Money Laundering & Criminal Proceeds (Recovery) Act 2009

Question 1

Elements of Money Laundering s243(2)

Answer 1

• 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 2

Define money laundering

Answer 2

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 3

Outline the three stages of the money laundering cycle

Answer 3

1. Placement - cash enters the financial system
   * (e.g. deposit proceeds of drug dealing into associate’s account)*
2. Layering - money is involved in a number of transactions
   * (e.g. associate transfers money into account held by a “shell” company of which offender is a director.*
3. Integration - money is mixed with lawful funds or integrated back into the economy, with the appearance of legitimacy
   * (e.g. the money is declared as revenue for the company, tax is paid and the offender pays himself director fees or salary out of the company account)*

Question 4

Discuss what is meant by “interest” in relation to property

Answer 4

Interest, in relation to property means:
(a) A legal or equitable estate or interest in the property; or
(b) A right, power, or privilege in connection with the property

Question 5

Define “offence”

Answer 5

Means an offence (or any offence described as a crime) that is punishable under New Zealand law, including any act, wherever committed, that would be an offence if committed in New Zealand.

Question 6

Define “property”

Answer 6

Means real or personal property of any description, whether situated in New Zealand or elsewhere and whether tangible or intangible, and includes any interest in any such real or personal property.

Question 7

Define “tainted property”

s5 of Criminal Proceeds (Recovery) Act 2009

Answer 7

Tainted property:
(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 8

Define “significant criminal activity”

s6 of Criminal Proceeds (Recovery) Act 2009

Answer 8

Significant criminal activity is defined as 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 9

Unlawfully benefited from criminal activity

s7 of Criminal Proceeds (Recovery) Act 2009

Answer 9

In this act, unless the context otherwise requires, 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 10

Profit forfeiture order - What must be satisfied?

s55 of Criminal Proceeds (Recovery) Act 2009

Answer 10

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 11

What is the purpose of the Criminal Proceeds (Recovery) Act 2009?

Answer 11

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.

Question 12

Qualifying instrument forfeiture offence

s5 of Criminal Proceeds (Recovery) Act 2009

Answer 12

(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

What is the assessment process? Outline the steps
| Restraint of Instrument of Crime

Answer 13

Before preparing an application for restraint of an instrument of crime, 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 14

What must occur before criminal proceeds action can be taken?

Answer 14

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 15

Who may apply for restraining orders, asset forfeiture orders or profit orders?

Answer 15

Only members of Asset Recovery Units.

Question 16

How long is a restraining order valid?

Answer 16

One year from the date on which the order was made.

Question 17

When interviewing a suspect about money laundering, or where proceeds recovery action is to be considered, what points should be considered?

Answer 17

1. Suspect’s legitimate income
2. Suspect’s illegitimate income
3. Expenditure
4. Assets
5. Liabilities
6. Acquisition of financial records, from banks, financing companies, loan sharks, family trust documents
7. Clarification of documentary evidence located, as per above