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唐朱昌
唐朱昌
教授,博士生导师。复旦大学中国反洗钱研究中心首任主任,复旦大学俄...
严立新
严立新
复旦大学经济学院、金融研究院副教授,中国反洗钱研究中心执行主...
陈浩然
陈浩然
复旦大学法学院教授、博士生导师;复旦大学国际刑法研究中心主任。...
何 萍
何 萍
华东政法大学刑法学教授,复旦大学中国反洗钱研究中心特聘研究员,荷...
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李小杰
安永金融服务风险管理、咨询总监,曾任蚂蚁金服反洗钱总监,复旦大学...
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周锦贤
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童文俊
童文俊
高级经济师,复旦大学金融学博士,复旦大学经济学博士后。现供职于中...
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汤 俊
中南财经政法大学教授,计算机科学与技术专业工学博士,复旦大学理论...
李 刚
李 刚
生辰:1977.7.26 籍贯:辽宁抚顺 民族:汉 党派:九三学社 职称:教授 研究...
祝亚雄
祝亚雄
祝亚雄,1974年生,浙江衢州人。浙江师范大学经济与管理学院副教授,博...
高增安
高增安
复旦大学中国反洗钱研究中心特聘研究员,专事反洗钱与贸易领域的研...
顾卿华
顾卿华
复旦大学中国反洗钱研究中心特聘研究员;现任快钱支付清算信息有限...
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The Context Of Money Laundering Compliance Costs


http://www.scoop.co.nz/stories/BU1911/S00151/the-context-of-money-laundering-compliance-costs.htm

 

When a business is obligated by law to ensure they are operating to compliance regulations, it is important for those businesses to understand the context of each obligation. Without doing so business owners can resent the costs and seek short cut approaches that undermine the purpose of compliance laws.

 

This article is focusing on the costs and context of money laundering compliance within New Zealand.

 

The starting point for context is looking at New Zealand as a country. It can be argued that New Zealand has strong statistics indicating the threat of money laundering and the risk that the country’s business sector is being used to facilitate the financing of terrorism is low. Examples of such statistics include New Zealand ranking as having a low perception of corruption on the world Corruption Perception Index. However, looking deeper, it is possible to identify anomalies with that perception measure. The most obvious is that New Zealand operates without an agency whose sole focus is stamping out acts of corruption. In the absence of an anti-corruption agency that has the primary objective of identifying, monitoring and reporting on corruption, then of course New Zealand will always have a low perception of corruption. The real or actual corruption level, however, is likely to be quite different.

 

Another statistic argued as a credit to New Zealand is the ability and ease in which a business or company can be formed. Over the past four years the World Bank has ranked New Zealand as #1 country for ease of doing business. It means that New Zealand is the best country, out of 190 countries, that easily allows a private individual or business to establish a corporate identity, often within 24 hours. Establishing a corporate identity within 24 hours in a country that is also ranked as having a low perception of corruption presents ideal conditions for those who have intent on establishing a network to facilitate organized crime.

 

Interestingly, New Zealand was one of the last OECD countries to introduce adequate AML laws. These laws have only been in place across our banking sector since 1 July 2013. As with any laws that require changes to business operations, there are teething problems and the process of implementation to an adequate level will no doubt take years before the level of effectiveness can be reached.

 

New Zealand’s late start for introducing international standards to combat money laundering and financing of terrorism, means that prior to 1 July 2013, on the basis of probability, New Zealand was a country that was facilitating organized crime. Just because these laws are now in place does not mean New Zealand has automatically transitioned into a country with a low risk of facilitating crime. It simply means that government agencies acting as AML Supervisors are in a better position to monitor the level of compliance across New Zealand’s financial industry.

 

In terms of ‘context’ – real estate is globally recognized as a sector that is attractive to money launderers. Real estate, as a high value asset and a market that has high liquidity, allows large sums of ‘dirty funds’, or that which is illegally obtained, to be placed, layered and integrated back to the hands of a criminal network. This method of committing money laundering provides a veil of legitimacy. The money launderer simply leverages from the common impression that wealth derived from the real estate market is a legitimate source of income.

 

To fully understand and appreciate the harms caused by money laundering requires asking the question ‘what is the harm of organized crime to New Zealand’s society’? New Zealand is a country with the highest use of methamphetamine. Last month it was reported a gram of methamphetamine in New Zealand had a value of around $450. In comparison to a legitimate market of trade, one gram of gold in New Zealand is currently selling at $75. For investment returns, it is therefore no surprise why international criminal networks are swamping New Zealand with methamphetamine. “Meth” as it is commonly known, is more addictive and more toxic than heroin. It is a drug that causes psychosis, extreme paranoia and violence. It is simply, an illegal substance that New Zealand does not want in its society, in homes or in schools.

 

Given New Zealand’s unique position as a country where businesses can easily be established, a country that is still in the phases of fully implementing money laundering laws and a country that has the highest rate per capita of methamphetamine use and a growing population of international criminal syndicates - what should be the cost of AML compliance?

 

A recent survey by the Real Estate Institute of New Zealand (REINZ) suggests the implementation cost of AML compliance across 1,861 realtors was $20 million. That would suggest, on an individual basis, the cost of implementing AML compliance was, on average, around $10,700 per realtor agency, or just over $200 per week. This amount seems a small price to pay to develop systems across business operations allowing a realtor to detect, monitor and report any suspicious or unusual transactions.

 

As the REINZ survey and its method of collating data has not been published, it is unknown whether the realtors made reasonable efforts to reduce costs of AML compliance implementation. As an AML compliance professional and co-founder of AML regulatory technology, I have firsthand knowledge that a significant proportion of implementation costs for AML compliance can be reduced to a fee of $695 per business – amlclick.co.nz. Therefore, the levels of compliance costs will significantly vary, and business owners need to research the market for solutions that allow them to reduce such ‘burdening costs’.

 

To conclude, though business owners may resent AML compliance costs, they should equally consider the costs of money laundering compliance as an investment towards keeping our children and members of society safer – as well as means of assisting law enforcement to detect and apprehend those individuals that make profit and financial gain from harming others.

 

Kerry Grass has been a certified AML specialist for 13 years and holds an International Diploma in AML. For the past 9 years she has operated as an Executive Consultant, specialising in AML compliance and regulatory technology known as AML360.