NZ’s ‘$1.35b’ money laundry

More people could be barred from being company directors as the Government seeks to improve New Zealand’s tarnished reputation for clean business.

Commerce Minister Kris Faafoi released a discussion paper yesterday that – as expected – canvasses a new publicly searchable register of company ownership.

He also confirmed a statement from the Ministry of Business, Innovation and Employment (MBIE) that the rules about who could be a company director might be tightened.

The changes are being considered after the Panama Papers controversy raised concerns that Kiwi companies and trusts had been a link in the chain in foreign moneylaundering schemes.

New Zealand was ‘‘not a major centre for financial crime’’ but it was not immune, with police estimating $1.35 billion in proceeds from fraud and illegal drugs is being laundered through corporate entities, he said.

Establishing a publicly searchable register on the ‘‘beneficial’’ or true ownership of Kiwi companies could make it much less attractive to use New Zealand as a base for clandestine activities, the discussion paper indicated.

‘‘Knowing the identity of the actual person controlling a corporate entity – the beneficial owner – is a crucial piece of information for law enforcement,’’ it said.

At the moment, the only people who are disqualified from directing companies are people who have been banned in New Zealand and Australia, for example for committing a dishonesty offence.

But MBIE would be seeking input on measures aimed at ensuring people appointed as company directors were ‘‘appropriate’’, and the Government could legislate to improve the regulation of directors ‘‘quite quickly’’, Faafoi said.

‘‘We know . . . that there are still people in New Zealand acting as directors when they have been banned from doing so in other jurisdictions.’’

RNZ drew attention this week to the circumstances of British lawyer Matthew Butterfield who, it said, registered wealth management firm Denton Morrell in New Zealand while serving a five-year ban in Guernsey from acting for a licensed fiduciary or insurance broker.

RNZ reported that Butterfield was central to an international media investigation into alleged money-laundering by interests in Azerbaijan – prompted by the carbomb murder last year of Maltese journalist Daphne Caruana Galizia.

Commenting shortly before the discussion paper was released, Institute of Directors governance leadership manager Felicity Caird said it had been aware a register of beneficial owners was on the Government’s agenda.

She welcomed moves to improve governance, but said this had to be balanced against the fact that New Zealand was a nation of small firms.