Police swoop on $10k bank account deals

By Sam Hurley
5:00 AM Saturday Mar 25, 2017

Police say new rules key cog in crackdown on financial crime but change ignites fears of privacy erosion.

Police estimate
$1.6b in dirty money was being laundered annually. Photo / File

Banks will be forced to provide police with customer details on all cash transactions over $10,000 in a fresh crackdown on money laundering and
the potential financing of terrorism.

Under new rules to be introduced from November, banks will give police sensitive information including names, locations and even phone
numbers.

Police say it is a crucial step in gathering intelligence - but it has prompted fears of more erosion of privacy.

And banks say they can't rule out passing on the cost to customers in fee hikes.

New Zealand Council for Civil Liberties spokesman Thomas Beagle told the Weekend Herald police seemed to be gathering data without reason to
suspect a crime.
"It's particularly worrying, police will be collecting all this information without the need for a warrant," he said.

"If they suspect someone of a crime they can go see a judge and get a warrant."
The new rules will also see banks alert the Financial Intelligence Unit to all international wire transfers from New Zealand of $1000.

It is a harder line to current rules which mean "suspicious transactions" are by reported banks and other financial institutions.

The new regulations are expected to lead to a huge increase in delicate banking data - including of individual clients - to authorities.

Customer details submitted to police will include names, account numbers, types and amounts of funds, locations, addresses, phone numbers,
and "any other identifying information".

Beagle said the new thresholds of $1000 for international and $10,000 for domestic transactions appeared too low.

"Police are doing this more and more because they can, rather than because they need it . . . It's concerning the Government will have access to
all this personal information, just in case they need it."

According to police statistics, 8989 transactions were reported to police in 2016 with a total value of $6.06 billion - an increase in value from 2015
when 10,247 transactions were reported at a value of $3.7 billion.

Of those transactions, police estimate $1.6 billion in dirty money was being laundered annually.

In a submission to the Ministry of Justice last year, the New Zealand Bankers' Association raised concerns about the security and vast volume of
customer information police will be handling from.
And it warned the increased workload "will require significant cost and resources" to deal with the transactions which are "expected to be very
large".

Several banks told the Weekend Herald it was too early to know if the added cost would be passed on to customers.
The Financial Intelligence Unit said the intent of the new rules was to further build an intelligence picture across the entire financial system and
"identify any suspicious looking activity or patterns".

It said customer details would be tightly controlled to prevent improper access and disclosure.

Karen Scott-Howman, chief executive of the Bankers' Association, acknowledged the role banks play in fighting financial crime but said customer
privacy and confidentiality was taken seriously.

"It's not unusual for policy and lawmakers to strike a balance between personal rights and other obligations to maintain the law and security," she
said.

The Office of the Privacy Commissioner has also warned that any collection of citizens' data "should have a clear purpose, and the data collection
should be proportional".

However, it said the new regulations appeared to meet that threshold.

A Financial Markets Authority spokesman said it starts monitoring reporting entities for compliance from November.

Other supervisors include the Reserve Bank and Department of Internal Affairs.
A Ministry of Justice spokesman said police would be the lead agency, but it would also play a part in determining exemption applications.

Since 2013 some 2000 institutions, including fund managers, derivatives issuers, debt collectors and casinos have been required to have systems
guarding against money laundering.

Those who don't comply can face fines or even jail time.

Suspicious transactions reported to the Financial Intelligence Unit

In 2016 there were 8989 reports at a transaction value of $6.06b
In 2015 there were 10,247 reports at a transaction value of $3.71b
Ways people clean dirty money
Real estate
Casinos
An overseas shell company
Gold
- NZ Herald