Money laundering in New Zealand amounts to well over a billion dollars a year, but some of the techniques used are extremely basic, new research has revealed.
The findings come after the country’s five big banks got together to work out how money launderers linked to meth dealers were able to get cash into our financial system.
One of the approaches taken was simply to deposit large sums of cash at branches at the end of the working day, when staff who were preparing to shut up were less likely to ask questions.
Criminals have also evolved their tactics over the past five years, including using dozens of people known as “smurfs” to make deposits, mainly at ATMs, one bank found.
The information has come to light in a threat assessment published by the Financial Crime Prevention Network. Its members include banks ANZ, ASB, BNZ, Kiwibank and Westpac, as well as NZ Customs and Police and its purpose is "to protect New Zealand against financial crime by working together to create and share intelligence, disrupt financial crime, and increase the nation’s resilience against the threat of financial crime".
The banks analysed police investigations - named Ida, Martinez and Brookings - which ran between 2015 and 2021, all of which took down major professional money launderers.
Among its findings was that: "Offenders would arrive late in the day when depositing large amounts in-branch. The bank believes the offenders did this to avoid further questioning by staff who were keen to finish for the day.”
This practice was brought to an end when the bank stopped accepting large deposits prior to closing because it was also seen as a “physical security issue”.
Smurfs, mules and multiple deposits
Three banks provided case studies for the assessment. Some of the other findings included:
* Extensive use of third-party depositors known as "smurfs"
* Use of mule accounts, when someone allows their bank account to be used to transfer illegally-acquired money
* Multiple cash deposits under reporting thresholds made on the same day, to the same account at different branches
* Opening personal accounts on a limited-duration immigration visa, the account is then used by third parties after the person leaves the country.
Yvonne Tahana explains the techniques and tactics used by money launderers, and how banks and authorities tackle them. (Source: 1News)
One bank found that professional money launderers have evolved over about five years from having a smaller number of people depositing large amounts to having dozens of smurfs depositing cash mostly via ATMs.
A second bank found the criminal abuse of smart ATMs is a growing risk. "In Auckland alone, suspicious cash activity occurring via ATMs has almost doubled year-on-year over a two-year period," it said.
Millions of dollars from criminal drug groups
The report also lays bare how much cash is potentially able to be money laundered.
"Money laundering generates approximately $1.35 billion in New Zealand each year, mainly from transnational organised crime (TNOC) linked to illicit drug activities," it said.
The network has also been able to quantify that between 2018 and 2021, $107 million was deposited by four distinct criminal groups - mainly from drug offending.
The Banking Association, which represents all of our biggest banks, said in a statement that millions of transactions are processed securely every day.
"Unfortunately, international criminal networks look for ways to exploit the services we provide to commit crime,” the association said.
"All banks have systems in place to help them comply with their anti-money laundering obligations, including processes to monitor and report suspicious activity. Banks are also subject to continuous supervision from the Reserve Bank of New Zealand.
"We're committed to preventing financial crime and protecting our economy. Collaborating with police to share learning and raise awareness on how we identify suspicious activity and deter financial crime helps us identify opportunities to enhance our approach across the banking industry."
In 2021 an important international evaluation found New Zealand's measures to combat money laundering and terrorist financing was delivering good results, but amongst other improvements needed was supervision of our "banking sector, in particular, needs greater resourcing".
Follow more of Yvonnne Tahana’s money-laundering investigation over coming days on 1News.co.nz and 1News at 6pm.
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