Mother-son money deals sentence a NZ first
A mother and son who transferred money for a ChineseCanadian businessman accused of running a $202 million pyramid scheme are the first in New Zealand to be sentenced for criminal offending under the Anti-Money Laundering and Countering Financing of Terrorism Act.
In 2018, the Department of Internal Affairs brought charges against Qiang Fu, his mother Fuqin Che and the Auckland CBD finance company Fu is the sole director and shareholder of, Jiaxin Finance.
The offending is connected to another case brought by the Police Commissioner against wealthy Chinese-Canadian businessman Xiao Hua Gong, also known as Edward Gong. Those proceedings are unresolved.
In November, Fu, Che and Jiaxin Finance were found guilty on charges including failing to conduct customer due diligence, failing to keep adequate records relating to a suspicious transaction and failing to report a suspicious transaction. Che was also found guilty of structuring a transaction to avoid the application of one or more anti-money laundering requirements.
At the High Court in Auckland yesterday, Justice Tracey Walker fined Jiaxin Finance $2.55m. Fu was fined $180,000 and Che was fined $202,000.
During Justice Walker’s hourlong sentencing Fu and Che, wearing a facemask, were seated in the dock with an interpreter seated between the two.
The defendants transferred $53m in funds for Gong from China across 311 individual payments between April 2015 and May 2016.
Justice Walker said the sentencing of Fu, Che and Jiaxin Finance would be the first sentence for criminal offending under the Anti-Money Laundering and Countering Financing of Terrorism Act.
‘‘This case is all about the framework and not substantive money laundering,’’ Walker said.
The Act came into force in June 2013 and introduced a rigorous regime to monitor New Zealand’s financial system to prevent and punish the financing of terrorism and money laundering, she said.
‘‘It constituted a significant step up in the regulatory framework governing financial institutions and transactions in New Zealand.’’
Justice Walker said Jiaxin Finance was a family enterprise where mother and son ‘‘acted in concert’’ and Gong had been a customer of Che, through another company, from as long ago as 2011.
Gong was arrested in Canada in December 2017, accused of running a $202m pyramid scheme.
Police froze and seized about C$63m (NZ$69m) in New Zealand bank accounts as well as two Auckland properties worth about $3m.
Justice Walker said the offending was premeditated, prolonged and there had been concealment but it was important to remember this was a compliance case and not a substantive money laundering case.
Prosecuting lawyer Sam McMullan said the defendants structured services to one client to enable him to transfer funds into New Zealand anonymously and without the ability of the authorities to be aware of the transactions. That structure was designed to defeat the purpose of the Anti-Money Laundering and Countering Financing of Terrorism Act, he said. ‘‘There was an intention to subvert the purposes of the Act for that one significant customer.’’
The ‘‘insidious’’ offending took ‘‘quite some time’’ for authorities to uncover, particularly as a result of misleading statements made by the defendants, McMullan said.
‘‘What was created by that scheme was something difficult to detect. Their conduct was an intentional flouting of the Act. It must be addressed accordingly.’’
Qu’s lawyer David Jones, QC, said the Crown alleged the defendants’ offending was part of a wider scheme to anonymise the transaction but that was not the case. ‘‘What we have is someone who is seen as a very important and influential person who wants to transact business in New Zealand.’’