Justice Minister denies that lobbying from real estate agents has delayed round 2 of anti-money-laundering reforms; says still on track for passing of legislation by mid-2017; but backs off earlier aim to introduce legislation in 2016

By Bernard Hickey

Justice Minister Amy Adams has delayed the introduction of legislation to extend tougher Anti-Money-Laundering (AML) rules to real estate agents, accountants and lawyers until early 2017 because she is concerned about extra compliance costs being passed on to "average Mums and Dads."

Adams told Parliament the Government was still on track to pass the legislation by the middle of next year, but had decided against introducing the legislation this year because it wanted to ensure compliance costs were not too high.

The comments follow accusations from Labour Finance Spokesman Grant Robertson that the Government had quietly put the legislative process on hold last week after lobbying from the real estate industry. (Here's Robertson questioning Adams in Parliament on Tuesday afternoon).

Adams told reporters in Parliament that the legislation could be passed by the middle of next year, even if was not introduced this year.

"I've said all the way along it's our intention to have the legislation passed by the middle of next year, and that hasn't changed," Adams said.

Adams said she had not had any correspondence or met with real estate agents.

"I am sure that they will have concerns about how this will affect them," she said.

"I have said all along this is a regime that brings with it significant compliance costs on new sectors, but that is what it is, and we are working to get the legislation in place within the timetable that the Prime Minister and I set out some months ago."

Asked if there had been a debate in a cabinet sub-committee that had delayed initial plans to table the legislation this year, she said: "There has been no slowdown to that date of having the legislation passed by the middle of next year, so we are working through very carefully how it applies and making it sure it is the right balance of ensuring the protection of our sector and not imposing unnecessary compliance cost, but at no stage have we moved from having to have it passed by the middle of next year."

Adams also would not comment on Robertson's claim the Government was looking at not forcing buyers to identify themselves.

"All of those details will be subject to the announcements in due course," she said.

Directly asked if the Government would have legislation in Parliament by the end of this year, she said: "We haven't made those decisions yet. I'll make announcements in due course."

She denied it would be necessary to table legislation this year to ensure the passing of legislation by mid-2017.

"You can move it through the House in the time frame that we think is necessary. We want to have it place by the middle of next year. That hasn't changed. What we are working through at the moment is all of the details of formalising and finalising that policy and we'll make more announcements in due course."

She later told Parliament (in the video above) that the introduction of the legislation would now be delayed to next year.

"There are far reaching implications for a large number of New Zealanders from these reforms. The timeframe that we've been consistently working towards is to have the bill passed by mid 2017 and this hasn't changed. However, introduction of the bill may now occur early next year to ensure that we do what we can to minimise the cost of the reforms to New Zealanders," she said.

"This is a regime that will have considerable compliance costs on ordinary New Zealanders and on this side of the house we want to ensure that those costs are no more burdensome on average Mums and Dads than they need to be."

'Caving to special interests'

Earlier, Robertson said the Government had again 'caved' to special interests and shelved the legislation.

“When the heat was on National earlier this year in the wake of the Panama Papers, John Key committed his government to fast-tracking legislation to widen the groups covered by anti-money laundering provisions. But now with public attention elsewhere he has quietly slammed on the brakes, and it now looks like there will be no change in the rules before the next election," Robertson said.

“It seems that once again National is putting their interests ahead of New Zealand’s. As happened with earlier attempts to tighten the rules on the foreign trust industry that were scuttled by people like John Key’s lawyer, industry insiders are putting pressure on the government to back-off or water down proposals," he said.

The Government decided earlier this year not to accept John Shewan's recommendation that the round 2 of the AML laws be put into force by the end of this year.

“The time for talking here is over. We need action to ensure we eliminate New Zealand as a destination for corrupt money and play our part in the international efforts to fight corruption and terrorism."

The Ministry of Justice said in its consultation paper in August (submissions have now closed) that it expected legislation to be introduced before the end of this year. See Gareth Vaughan's article here.

The Government delayed the consideration of round 2 of the AML reforms for two years between 2014 and early 2016, before the Panama Papers publicity forced it to put the reforms back on track. See more here from Adams and John Key on May 31 on the Government's plans to accelerate the reforms in the wake of the Panama Papers publicity. Round one of the reforms applying to banks and fund managers were introduced in 2013.

(Updated with confirmation of delayed introduction of legislation in Parliament)

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16 Comments

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THIS IS DISGRACEFUL !!!!

All we are asking Real Estate Agents to do is verify the sources of large deposits into their Trust Accounts for property transactions

This is common practice EVERYWHERE , and its not hard to do at all

Real Estate agents have neither the skills or the motivattion to deal with this stuff.
Bank compliance departments have all the info to hand.

Real Estate agents have neither the skills or the motivattion to deal with this stuff

I think not.

... a foreigner who may or may not have engaged in massive criminal activity and/or dealt with Iran, Afghanistan, or any other bogeyman du jour at some point in their past, and is using US real estate merely as a money-laundering front perhaps? Sadly, we will never know. Why? As explained before, it is all thanks to the National Association of Realtors - those wonderful people who bring you the existing home sales update every month (with a documented upward bias every single time) - which just so happens is the only organization that actively lobbied for and received an exemption from AML regulation compliance. In other words, unlike HSBC, the NAR is untouchable, even if it were to sell a triplex to Ahmedinejad on West 57th street. Read more

Government of the people by the people for the people? I think not. Not this government. Government of the people by the privileged for their profits.

Okay , so is "concerned" about significant compliance costs .

maybe she could explain ?

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Blame government for inaction. When forced to act as no where to hide will try all tactics to delay if not avoid.

This is another proof of government working to protect and support ..................

Shame.

May I ask if the Justice Department works for the good of all New Zealand, or just for the obnoxious few.

Maybe we need to invest in a New Government, that does not subscribe to Real Estate as the only source of wealth and perhaps bring the Serious Fraud Office to bear on the Importation of Laundry Money as a means to fund outside influences.

There is a very strange smell emanating from this ....and it smells like a corruption of rules and agendas for the decidedly wrong people.

May I ask if the Justice Department works for the good of all New Zealand, or just for the obnoxious few.

It works for the best democracy money can buy.

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Not sure if any other government will do anything or not but one thing is clear that for any solution - This Government has to go.

Solution starts with #JKEXIT

if it quacks like a duck and walks like a duck and looks like a duck, its a ..... according to this government a sparrow
why are they so intent on trying to help certain people hide facts from the NZ public

So far, three Chinese banking corporations — Industrial and Commercial Bank of China (ICBC), China Construction Bank and Bank of China — have made the move. They are identifying New Zealand investment opportunities for their existing Chinese clients, as well as working with New Zealand businesses to expand into the Chinese market.

Their positioning in the New Zealand market has been smoothed by the appointment of former National MPs to chair their local boards: Dame Jenny Shipley (CCNZB); Don Brash (ICBC NZ) and Chris Tremain (BOCNZ).

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1163...

Smooooothed?. ...There is nothing like having Political Weight behind closed doors. Eh.

Or was it an open and shut case.

http://www.bloomberg.com/news/articles/2016-10-28/china-banks-test-regul...

No crisis here, nothing to see....does not have to conform...to our standards.

Bank of China's clients include COSCO, Bright Dairy, Huawei and Haier Group, which all do business in New Zealand, and counts former finance minister Ruth Richardson as a director. Former National Party minister Chris Tremain is chairman of the local unit.

https://www.nbr.co.nz/article/bank-china-unit-becomes-25th-lender-regist...

Aren't the Chinese banks giving us cheaper interest rates than our Australian cousins making money lending more competitive?
How are real estate agents going to check that your money is clean?
Perhaps stop foreign buyers buying NZ land and houses. According to John Key its just 3% of the market but its such a big 3% that it would crash the market if it was stopped.

Are real estate agents going to check that gangsters don't sell pee and foreigners don;t smuggle people?

Perhaps the reason the government are unwilling to introduce AML laws, is because so many politicians and ex-politicians are arm deep... over in America at least they are having a look... http://www.reuters.com/article/us-agricultural-bk-new-york-fine-idUSKBN1...