The number of New Zealand foreign trusts has slumped more than 80% since the rules around them were tightened in the wake of the Panama Papers in 2016.
The New Zealand National Risk Assessment 2024 on Money Laundering, Terrorism Financing and Proliferation Financing released by the NZ Police Financial Intelligence Unit (FIU) this week, shows a total of 2254 foreign trusts. That's down 9417, or 81%, from 11671 in 2016.
As the FIU notes, a foreign trust is a trust arrangement with assets settled onto the trust by a non-resident settlor. Typically these assets are held offshore. In 2016 the International Consortium of Investigative Journalists led reporting on a leak of more than 11.5 million financial and legal records exposing crime and corruption. NZ foreign trusts featured in this leading to the Government of the day making changes.
"The declining number [of foreign trusts] is because of the comprehensive foreign trust regime that was introduced in 2017 and the ongoing compliance focus in this area," the FIU says.
"The foreign trust registry collects information on persons connected to the trust, settlements onto the trust and distributions from the trust at registration and annually. The registry is open to Police and the Department of Internal Affairs."
"Previous changes to trust law include establishing the Foreign Trust Register, which was done by Inland Revenue in 2016 following the Government’s Inquiry into Foreign Trust Disclosure Rules. The inquiry found that the existing foreign trust disclosure rules were not fit-for-purpose in the context of preserving New Zealand’s reputation as a country that cooperates with other jurisdictions to counter money laundering and aggressive tax practices," says the FIU.
The 2024 National Risk Assessment is the first since 2019. Table 15 below shows the breakdown of the countries where NZ foreign trusts are most popular.
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