building robust anti-money laundering integrity systems 11th annual financial markets law conference...

Building Robust Anti-Money Laundering Integrity Systems

11th Annual Financial Markets Law ConferenceAuckland, Rydges

Wednesday 17th June, 1:20pm

Suzanne Snively (ONZM), Chair Transparency International New Zealand

[email protected]

www.transparency.org.nz 1

mailto:[email protected]

TRANSPARENCY INTERNATIONAL NZ (TINZ):• Transparency International New Zealand Inc (TINZ) is an

incorporated society• Parent organisation, Transparency International, set up by

Jeremy Pope in 1993, accredits the NZ Chapter. TI facilitates international best practice in its over 100 Chapters.

TINZ OBJECTIVES INCLUDE:• to promote transparency, good governance and ethical

practices in the NZ private, civil society and public sectors;• to promote ethical business practices by NZ business

offshore, and transparency and good governance in our region

TINZ & NZ Financial Institutions Can Work Together


TINZ & FINANCIAL INSTITUTIONS CAN WORK TOGETHER• According to TI, since 2009, fines imposed on the

international banking sector alone total at least US$232 billion and this is expected to rise to US$300 billion by 2016.

• In contrast, there are opportunities for the New Zealand financial system to have a higher global profile and better terms of business for its membersNZ Financial Services and TINZ can work together to build robust anti-money laundering and other integrity systems

TINZ & NZ Financial Institutions Can Work Together


•New Zealand has always scored in the top 5 with one of the least corrupt public sectors according to the TI CPI.•For a country that likes to win at everything it does, though, New Zealand had disappointing news last year.•New Zealand dropped in the Transparency International rankings of the least corrupt public sectors. Falling to #2 for 2014, NZ’s score remained at 91, Denmark’s score rose to 92•The fall in NZ’s ranking is a wake up call.

NZ can take a leadership position by quickly implementing the Anti-money Laundering (AML) provisions once the Organised Crime and Anti-Corruption Bill becomes law

Countries with Trusted Public Sectors are Unique


NEW ZEALAND IS:• one of the very few countries in the world with a public

sector that demonstrates high standards of ethical, transparent, and corruption free practices

• successful at operating by convention as well as regulation• observant of international anti-corruption conventions• committed to maintaining good governance and

transparency across the public sector, community, NGO, private and financial institutions

• providing leadership, expertise and funding to anti-corruption and transparency work in the other countries

These above factors are more effective antidotes to corruption than more punitive systems

Countries with Trusted Public Sectors are Unique


Banks and other Finance Services can benefit from New Zealand’s trusted public sector, good governance practices and strong integrity standards -(1) Opportunity to be proud(2) Leading to a growing and more sustainable customer base (3) Through leadership role in anti-money laundering, NZ financial institutions can strengthen their balance sheets(4) Creating a positive spiral, increasing the stability of the NZ financial market, underpinning a stronger economy

GENERATING INFINITE POSSIBILITY (Instead of constraint and finite resource limitation)

(1) Opportunity to be Proud


TI Corruption Perceptions IndexTransparency International’s Corruption Perceptions Index (TI CPI) ranks countries’ public sectors by levels of corruption, as determined by expert assessments and opinion surveys.

TI National Integrity System (NIS) AssessmentTINZ examined whether this perception of New Zealand was valid through the 2013 National Integrity System Assessment. According to the 2013 NZ NIS, New Zealand’s institutions generally scored well for integrity.



The core message of the 2013 NZNational Integrity System Assessment: “stronger action to promote and protect integrity in NZ is overdue”. www.transparency.org.nz/nis

The SFO/TINZ developed on-line training,for employees to ensure that NZ businesses are as good as their public sector is perceived.www.transparency.org.nz/anti-corruption-training

www.transparency.org.nz

New Zealand

National Integrity System

Assessment

Integrity Plus 2013



There are 7 key areas that enhance bank and finance company competiveness profitability, productivity while providing a an opportunity to grow your overall asset base. 1. Reputation and brand are powerful galvanisers and have

unrealised potential to draw global interest in New Zealand products and services, increasing economic activity, business revenue and the size of the customer base available to financial service providers

2. Absence of corruption means a lower cost of doing business every day in New Zealand, compared to other places

(2) Strong Integrity Systems Grow Customer Base


The other 5 of the 7 key benefits of a trusted country that enhance competiveness, profitability and productivity are –3.Lower cost of debt4.Easier market access5.Higher rate of return on investment6.Staff prefer to work for ethical organisations 7.Ethical organisations achieve greater customer value.

For most NZ organisations, the 7 benefits listed above are largely unrealised – to be realised, financial services need to focus on good governance that sets a strategic direction with

plans aimed at gaining the returns from them.

(2) Strong Integrity Systems Grow Customer Base


In 2010, the United Nations found that:“Global intergovernmental agencies combating illicit financial funds flows have been slow to react to the electronic era of banking and the use of that system to launder illicit money.” - global governance failed to keep pace with globalisation.For example:Recent US Treasury action against HSBC resulted in a deferred prosecution in return for an agreement from HSBC to address non-compliance with AML regulations. The agreement included (a) forfeiture of illegally transferred funds; (b) a fine and (c ) the enforcement of closer monitoring of the HSBC’s money laundering compliance.

.

(3) Global AML Leadership Will Strengthen Your Balance Sheet


By taking an assertive position now on AML, the New Zealand banks and financial services providers will prevent costly

court actions

On the positive side, adopting AML best practice: provides national security

AND gives NZ financial institutions a distinctive attribute to

promote in a world focused on responsible investment



Trust is an economic as well as a constitutional and social value. International perceptions of NZ’s trusted public sector, benefits the financial system. These are key indicators of low country risk.New Zealand’s Organised Crime and Anti-Corruption Legislation Bill reflects our Government’s ongoing commitment to combat organised crime globally. New requirements are that financial institutions will need to report wired transactions of over $1,000 and all physical cash transactions of $10,000 to the NZ Police financial intelligence unit. These requirements will align NZ with international best

practice for countering money laundering.



Two important amendments to AML provisions of the Crimes Act are covered by the omnibus bill: (1)acknowledges that money laundering is often intermingled

with a range of other criminal activities and frees up the police to prosecute even when money laundering is not the sole offence, and

(2)clarifies that the prosecution need not prove that a defendant had an intent to conceal the proceeds of crime, although that may result from a money laundering transaction (responding to concerns raised by the Financial Action Task Force).



“The fact that banks are already required to collect identity information from their customers means that they are unlikely to notice any change as a result of these new

requirements. Indeed, if anything financial institutions could make a case of theft, which combined with the misuse of

personal information, is estimated to impact on over 190,000 New Zealanders each year,”

according to Justice Minister Amy Adams in her comments introducing the second reading of the Crimes and Anti-Corruption Legislation Bill in May.



“Collectively, the amendments in the bill will ensure that New Zealand has a robust legislative framework that complies

with best practice. The bill will ensure that those engaging in organised or corruption criminal activities will be subject to the full force of the law by removing current limitations on

domestic law and enhancing New Zealand’s ability to internationally cooperate.”



- Being global leaders in AML provides a distinctive advantage to New Zealand financial organisations

- New Zealand can be ahead. A World Bank report in 2010 found that only 2% of 124 assessed jurisdictions were fully

compliant with existing standards of AML dealing with Politically Exposed Persons (PEPs), high net-worth

individuals with dubious reputations.- You can spread the news about the (7) benefits of strong

integrity systems as these can be part of the planning and revenue growth strategies not only of your own business, but also of your customers and other stakeholders

- This means a stronger balance sheet for you AND for them



BUILDING STRONG INTEGRITY SYSTEMS CREATES A POSITIVE SPIRAL FOR THE NZ FINANCIAL SYSTEM AND ECONOMY- By being proud of our trusted public service and building

your own authentic brand around this- By promoting good governance and just business through

strong integrity systems such as robust AML practice, you are taking the steps to build your customer base, your stakeholder/investor support and to realise greater returns.

- Good governance, setting a strategic direction to maximise the 7 benefits of this, enhances innovation, productivity and profitability, in this way generating more quality stakeholders and a stronger balance sheet

(4) Positive Spiral for NZ Financial Market & Economy


BUILDING STRONG INTEGRITY SYSTEMS CREATES A POSITIVE SPIRAL FOR THE NZ FINANCIAL SYSTEM AND ECONOMY

This is what strengthens financial markets and builds an economy. It also provides the tax base for sustainable

business, public and community services and to support the governance processes to keep the NZ public sector as good as

it’s perceived



EVERYONE OF YOU CAN MAKE A DIFFERENCE

Being proud of our values and those of New Zealand’s public sector

Integrating these values into your routine business practice Being a global leader in anti-money laundering practice

In this way: New Zealand’s asset of trust becomes an infinite asset for

growing your balance sheets and stakeholder base

GENERATING INFINITE POSSIBILITY (Instead of constraint and finite resource limitation)




Working together to address corruption, you and other New Zealanders can help grow the world’s yellow zones!

22www.transparency.org.nz

DISCLAIMERThis proposal is for information and discussion

purposes.

Lest we forgetTransparency International (New Zealand) Inc. cannot accept any liability whatsoever for the consequences from the use of

this presentation by any party in any circumstances.

Comment, including reference to others’ knowledge, is actively sought and will be considered in future discussion.

Thank YouRemember the past, transform the future

Be proud of practical achievements, make the prosperity boat go faster


building robust anti-money laundering integrity systems 11th annual financial markets law conference...

Documents

tinz financial institutions

transparency work

nz financial market

nz business

new zealand financial

anti corruption

nz private

members nz financial