble and agile system for setting and enforcing obligations on industry. Thirdly, it enables the setting and collection of an industry levy to help resource and fund the necessary changes and improvements to the AML system. An effective AML system requires a unified and consistent approach across the agencies that are responsible for stewardship, regulation, and intelligence. By streamlining the supervisory model, this bill will enable more agile and responsive supervision. It also means that the Department of Internal Affairs will be able to issue timely and consistent cross-sector guidance so that businesses can have confidence that they are meeting the regulatory expectations. Currently, updating AML obligations is slow and resource intensive, relying on primary legislation or new regulations that struggle to keep pace with evolving financial crime. This creates and unnecessary burden for businesses, and it risks gaps in enforcement. This bill enables the Ministry of Justice and the Department of Internal Affairs, as well as New Zealand Police, to make targeted changes through secondary legislation such as rules and notices. This allows obligations to be applied more flexibly based on risk, supporting a genuinely risk-based system while retaining regulations where parliamentary oversight, of course, is required. We need an AML system that is sufficiently resourced to make meaningful reform and to cut through red tape for those legitimate businesses, while effectively detecting, deterring, and preventing financial crime. This bill establishes an industry levy as part of a new hybrid funding model to support the improved operation of the AML system. This is consistent with international practice and will ensure that participants in our financial system and other areas giving rise to money laundering risk will contribute to the safeguards against financial crime. Levy regulations will distribute costs in a risk-appropriate and equitable way while minimising administrative costs. We will be mindful of the potential consumer impact of the levy where multiple regulated companies are involved with the same transaction. The intention is that the regulatory relief enabled by this bill, together with the benefits to be co-funded by the levy, will result in overall positive outcomes for businesses and consumers. We will continue to refine the levy in consultation with the industries and the businesses that it might affect. I would like to thank the industry for their continued engagement and their support throughout this process of change. I now turn to the Anti-Money Laundering and Countering Financing of Terrorism Amendment (AMLCFT) Bill. This bill cuts unnecessary red tape. It makes the system easier for businesses to navigate and of course comply with. It delivers 25 targeted changes to improve efficiency, support regulators, and maintain New Zealand’s compliance with internation standards. For example, it allows more proportionate due diligence for low-risk trusts rather than applying the same requirements regardless of the risk. It also removed unintended duplication, such as requiring an international Border Cash Report when one has already been completed. More broadly, the bill improves clarity and proportionality across the system by ensuring obligations, including checks for politically exposed persons, are applied based on risk rather than on rigid rules. The supervisor and levy bill was considered by the Economic Development, Science and Innovation Committee, while the AMLCFT bill was considered by the Justice Committee. I’d like to thank both committees for their careful and constructive consideration of the bills. I’d also like to thank those submitters who took the time to share their views. The Economic Development, Science and Innovation Committee made a series of excellent recommendations, primarily relating to retaining the integrity of the enforcement mechanisms in the Act for new secondary powers introduced in the bill. This is to ensure that regulator parties know where they stand when a rule or a notice is made, and that criminal activity absolutely will be prosecuted. Another is standardising the consultation requirements and matters to be considered by regulatory decision-makers, providing a clear opportunity for affected parties to input into secondary legislation and understand why decisions have been made. As well, they’ll be ensuring that safeguards are in place when the new supervisory powers are being applied. These changes support the policy underpinning the bill and have not altered the intent of the bill. The Justice Committee made six recommendations on the AMLCFT bill, and I’m going to address three of them. First, the bill clarifies business obligations to provide records. The committee replaced the requirement to act to act “swiftly” with tiered time frames based on urgency, giving businesses greater certainty while ensuring timely access is still available for authorities. Second, the committee clarified the role of guidance and risk assessments. Submitters were concerned that guidance could take on the force of law. The bill now requires businesses to incorporate risks identified in national and secretarial assessments, making both the status of those assessments and business obligations clear. Thirdly, the committee recommended introducing a censure as a separate sanction alongside formal warnings, rather than renaming the warnings. The amendment includes a clear framework and appeal rights, aligning with other legislation and giving supervisors a more effective soft enforcement tool. I’m proud to speak to these bills today because of the difference that they’re going to make to everyone who’s engaging with our anti-money laundering system. The Government is committed to bolstering economic growth while tackling financial crime. The common-sense, quick win changes in the AML bills that are presented will strengthen the anti-money laundering regime while empowering businesses in New Zealand to focus on doing what they do best. I’d like to commend this bill to the House. CAMILLA BELICH (Labour) (15:58): It’s not often I get to do a call on two bills at once, so I thank the Minister for giving me a lot of reading material to go through on these particular bills. We are at the second reading now, and it’s the first opportunity I’ve had to take a call on either of these bills. The call for action in this area has been clear. I think, in the documentation I was looking at in 2022, there was a report done that indicated there needed to be action to make sure that our anti-money laundering and countering financing of terrorism laws and regulations were strengthened. I think, even looking back at the time when these particular amendments that we’re making to the original bill were brought in, there was a view at that time that more would need to be done in the future. It’s not a surprising thing to take action on, and, obviously, it’s good for Governments to make sure that when important recommendations are made about significant issues like this, they are followed forward. I think there are—I could be wrong—four bills, and we’re discussing two of them today. These are not straightforward matters, but, of course, I’m sure all New Zealanders will recognise that, unfortunately, one of the crimes that is sometimes committed—both in New Zealand and around the world—is hiding the proceeds of crime or hiding particular proceeds or amounts of money and purporting for those to be one thing when actually they are something else. I wanted to start with the Anti-Money Laundering and Countering Financing of Terrorism (Supervisor, Levy, and Other Matters) Amendment Bill. When this was first introduced—and I think today the Minister went over some of the reasons it was first introduced—one point of difference that we had with the Government on this is where the Minister appeared, in some of her comments, to suggest that streamlining this was in order to get rid of a situation of undue bureaucracy. I don’t agree that that is the right driving intention for these particular changes. The driving force should be that we have the strongest, most appropriate laws in place to ensure that when people do business in New Zealand or when, in fact, people do business with New Zealand companies, they know that we take this type of crime seriously and that we will do everything we can to make sure that New Zealand has appropriate mechanisms to ensure that this doesn’t take place. We don’t agree that it’s necessarily “red tape”. I wasn’t privileged to be on the Economic Development, Science and Innovation Committee, but the select committee, in relation to both bills, have made some pretty substantive changes since the original bills were introduced. At least one of them had a report-back time of the end of November last year, so I think there will be some questions we do have for the Minister around how these particular changes are going to be implemented. For example, one of the changes brought in by the select committee was that rather than the normal process of having a bill come into force the day after Royal assent, it would come in on 1 July 2026. Well, we are now approaching that much faster than we would have been when this was due for reporting at the end of last year. There are a few issues about whether that needs to be changed—this is, again in relation to, I think, the first bill on the Order Paper. They’re quite similarly names, so I can’t be exactly certain—anyway, it’s in relation to the supervisor and levy bill. The other issue that I wanted to raise is something that we have raised in relation to a few different bills—not just in this area, and certainly not just with this Minister. There are a lot of the substantive provisions in both of these bills that are reliant on regulations and are made to be effective through regulations. Obviously, a concern for us as legislators is the fact that we don’t have oversight of the regulations before the bills are made law, and therefore we can’t balance whether the system as a whole will be effective. That is another thing that was reflected on by the select committee. Another thing that I’d be keen to raise now and obviously ask the Minister about in the committee of the whole House stage, is the fact that there has been a change made by the select committee to mean that there has to be consultation with the Minister on changes. Now, these are crimes that we’re talking about, and we do have in New Zealand a relatively usual and, I think, proper space and gap between the operations of the prosecuting bodies like the New Zealand Police and other agencies like the Serious Fraud Office and the political decision-makers who make the laws, That has been a change made at select committee—it’s been a suggestion to have consultation with the Minister. Other things that might be interesting for lawyers, and certainly were interesting for me, were that changes were made to ensure that when a meeting about a contravention happens—this is under the first bill still—that a lawyer has to be present at that meeting. I’m quite interested to find out at later stages of this discussion how that works, because having a lawyer present and being informed of your rights won’t necessarily get rid of all the potential risks. If there’s any doubt, I wasn’t on the select committee, but it appears to me that they have made more substantive changes than many other select committees do, so I want to commend them for that. There are a few other changes in relation to that first bill, but I notice that I’m almost out of time to talk about the second bill, which is obviously being read at the same time. This has had some rather substantive changes since the first reading. One of the things that might be interesting for the politicians in the House to note is that there was a change from “politically exposed person” and that definition that appeared in the first draft of the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill, which is the second bill. The language of that has been changed. It was raised as a concern by submitters, so I do commend the committee for doing that, and I’m interested to hear, in due course, from the Minister on how that will affect that. Another aspect of this bill, similar to the last bill, is the fact that there will be other regulations that will be put in place that will not be subject to select committee review. That’s specifically in relation to the risk assessment. That is significant, and, obviously, we hope that the provisions that are put in place can be reviewed at some stage so we can make sure that those are appropriate too. Overall, I don’t think many New Zealanders would disagree with the purpose of these pieces of legislation. These are serious matters. I recall in my training as a lawyer, and when I qualified in the United Kingdom, that one of the main areas that we had to study was to make sure that we were able to effectively identify money laundering. That was a compulsory aspect of it. The fact that we are taking this so seriously and have, in fact, four pieces of legislation to address these concerns shows how complex this can be. These are not victimless crimes. You’ll see in some of the information about how money laundering has been exploited in New Zealand that some people have used their children or children’s identities in order to money launder. That is a despicable crime, not only for the dishonesty associated with the money laundering but also for the association of people who have no agency and the potential impacts for them in later life, too. This is serious. The committee has done a good job at making some substantive changes to both bills. It’s interesting to see them set out here beside one another. Obviously, we will look at the other pieces of legislation as well, but we do encourage the Government to make sure that the focus is on having a robust regime in relation to money laundering and on making sure that people can have confidence in New Zealand, whether they are doing business here or whether they are an overseas company doing business with New Zealand abroad. I commend these bills to the House. ASSISTANT SPEAKER (Maureen Pugh): The question is that the motion be agreed to. Dr LAWRENCE XU-NAN (Green) (16:08): Thank you, Madam Speaker. I rise on behalf of the Green Party to speak on two bills—the associated bills that we’re reading now for the second time. In terms of context, what we have is the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill and the Anti-Money Laundering and Countering Financing of Terrorism (Supervisor, Levy, and Other Matters) Amendment Bill. Both bills had their first readings a little while ago—the first one in particular, the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill, which I will now shorten to AMLCFT. Hon James Meager: That’s just as long! Dr LAWRENCE XU-NAN: Well, I could expand it and just continue to take up more time. Anyway, the first AMLCFT bill was introduced at the end of 2024, and it did go through the Justice Committee at that time. Afterwards, we saw the first reading, at some point last year, of the AMLCFT (Supervisor, Levy, and Other Matters) Amendment Bill. It’s also interesting to note that while the two bills cover the same sort of recommendations and findings from the Financial Action Task Force, they did go to separate select committees. At that stage, we raised the concern, particularly when the second bill was read—the AMLCFT (Supervisor, Levy, and Other Matters) Amendment Bill, which went to the Economic Development, Science and Innovation Committee—about why that went to that committee when the first one, about which we did have a few questions and concerns as well, went to the Justice Committee. At that stage, the rationale that we were given was that upon attending the relevant select committee and select committee process for both of them, it does make a lot of sense when it comes to the first anti - money-laundering and countering financing of terrorism (AMLCFT) bill in the Justice Committee being more relevant around the illegality aspect, the definitions around the regulatory system but also the use of censure, etc. That was appropriate to be heard by the Justice Committee members, particularly those with a skill in those matters. But it is unfortunate that once we got to the second bill, which went to the Economic Development, Science and Innovation Committee, it was hard for members—who could, of course, sub in from one committee to another. But for those from the public perspective who may not be aware, both committees sit on the same day, so occasionally it was hard for the same members to sub in and out to join both committees, particularly when the second AMLCFT bill was heard in the Economic Development, Science and Innovation Committee. It was just by chance that I was able to sub in on some of those and was able to hear from both submitters and also officials on both bills, which form part of a broader package of AMLCFT reform. So that’s kind of the broader context. I’m going to start first with the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill, which went through the Justice Committee, and then I’ll move on to the second one. Like I’ve said, both of them come as a broader package from the Financial Action Task Force recommendations and the review that they’ve done on AMLCFT. With that particular one, there were kind of two particular areas that are important to note. I want to express the difference between how the bill was introduced in the first reading and what we’re seeing now in the second reading, after the select committee stage, in terms of some of the changes that we’ve adopted as a result of what we’ve done in the select committee, after advice from officials but also from submitters, and I want to thank all submitters on both bills. For the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill, we had 21 submitters, and the two broadest areas were around the definition of “politically exposed person” in new section 26(1) in clause 10. Specifically, when we were looking at the term that was used, which was “risk management system”, submitters mentioned, rightly, that this particular term doesn’t appear anywhere else in the legislation and that by introducing this term, it might have the counter-productive effect of making it more clear in terms of the requirement from reporting entities. So, as part of that process, we have decided to remove that particular term “risk management system” and retain the existing section 26(1) in the section, which talks about it being in accordance with the level of risk involved. I think that is an important consistency change that we’ve made to the bill to ensure that it is fit for purpose. Now, of course, we also discussed a lot in terms of how the reporting entities must keep a record and the fact that now, under the new requirement, we are seeing greater accountability, which is really important because, again, AMLCFT is a serious concern. As we see organised crimes becoming more and more sophisticated, our AMLCFT legislation should also be able to keep up to date with the increasing sophistication while at the same time ensure that the compliance isn’t overly burdensome for people who may not be in a position to do the full reporting but also in a position where they may not have the resources to be able to comply with a one-size-fits-all model. So I think, again, the flexibility we’re seeing in both bills is really, really important, but in this case, in terms of the reporting, now, the “reporting entity that is required to produce … under this Act or any other enactment would need to do so swiftly.” Again, it’s an accountability and transparency mechanism that we see, which is really important. Finally, I think, for the AMLCFT bill that I want to address is the questions—and, again, we’ve heard concerns from the submitters around censures. Now, at this stage, there are two separate—well, formerly, under the first reading of the bill, the intention I think at that stage was to replace formal warnings with censures, but as we heard from the select committee stage, as people rightly pointed out, when we’re looking at formal warnings, it is in reference to allegations, and “recipients are invited to contact supervisors if the facts stated in the notice are inaccurate or incomplete.”, whereas “censures are typically penalties that follow evidential findings”. So those two are very different and serve different purposes. One of the things that the select committee did do is we amended to add censures as a new section while retaining the existing formal warning system—again, just to take into consideration both scenarios. So that’s mainly the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill. I’m going to move on to the Anti-Money Laundering and Countering Financing of Terrorism (Supervisor, Levy, and Other Matters) Amendment Bill. I think one of the big issues over—well, one of the big changes, which at select committee we didn’t really have to make any changes to because neither submitters nor officials had any particular concern with this area, is the changes in terms of reporting for the supervisors and the requirements around the supervisors. I think what is important to mention as part of the select committee process and questions that were raised—and I think this is going to be something that, for example, the Regulations Review Committee will continue monitoring—is that the biggest aspect of this particular bill, which is more to do with the financing aspect of it—which is why it went to the Economic Development, Science and Innovation Committee—is that it provides for regulations and codes of practice to be made in the AMLCFT system, which then extends that range of secondary legislation, which, for some, of course, as part of a primary legislation, understandably, submitters have concerns around certainty and around requirements, because secondary legislation is not done as part of the introduction of a bill; it’s done much later on. So it is important, then, to ensure that when the agencies are—and I believe, in this case; I might be wrong, but I believe it’s the Department of Internal Affairs. When they are putting together the regulations and the codes of practice to ensure that a fulsome consultation is done with the relevant stakeholders to make sure that they are fit for purpose and they are appropriate—and, of course, as we know, with the Regulations Review Committee here in Parliament, the Regulations Review Committee will also be reviewing and will be keeping an eye on some of the secondary legislation. Finally, I just want to address that the broader concerns we’re seeing and how wide-scoping this is when it comes to AMLCFT globally—because, again, this is something that isn’t simply just about individuals but can also be applicable to organisations and companies. An example I really want to address is the landmark case currently that just took place in France where Lafarge, which is a cement company, has been put on record as, or has been ruled to be, financing terrorism in Syria and beyond. This, for example, is now owned by Holcim, which is a company that is also here in Aotearoa New Zealand. So it’s important, when we’re looking at the broader scope of AMLCFT, how we’re able to make sure that that doesn’t happen for both individuals and companies. But the Green Party does support this bill. Thank you. CARL BATES (National—Whanganui) (16:18): Thank you, Madam Speaker. Removing red tape isn’t just about one step or one action; it’s about layers and layers of removal of unnecessary compliance, things that cost New Zealand businesses every day. This bill is another step in removing unnecessary red tape. It’s about making it easier to do business, reducing compliance costs, and improving our regulatory systems. As part of getting this country back on track, I commend this bill to the House. Hon CASEY COSTELLO (Minister of Customs) (16:19): I rise on behalf of New Zealand First to speak on the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill and the Anti-Money Laundering and Countering Financing of Terrorism (Supervisor, Levy, and Other Matters) Amendment Bill—a big mouthful. I think it’s really important, on behalf of New Zealand First, to recognise that our core pillar is around protecting community and country, and that includes the necessary steps that we have to ensure that crime and terrorism do not form or take stronger hold than they already have in the fabric of our society. When we talk about this bill removing bureaucracy and red tape, this means that we’re producing legislation that is usable, workable, and more effective. It is not simply removing red tape; it is actually making the legislation more effective, more applicable. When people understand the legislation, then we can ensure there’s greater levels of compliance and, therefore, greater levels of accountability for those who breach the legislation. New Zealand First is very proud of this piece of legislation. We commend the Minister for the hard work that has gone into bringing this piece of legislation together. We do need to ensure that we make it easier to do business. We do need to make sure that we maintain our reputation as a safe and effective place to do business, to live, and to operate. Therefore, this legislation is important that we ensure that we have risk-proportionate legislation, that we apply practical steps to ensure that we’re not duplicating, we are making our legislation clear and understandable. Therefore, we have no hesitation in commending this bill to the House. TEANAU TUIONO (Green) (16:21): Thank you, Madam Speaker. I rise as the second speaker for the Greens to support these bills. I wasn’t on either select committee—the Justice Committee or the Economic Development, Science and Innovation Committee—but I do note the comments made by my esteemed colleague Dr Lawrence Xu-Nan that having those select committees on the same day made it very difficult for members of our Parliament that are incredibly keen to go to every single select committee that they could—so commiserations to Dr Lawrence Xu-Nan and others across the House that wish they could go to as many select committees as they could. I guess the thing that I noted from that was the complexity with these number of bills. There’s the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill—which has been protracted into the AMLCFT-type legislation—which is just one of four bills that would amend regulatory systems administered by the Ministry of Justice. These amendments in the bill are designed to ensure that anti - money-laundering and countering financing of terrorism legislation remains fit for purpose, which is the reason why it’s divided up into a number of bills. My understanding is that the Anti-Money Laundering and Countering Financing of Terrorism (Supervisor, Levy, and Other Matters) Amendment Bill—which is the one that went to the Economic Development, Science and Innovation Committee, and went to that committee because it was dealing with the financial aspects, as well. It focused on making sure that it provides for codes of practice and making sure that there was that following-on regulation. Because this will be a fast-changing and developing aspect of the law, as well, it’s good to hear that the Regulations Review Committee, hopefully, will be paying close attention to this particular bill as well. Also, noting the case that Dr Lawrence Xu-Nan said as well, in terms of this type of bill, that it’s important that it just doesn’t focus on individuals—and noting that companies and larger organisations can also be involved in financing of terrorism, as well. He did point to the case of the French cement company Lafarge—who is now owned also by Holcim, who are here in New Zealand; so I hope they’re listening as well—who have been found to be funding terrorism in Syria, so pointing to the important aspect of making sure that we get this legislation over the line, as well. The other bill that we are discussing today, as well, is the Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill. Because I wasn’t on the select committee, I kind of assumed that it was an overarching bill, but I’ve been told that it wasn’t; it is actually part and parcel of the four bills. That one went to the Justice Committee because it was dealing with issues where there are experts on that committee who deal with these issues day to day. One of the things that they dealt with was what it means to be a politically exposed person. There are very many politically exposed persons in this Parliament, but I guess, within the context of this legislation, it has a very, very specific meaning. One of the discussions that they had was around a risk management system. The point that I took was that, actually, this was the first time that this term had actually appeared in the legislation, and that would cause issues. The committee—my understanding is—decided to change that and take that away. I think that is a common-sense thing to do, to make sure that it is streamlined. It is important to make sure that these bills do get given due consideration. I do want to commend members across the House for working diligently on this. It does seem incredibly complicated and complex. I’m just picking this stuff up today, but these are fast-moving times. Making sure that our legislation is fit for purpose, making sure that this legislation can get the job done is incredibly, incredibly important. Having that spread across different select committees to actually deal with the separate issues is incredibly important, as well. I know that submitters would have come to the select committee with solutions and to find particular ways in which this will make it fit for purpose here in New Zealand, and beyond as well. There was a discussion around the commencement date. I note that, as well, that it was different in terms of the context of this bill as opposed to what it was usually as we expect within other bills. The Greens will be supporting both of these bills. Thank you. Dr HAMISH CAMPBELL (National—Ilam) (16:26): It is a great honour to rise and speak in support of both these bills. It’s great to have support right across the House for them. It is important to protect against crime and also terrorism, but we also need to make sure our legislation is workable and efficient. Therefore, I commend these bills to the House. VANUSHI WALTERS (Labour) (16:26): Thank you, Madam Speaker. Like colleagues across the House, I rise to speak in favour of both of these bills. Several colleagues have raised the fact that these bills went through two separate select committees, so it was a bit of a collaborative effort, but, actually, a third committee was involved, as well: the Regulations Review Committee, and perhaps I’ll be able to speak to some of their contribution down the line. This is, of course, an extremely serious issue, particularly so when we see New Zealand’s standing or ranking with Transparency International slip in recent years. Certainly, this is one area that, in my view, has given pause to that. What we know is that about $1.3 billion is generated by money-laundering just in New Zealand every year. In 2025, there was a story about $1.8 million being taken from a group of about a dozen people who thought that they were investing in companies, essentially. This is an issue that very much affects everyday people. I read an article a little while ago that compared how New Zealand was doing in comparison to Australia, in terms of our regulation. There was a phrase they used that said, “Australia is a step ahead but still in transition.” This is very much an issue where countries across the world are looking to develop their legislation, so it’s entirely appropriate that we should be doing the same. The Minister and my colleague Camilla Belich have run through some of the aspects of this bill, certainly strengthening the scheme but also ensuring that there isn’t overregulation where it’s unnecessary. There are also very practical powers that are included in the four sets of bills, including the increase to powers for Police to freeze back accounts, as well. I do note that, in terms of the submitters who came to the Justice Committee, one was the Law Society, and they did raise issues about whether the regulation was still too heavy in this space. In 2024, the Law Society released a report on the costs of running a legal practice. The used the financial data of—I believe it was—over 100 practices to identify operational costs and challenges. What the report showed is that the cost of running a legal practice had increased by 15.3 percent, but in the survey responses, many of the responses spoke to the fact that within that, the percent to which they were affected, there was a significant proportion that related to anti - money-laundering and countering financing of terrorism costs. These are costs such as keeping records and conducting risk assessments. While I feel that we have got the balance right for now, I know that, certainly, there are asks from some who are being regulated that we continue to consider whether we do have the balance right. I wanted to start as well by speaking a little bit about the search powers in the bill that we considered. As many in the House will of course know, section 21 of the New Zealand Bill of Rights Act protects the freedom from unreasonable search and seizure. Now, the bill as introduced allows the supervisor to require any person who it reasonably suspects has knowledge of a possible contravention of the Act or regulations to attend a meeting with a supervisor to answer questions and provide any other information they deem is necessary or desirable. What’s interesting about this is these circumstances, according to the legal advice, are likely to be held to be searches. Coupled with section 46, amended by clause 10 of this bill, it expands the regulator’s powers to enter into dwellinghouses with the consent of the occupier and conduct these interviews. Now, the New Zealand Bill of Rights Act said that these searches—so these interviews—are legal, but there were then, of course, questions about whether the individuals being questioned would be required to answer. Thankfully, within the bill as it was introduced, there’s a section that said the individuals don’t need to answer if it would incriminate them. The select committee did some really valuable work here in that they expressed concern that individuals simply wouldn’t know that they held this right. There was a necessary connector, which was the connector to two things, actually. Firstly, legal advice at this critical time, but also the individual seeking the information had to inform them of the rights as well. That was a really helpful addition that the select committee made. There’s also a second question around the issue of detention. While these individuals are being required to attend a meeting, there was no power to bring the meeting to a close in the initial piece of legislation. Now, the initial views and advice around this were that it didn’t matter because the interviewers must exercise due care. The select committee actually said, “No. We should have this as an explicit provision within the bill.” Again, the individuals being interviewed are required to be informed of their right to call an end to these proceedings. Now, at this stage you might be saying, “Well, aren’t we defeating the purpose of the bill?” We do want these investigators to have access to appropriate levels of information, but, thankfully, the bills as they are already cover this point as well. The Act provides for the supervisors to require the production of documentation. That’s quite broad, in my view. That information cannot only be obtained through that power but there are provisions about how long individuals have to be able to provide that information as well. So really robust work done by the select committee in terms of ensuring the protection of rights as opposed to assuming them. I said I’d mention the role of the Regulations Review Committee because, again, it’s often an overlooked committee, but one who ensure we have clean and tidy legislation when it comes to this stage of a bill or bills being in the House. They pointed, in some of their advice, to a duplication of powers. This was a power to make exemptions to levy requirements—a very, very important part of the legislation. I’m getting some nods from Government members, I’m sure who not only agree with this but agree with the important role of the Regulations Review Committee. Their proposal was that you didn’t need both powers. So the two powers: one has some restrictions around when an exemption could be granted; the other one was quite broad. The committee’s recommendation was to include the power with more restrictions, which is really in line with best practice in terms of legislative drafting—so a very important role from the Regulations Review Committee. I can’t bring my contribution to a close without also mentioning one important thing that the Economic Development, Science and Innovation Committee—so the other select committee—recommended as well. This is a clarification, rather than anything else, which relates to Official Information Act (OIA) requests. There was a clause within the initial bill that went to that select committee in clause 36, Schedule 1, New Part 3, section 9(2)(a), that said, “all information that relates solely or principally to the function and that is held by the FMA or the RBNZ is transferred to and held by the DIA;” They pointed out that, actually, that was quite confusing about who would hold the obligation to provide the information if an OIA request was sought. In my limited time, I won’t read out the language they proposed, none the less to say that I think that it was extremely helpful. In my final minute, I would just like to make one point about the funding of mechanisms to appropriately oversee fraud, and serious fraud in particular. I would encourage the Government to not only ensure that we have a legislative framework that is fit for purpose and that has the mechanisms to monitor compliance with that framework but that we also have the court systems to be able to prosecute at a level we should. Now, in last year’s Budget we saw about $100,000 decline in the Serious Fraud Office’s budget, who are being, essentially, asked to have, in my view, a broader mandate and address more serious issues that are hitting our shores—I reference, again, both the decline in our Transparency International rating and increasing rates of fraud across the board. We agree with the legislation, but, again, we’ll be keeping an eye on the Budget later this year; for me, particularly in regards to the budget of the Serious Fraud Office. Thank you. RIMA NAKHLE (National—Takanini) (16:36): It’s a pleasure to rise in support of the combining and coming together of these two different but fundamentally same in importance bills. Like the coming together of these two bills, it’s lovely hearing the coming together of the commendation around the House of them from all the different parties. I commend these bills to the House. DEPUTY SPEAKER: Dan Rosewarne—this is a split call. DAN ROSEWARNE (Labour) (16:37): It’s a pleasure to rise and take a call on these two bills. I wasn’t there for the submission process, but I’ve very much enjoyed just hearing the contributions in the House today. Protecting the integrity of New Zealand’s financial system and ensuring that it cannot be exploited by organised crime or those financing terrorism is absolutely crucial. Let’s be clear: any anti – money-laundering is not red tape, as some have indicated; they’re a front-line defence. They protect our communities from very real harm caused by organised crime, particularly in a country that continues to grapple with the devastating impacts of methamphetamine and a huge amount of financial scams. We support the steps it takes to strengthen enforcement, close loopholes, and improve the overall effectiveness of the anti – money-laundering and countering financing of terrorism (AML/CFT) regime. For example, we support banning those crypto ATMs that we see cropping up around the country. These machines convert cash into cryptocurrency. They’ve become a clear vulnerability in the financial system—very hard to track the movements within that system. The Banking Ombudsman recently warned of significant scam risks with people being directed to deposit large sums of cash into these machines. We’ve even seen them appearing around Christchurch. In my research leading up to speaking on this bill, there were around about 30 in Christchurch alone. They were cropping up around the country up to around about 200. Closing the loophole is the right thing to do. But support for this bill does not mean a blank cheque; we still have some concerns. We also support the move to single AML/CFT supervisor—that role. This is a sensible change. It will simplify what is currently a fragmented system and make it easier for legitimate businesses to navigate. Many of our international partners, including Australia, that already operate under a single supervisor model. However, this new supervisor will take on significant responsibilities—functions currently held by both the Reserve Bank and the Financial Markets Authority. That raises an important question: is the Department of Internal Affairs the right place for that role? Because this is not a minor or administrative shift. This is a consolidation of a substantial regulatory enforcement and rulemaking power into one single entity. That entity must be very robust, it must be well resourced, and capable of managing risk at a national and international level. That brings me to a key concern: the growing reliance on secondary legislation. This bill gives significant powers to the chief executive of the supervisor to make rules, set thresholds, and grant exemptions, and to shape how the system actually operates in practice. Some flexibility is appropriate, but we’re concerned that too many critical decisions—decisions about how that risk is defined and managed—will be made outside of that full parliamentary scrutiny. Parliament should not be asked to sign off on broad principles only to have the real substance determined later on down the track, behind closed doors. We want to know exactly what is being proposed in that secondary legislation, because that detail very much matters. Take the issue of low-risk customers. In principle, Labour supports making compliance easier where risk is genuinely low, but no one wants to see small businesses, farmers, or everyday New Zealanders buried under unnecessary compliance costs. That really needs us to define what is low-risk, and that is not straightforward. Criminals actively look for weak points in a system, they look for the gaps, and they look for people and transactions that appear low risk in order to exploit them. We know, for example, that children’s bank accounts can be used as conduits for that money-laundering. Real estate transactions remain a known vector for illicit finance. These are all things that these two bills do, and for that reason, we commend them to the House. TOM RUTHERFORD (National—Bay of Plenty) (16:42): Thank you very much, Madam Speaker. This bill introduces a single supervisor for anti - money-laundering and countering financing of terrorism—we’re sort of bringing things together, which is a really good thing in Parliament. It replaces the current, complicated system that exists at the moment. Many businesses really struggle with the processes that they have to go through—there’s heaps and heaps of complexity associated. Ultimately, it’s about making it simpler for the businesses but also ensuring that this reform removes all of the unnecessary bureaucracy that’s happening. It strengthens up our defences against serious financial crime, and so I commend it to the House. Hon Dr DUNCAN WEBB (Labour—Christchurch Central) (16:42): Kia ora e te Mana Whakawā. Yes, we do support this bill, but we support appropriate regulation. I do think it’s important to recognise that anti - money-laundering legislation and action is actually critical in addressing some of the real problems in New Zealand today. We do know that the gangs have cash businesses, and they desperately need to launder their money. We do know that methamphetamine use has gone up astronomically in New Zealand over the past few years, and a cash business like that desperately needs ways to launder money. I just want to express some caution around the narrative that we’re hearing across a number of agencies and regulatory sphere when we talk about risk-based regulation. On its surface, that’s a pretty anodyne kind of comment, but what we’ve got to be really careful about is that that isn’t seen as shorthand for deregulation or less regulation, or lower or looser regulation. What it needs to be is effective regulation, and I think we can all agree that that is entirely appropriate. There is a danger that we search out situations that the participants say are low risk. My colleague Dan Rosewarne identified one. The problem is that in many cases, they are low risk—children’s bank accounts. Now, of course, we don’t want children to have to have full “know your customer” regulations when they’ve got their $2 a week going into their bank account. If you know that nobody looks at children’s bank accounts, then those naturally become a target because it is the weakest link. The same goes for routine conveyancing transactions, which is another so-called low-risk transaction. Of the thousands that happen every week, they are almost all fine, but if we have a regime where nobody looks—where there is no reporting requirement for routine conveyancing transactions—then routine conveyancing transactions will be where the money goes. We’ve got to be really cautious that we don’t see the system as static—that we don’t say, “Oh, nobody launders money that way, so we don’t need to look there.” As soon as you stop looking there, money will start being laundered there. The whole premise of these two bills is risk-based regulation. We agree, in principle, with the idea that you don’t regulate where there is no risk—but be cautious that you don’t look at something like children’s bank accounts, conveyancing transactions, or real estate agents’ trust accounts and say, nothing ever goes wrong there, so nothing ever will. That’s the first thing I would say. Along with that goes the idea that money-laundering regulation is red tape. It’s not. It’s actually one of the most effective and important tools to address organised crime, and I think we need to recognise that. What we should see this as doing—and I think it does, in part—is sharpening the tools rather than blunting them. It shouldn’t be making it less effective; it should be making it more effective. The other thing I want to talk about just briefly is the levy framework. We can see some justification that entities that process large amounts of money should generally pay the costs of administering what goes on there, but linked to what I just said is that this is actually a law enforcement function. What’s going on here is the prevention and detection of criminal activity. In a sense, this has been outsourced to industry in the sense that if a bank gets a suspicious transaction, they are expected to detect and report that; it’s their job to do it—not the Police’s job, not the Financial Market Authority’s job. They are part of the enforcement network. That’s good and fine—there’s nothing wrong with that. But then, to say that they also have to pay the costs of the people who receive their reports and follow up on them—I think there’s a balance to be struck. I’m not a huge one for letting banks off the hook, or even lawyers, but this is nevertheless a situation where we’ve got to be a little bit cautious about what we levy for. Levying and other charges are generally about a private good, but the good of appropriate money-laundering regulation is a good that is borne equally by society, because it means that there’s going to be less money-laundering that goes on, and it weakens criminal networks. I think we’ve got to think really carefully about that—about whether, just because someone is doing that activity, they should be paying for the administration of it in the Department of Internal Affairs. That’s the other major restructure that this legislation does. Again, we agree that consolidation of the functions is appropriate, but we do hope that this Government will resource the Department of Internal Affairs appropriately, because the functions are not merely administrative. But we do hope that this Government will resource the Department of Internal Affairs appropriately, because the functions are not merely administrative. It’s not just a matter of looking through a few spreadsheets and seeing where the money came from. Anti - money-laundering and financing of terrorism in particular is a complex, investigative, and forensic task. The people in the Financial Markets Authority who were doing that were expert investigators. It’s really important that that expertise exists in the Department of Internal Affairs and that culture of robust and fair and procedurally sound investigation is carried across into the department. Similarly, the work that the Reserve Bank was doing in administering—and, if I recall rightly, they would administer the suspicious transaction reports. So also those skills have to come across as well. So, yes, we think that this bill and these two bills together are generally fine. I don’t know that we would have done it quite the same way, but the Labour Party’s not going to stand in the way of small improvements which do the right thing. We do worry, though—and Vanushi Walters made this clear—that a lot of the administrative power, and it’s substantial, is passed through on to secondary legislation. Broad powers of exemption need to be carefully used. One of the questions is how far down the chain they go. As I understand it, this will be the chief executive’s role to exempt either by way of individuals—that Sharesies gets an exemption for such and such things—or by classes, so anyone who is embarking on this trade or enterprise can get an exemption. They’re pretty significant carve-outs of the legislative scheme and they need to be really carefully scrutinised to be very transparent. The regulation-making powers and the power to exempt by notice and the like raises some alarm bells and we’ll keep a close eye on it. But as I said, the real issue is that we’ve got a massive problem in New Zealand of organised crime, criminal groups, methamphetamine use and sale, and we just want to be really cautious that we don’t actually blunt one of the most effective tools in addressing that serious social harm. TIM COSTLEY (National—Ōtaki) (16:53): I commend the bill. SUZE REDMAYNE (National—Rangitīkei) (16:53): I commend this bill to the House. DEPUTY SPEAKER: So I’m going to take the vote on these two bills. I have been advised that I can vote on both of them together as long as all parties are voting the same way on both bills. So if anyone is intending to vote a different way on each bill, please let me know now. There is no indication of that. Motion agreed to. Bills read a second time.