The diplomat, the sniffer dog and $300k cash

Secrecy surrounds seizure of money from member of visiting delegation

More than $300,000 has been seized from a foreign diplomat after he failed to declare the vast sum of cash in his luggage. The experienced traveller, part of a delegation invited to New Zealand, was let off with a warning when an airport sniffer dog found the cash.

Officials refuse to reveal the identity of the individual, the country he was representing, the airport, or even the date of the find, to protect the Government’s international relations.

Even the detection dog’s name is secret to protect its privacy.

Now the diplomat is trying to retrieve his money from Customs, which seized the undeclared cash.

Emails released under the Official Information Act show the confiscation led to crisis talks within the Ministry of Foreign Affairs and Trade (Mfat), where a “taskforce” was set up to handle potential diplomatic fallout.

There were also one-on-one talks between the heads of Customs and Mfat, in which Christine Stevenson, the acting chief executive of Customs, vowed to act “without fear or favour”.

While Mfat officials were at pains to not be seen as influencing Customs, they noted among themselves Stevenson had “discretion” in whether the money was eventually returned.

Under anti-money laundering law in New Zealand, travellers entering or leaving the country must declare cash of $10,000 or more, or foreign currency to an equal value.

Customs said the man spoke English and did not satisfactorily explain why he failed to declare the cash.

The money, in several different foreign currencies, converted to the equivalent of $302,000.

“He only said, ‘sorry, sorry it was my mistake’. He could not give me any reasonable excuse for his nondeclaration,” according to the Customs official who questioned him.

“The money was located from various banks and currency exchanges around the world. [Redacted] explained that he travels a lot and collects cash as he goes. He could not provide any receipts to prove the source of the funds.”

Failing to declare cash of $10,000 or more is a breach of the Anti-Money Laundering and Countering Financing of Terrorism Act, which carries a penalty of up to three months’ prison.

The man had a diplomatic passport — although he used another passport to enter New Zealand — but did not invoke diplomatic immunity.

Instead of arresting him, Customs issued a warning because of the “circumstances” and seized the cash.

“[Redacted] wanted to know when he could uplift the cash on Monday morning, I advised that Customs would be detaining the cash and that he would not be getting it back on Monday,” according to the report of a Customs’ official, released under the Official Information Act.

Undeclared cash, a “prohibited good” under the Customs and Excise Act, can be detained and then permanently seized.

If the cash is confiscated, an individual can appeal to Customs to prove the money was legitimate.

Customs told the Herald the man had now sought the return of the $302,000.

At the time of the cash seizure, Customs’ senior lawyer alerted Mfat, which set up a “virtual taskforce” to handle any “bilateral implications” that might arise with the man’s Government.

Emails show Mfat officials researched whether the diplomat faced the same cash-reporting obligations in his home country, which were similar to New Zealand.

“In terms of process, [redacted] has been in touch with Customs to find out a) what the process is from here; and b) how they propose to act,” wrote Ben King, Mfat deputy secretary for the Americas and Asia.

“In doing this, [redacted] was very clear that Mfat was gathering information to understand whether a diplomatic response might be necessary; we were not attempting to influence the process in any way.”

The Herald has referred the response of Customs and Mfat to the Office of the Ombudsmen for review.

A second email from King to members of his taskforce repeated the gist of a conversation between Brook Barrington, the chief executive of Mfat at the time, and Stevenson.

There was a two-step process, wrote King. First, Customs would seize the $302,000 without fear or favour. The second step, noted King, provided the Customs’ boss with an “element of discretion”.

“The process allows the individual from which the funds have been seized to prove the money was legally obtained (ie nothing to do with money laundering). As noted, the Comptroller does have some discretion at this point. Stevenson alerted Barrington that her decision would take account of [redacted] with Customs officials [at the airport on arrival],” wrote King.

“Mfat is very happy to engage if Customs would find it useful to discuss possible avenues in the exercise of [Customs] discretion.” Dr Ron Pol, an expert in money laundering in NZ, said simply bringing a large amount of cash into the country was not necessarily criminal.

But failing to declare the money was a “strict liability” offence, where Customs does not need to prove intent — only that the passenger did not declare the cash.

As such, Pol said, the decision by Customs to issue an official warning, rather than prosecute, “seemed odd” given the passenger was unlikely to forget $302,000 when filling out the arrival card.