By Bernard Hickey
Justice Minister Amy Adams has defended a Government decision to delay the introduction to Parliament of a proposal to extend tougher Anti-Money Laundering (AML) rules to real estate agents, solicitors and accountants, saying it could cost 'Mums and Dads' NZ$1.6 billion over 10 years.
Under questioning from Labour Finance Minister in Parliament (see video above), Adams confirmed comments from yesterday that the introduction of a bill to Parliament had been delayed until next year from later this year, saying the Government made a decision on October 25 to put out an 'exposure draft' rather than introduce legislation. The Government was still on track to enact the legislation in the middle of next year, she said.
"The compliance costs involved in net present value terms have been assessed as being up to NZ$1.6 billion over 10 years," Adams said in answer to question about the costs to 'Mums and Dads' of the rules.
Robertson then asked: "Why, 3 years after phase one was brought into force, 2 years after the Government was warned by President Xi of corrupt money from China entering New Zealand, and a year after officials asked her to begin work immediately is she still standing by, allowing billions of dollars of corrupt money to come into New Zealand?"
Robertson accused the Government yesterday of going slow again on phase II of the reforms because the heat around the Panama Papers from May this year had receded. The Government quietly shelved Ministry of Justice work on rollout of phase II in late 2014 after lobbying from John Key's personal lawyer, Ken Whitney, who runs foreign trusts. See more in our April 28 article.
The Government was then forced to accelerate the plans again in May after controversy boiled around the Panama Papers and Whitney's involvement in the 2014 delays. Panama Papers report author John Shewan also called for the rollout of phase II by the end of this year.
Adams replied the Government was getting on with the introduction of phase II of the AML rules as fast as possible.
"But I reiterate that $1.6 billion of compliance costs over 10 years is significant, and the fact that this Government cares about things like compliance costs and their impact on business is why we are the No. 1 country in the world for ease of doing business, and a big part of the reason unemployment has now dropped to 4.9 percent," she said.
Robertson then challenged Adams on funds being laundered into the New Zealand housing market from overseas.
"Is not the real threat to mums and dads that hundreds of millions of dollars of criminal funds are being laundered in New Zealand through the real estate market, which is leading to massive house price increases and locking first-home buyers out of the housing market?"
Adams said Robertson was ignoring the fact that almost all the transactions went through banks, which were already covered by the tougher AML rules, which force banks to identify.
A spokesman for Adams said the NZ$1.6 billion was official advice from the Ministry and would be released when the exposure draft was released.
13 Comments
This government has few if any concerns on trying to ease compliance costs in others areas. Notably the costs of building consent and completions. Like an unnecessary flag referendum with its reminder to us all here still lounging unloved in the top right of this web page.
Yes, we are all OK supported by the odd smile and wave from above.
Don't worry.
Be happy.
I agree with John Key on this one. At the moment it costs about $1,000 to pay your solicitor for the standard property transaction. It sounds like John thinks this cost will double.
Why should I pay this money to check that I'm not laundering money from overseas?
I would prefer to stop non residents from buying NZ houses and land. Problem solved. Housing crisis solved. Runaway house price inflation solved.
Seriously?
$1,000 extra to get standardised form filled in and a couple of verification documents chased up by lawyer's office junior showing source of money? And as for Real estate agents...what? Are they going to charge extra when a buyer comes through? Get real.
The only potential cost is that the deal doesn't go through with dodgy money and it takes a bit of pressure off house prices.
Blows my mind. I'm one of many who supported this government at the beginning but totally disenchanted with their blatant lies
I think the $1,000 extra cost isn't because of the forms, it comes down to the extra time involved in the transaction (Family Trusts, complex company structures etc), the additional internal compliance required to monitor the transaction and the third party audits required periodically to ensure compliance with the legislation.
AML/CFT is a complex act and it has taken some of the largest organizations a very long time to get their head around so I think it is dangerous not to review the impacts and look at a cost/benefit analysis.
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