7. Money Laundering & Criminal Proceeds

Question 1

Define Money Laundering

Answer 1

Money laundering is the process of dealing with the proceeds of criminal activity in such a way as to make the proceeds appear to have been legitimately acquired

Question 2

Define Money Laundering
Section 243
Define Conceal

Answer 2

In relation to Property

Conceal- conceal/disguise the nature, source, location, disposition, or ownership property. Includes converting one form to another,

Question 3

Define Money Laundering
Section 243
Define Deal With

Answer 3

Deal With: deal with the property in any manner and by any means- dispose(sale, purchase, gift), transfer possession, bring in or remove from NZ

Question 4

Define Money Laundering
Section 243
Define Interest

Answer 4

Interest- legal or equitable estate or interest in the property; or a right, power, or privilege in connection with the property.

Question 5

Define Proceeds

Answer 5

Means any property that is derived or realised, directly or indirectly, by any person from the commission of the offence.

Question 6

Outline the Money Laundering Cycle
Placement

Layering

Integration

Answer 6

Placement- Cash enters the financial system.
Eg An offender makes money from selling cannabis and then deposits these proceeds into an associate’s bank account.

Layering- Money is involved in a number of transactions.
Eg The associate transfers the money into an account held by a ‘shell’ company that the offender is the director of.

Integration- Money is mixed with lawful funds or integrated back into the economy, with the appearance of legitimacy.
Eg The money is declared as revenue for the company, tax is paid, and then the offender pays himself director fees or a salary out of the company account.

Question 7

The Elements of Money Laundering

s243(2)

Answer 7

• in respect of any property that is the proceeds of an offence
• engages in a money laundering transaction
• knowing or believing that all or part of the property is the proceeds of an offence
• or being reckless as to whether or not the property is the proceeds of an offence

Question 8

Criminal Proceeds (Recovery) Act 2009
What is the purpose

Answer 8

(1) establish a regime for the forfeiture of property—

(a) that has been derived directly or indirectly from significant criminal activity;
(b) that represents the value of a person’s unlawfully derived income.

(2)

(a) eliminate the chance for persons to profit from crime
(b) deter significant criminal activity; and
(c) reduce the ability of criminals to expand criminal enterprise; and
(d) deal with matters associated with foreign restraining and forfeiture orders that arise in New Zealand.

Question 9

What is the standard of proof for CPRA

Answer 9

Civil-based process where the Crown must prove on the balance of probabilities that wealth and benefits have been accumulated through significant criminal activity.

Question 10

Define Assets forfeiture order

Answer 10

(AFO) is issued by the High Court on application. Issued if application shows on the balance of probability that specific assets which have been acquired have been tainted by significant criminal activity.

Question 11

Define Tainted property S5 CPRA

Answer 11

property that has been—

acquired or directly or indirectly derived as a result of significant criminal activity; (at least 1 criminal activity)

Question 12

What is a Qualifying instrument forfeiture offence (s5)

What is Significant criminal activity (s6)

When has someone Unlawfully benefited from criminal activity (s7)

Define Instrument of crime (S5)

Answer 12

QIF offence punishable by a maximum term of imprisonment of 5 years or more.

SCA-

(a) 1 or more offence/s punishable by 5+ years
(b) from which property, proceeds, or benefits of a value of $30,000+ have been acquired or derived.

UB- knowingly, directly or indirectly, derived a benefit from significant criminal activity.

Instruments of crime: Property used to commit or facilitate the commission of a QIFO.

Question 13

Define Profit forfeiture order (S55)

Answer 13

(PFO) is issued by the High Court if it is satisfied on the balance of probabilities respondent has unlawfully benefited from significant criminal activity
And
(b) the respondent has interests in property.

Question 14

Obligations and Duty of prosecutor

Section 142B of the Sentencing Act 2002

Answer 14

obligations on the prosecutor to consider notifying the court of any relevant property that is an instrument of crime so that forfeiture of that property can be considered as part of the sentencing process.

Question 15

Restraint of instrument of crime

S26

Answer 15

Property that is an instrument of crime may need to be restrained while the criminal proceedings take their course, to prevent disposal of the asset or erosion of its value by being further encumbered

A restraining order is the first step in the asset seizure process. Valid for 1 year, extension valid for another 1.

This will require an ‘application for restraining order relating to instrument of crime’, under s26 of the Criminal Proceeds (Recovery) Act 2009.

Question 16

Assessment process for retraining assets

Answer 16

Before an application the assessment process is conducted to determine:
• the value of the asset
• equity in the asset
• any third party interest in the asset
• the cost of action in respect of the asset.

Question 17

What must you satisfy to the courts in respect of all applications?
PTI UB

Who can apply for various orders?

Answer 17

In respect of all applications made to the High Court, they must be satisfied on reasonable grounds for belief

• property tainted
• property is an instrument of crime
• unlawfully benefited

Only members of Asset Recovery Units may apply for restraining orders (apart from those relating to Instruments of Crime), assets forfeiture orders and profit orders.