Money Laundering

Question 1

Meaning of 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

Money Laundering Cycle

Answer 2

Placement - Cash enters the financial system.

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

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.

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.Money Launder

Question 3

Money Laundering Engages in… Elements

Answer 3

S243(2) CA61

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 4

in respect of any property that is the proceeds of an offence

Answer 4

Property is defined to include both tangible and intangible property and interests in real or personal property whether within or outside NZ

Includes offences, acts, and omissions committed overseas that would be an offence in NZ if committed in this country

Question 5

engages in a money laundering transaction

Answer 5

One must conceal property or enable another to conceal the property and then also deal with the property or assist with such dealing.

This includes disposing or transferring the property; bringing or removing the property from NZ; or changing it from one form to another (eg. Purchasing a vehicle)

Question 6

knowing or believing that all or part of the property is the proceeds of an offence

Answer 6

Knowledge is proven via direct evidence (e.g. admission) and/or circumstantial evidence.

Knowledge must exist when the property is dealt with (R v Kennedy)

Question 7

or being reckless as to whether or not the property is the proceeds of an offence

Answer 7

Recklessness is the conscious and deliberate taking of an unjustified risk (R v Harney)

Question 8

Money Laundering With intent to engage in… Elements

Answer 8

S243(3) CA61

obtains or has in his or her possession

any property (being property that is the proceeds of [[an offence]]committed by another person)—

(a) with intent to engage in a money laundering transaction in respect of that property; and
(b) 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 9

‘Proceeds’ s243, Money Laundering

Answer 9

Proceeds, in relation to a serious offence, means: any property that is derived or realised, directly or indirectly, by any person from the commission of the offence.

Question 10

CPRA Purpose

Answer 10

s3 Criminal Proceeds (Recovery) Act 2009

(1) The primary purpose of this Act is to establish a regime for the forfeiture of property—

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

(2) The criminal proceeds and instruments forfeiture regime established under this Act proposes to—

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

Question 11

Tainted Property Definition

Answer 11

S5 Criminal Proceeds (Recovery) Act 2009

(a) means any property that has, wholly or in part, been—
(i) acquired as a result of significant criminal activity; or
(ii) directly or indirectly derived from significant criminal activity; and
(b) includes any property that has been acquired as a result of, or directly or indirectly derived from, more than 1 activity if at least 1 of those activities is a significant criminal activity

Question 12

Qualifying instrument forfeiture offence

Answer 12

S5 Criminal Proceeds (Recovery) Act 2009 (a) Means an offence punishable by a maximum term of imprisonment of 5 years or more; and

(b) Includes an attempt to commit, conspiring to commit, or being an accessory to an offence if the maximum term of imprisonment for that attempt, conspiracy, or activity is 5 years or more.

Question 13

significant criminal activity

Answer 13

S6 Criminal Proceeds (Recovery) Act 2009

(1) In this Act, unless the context otherwise requires, significant criminal activity means an activity engaged in by a person that if proceeded against as a criminal offence would amount to offending–
(a) that consists of, or includes, 1 or more offences punishable by a maximum term of imprisonment of 5 years or more; or
(b) from which property, proceeds, or benefits of a value of $30,000 or more have, directly or indirectly, been acquired or derived.

Question 14

unlawfully benefited from significant criminal activity

Answer 14

S7 Criminal Proceeds (Recovery) Act 2009

A person has unlawfully benefited from significant criminal activity if the person has knowingly, directly or indirectly, derived a benefit from significant criminal activity (whether or not that person undertook or was involved in the significant criminal activity).

Question 15

Profit Forfeiture Order

Answer 15

Section 55, Criminal Proceeds (Recovery) Act 2009

(1) The High Court must make a profit forfeiture order if it is satisfied on the balance of probabilities that—
(a) The respondent has unlawfully benefited from significant criminal activity within the relevant period of criminal activity; and
(b) the respondent has interests in property

Question 16

Instrument of crime

Answer 16

S5 Criminal Proceeds (Recovery) Act 2009

Instrument of crime means–

(a) Property used (wholly or in part) to commit or facilitate the commission of a qualifying instrument forfeiture offence.

Of note

(b) in relation to a qualifying instrument forfeiture offence that is an offence against section 8(1) or (2A) of the Terrorism Suppression Act 2002, includes funds (as defined in section 4(1) of that Act) allocated for the purposes of committing that offence; and
(c) in relation to any property referred to in paragraphs (a) and (b), the proceeds of any disposition of that property or any other property into which that property is converted, after the commission of the qualifying instrument forfeiture offence, except to the extent provided otherwise by any order of a court under this Act or the Sentencing Act 2002, excluding any severable interest or granting relief.

Question 17

Duties of Prosecutor

Section 142B, Sentencing Act 2002

If a person is convicted of a qualifying instrument forfeiture offence and any property was used to commit, or to facilitate the commission of, that offence, the prosecutor must, if in the prosecutor’s opinion the court should consider whether to make an instrument forfeiture order in respect of that property, notify the court in writing of—

(a) the details of that property:
(b) the name and identifying details of any person (other than the offender) who, to the knowledge of the prosecutor, has an interest in the property.

Answer 17

In practice it will be incumbent on the Officer in Charge of the criminal file to notify their counsel for the Crown Solicitor that there is property that is an instrument of crime. In your referral to the Crown Solicitor request that they file a ‘Prosecutor’s Notice’ with the Court, advising them that the court should consider making an instrument forfeiture order (ss 142A to 142Q Sentencing Act 2002 and subpart 4 of Part 2 of the Criminal Proceeds (Recovery) Act 2009).

Question 18

Restraint of instrument of crime

Answer 18

Property that is an instrument of crime may need to be restrained whilethe criminal proceedings take their course, to prevent disposal of the asset or erosion of its value by being further encumbered (eg mortgage on a house). Where such circumstances exist it is recommended that this action is taken

This will require an ‘application for restraining order relating to instrument of crime’, under s 26

Question 19

Assessment process before application for restraint of instrument of crime. Used to determine:

Answer 19

• 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.

Note: Consultation with the Financial Crime Group is required regarding the cost of action, as it is they who incur the cost associated with assessment and storage (where applicable) of the asset until such time as a final determination is made, by the Courts, in respect of the property.

Question 20

Affidavit required for application

Answer 20

• Officer in Charge:
  
  • details.
• Offender(s):
  
  • details
  • charges
  • criminal convictions.
• Search warrant - describe the nature of the offending discovered at or involving the property (asset) concerned. Note: Where the value of the asset is high you need to demonstrate that the offending was at more of a commercial level.
• Admissions made during interview(s).
• Property:
  
  • describe property sought to be restrained and its value
  • show that offender owns, has custody or control.

Question 21

What must occur before Criminal Proceeds action can be taken And what belief is required.

Answer 21

A restraining order is the first step in the asset seizure process. In the case of tainted property and benefits from crime an application made to the High Court must show reasonable grounds for belief that the property is tainted – that it has been acquired, or directly or indirectly derived, from “significant criminal activity”.

Question 22

Property partly used may result in forfeiture of whole

Answer 22

In the case of an instrument forfeiture order, reasonable grounds must be provided to show the instrument was used to facilitate significant criminal activity. Even if the property has only been partly used for the purposes of crime, the entire property is an instrument of crime and may be subject to forfeiture.

Question 23

Valid for one year

Answer 23

A restraining order is valid for one year from the date on which the order is made. The court may issue an extension before the expiry of the original order. The extension is also valid for one year. The restraining order remains in force for the prescribed time or until the making or declining of an assets or profit forfeiture order, whichever is the earlier.

Question 24

Investigative Procedure What points to cover when interviewing a suspect

Answer 24

• suspect’s legitimate income
• suspect’s illegitimate income
• expenditure
• assets
• liabilities
• acquisition of financial records, from banks, financing companies, loan sharks, family trust documents
• clarification of documentary evidence located, as per above.