NZ firms linked to money laundering

by MICHAEL FIELD

Criminals are using shell companies set up under New Zealand's lax company laws to launder money.

Companies created by an Auckland firm operating out of Queen St have been linked to Russian crime, a Mexican drug cartel and Romanian extortion.

A 16-month Fairfax Media investigation has also tied companies created by Geoffrey Taylor and his sons Ian and Michael, who work out of 363 Queen St, to a company that smuggled arms out of North Korea.

The government admits there is a problem but says it has had other priorities.

The Taylor operation is not illegal, but the companies they create are connected to serious crimes in a number of countries.

They set up a shell company, Bristoll Export Ltd, that helped move part of the proceeds of a $245 million Russian tax fraud out of Moscow and into Swiss bank accounts. London-based Hermitage Capital Management hired a lawyer to find out what happened, but he died in a Moscow jail.

Hermitage chief executive Bill Browder told the Sunday Star-Times he was "highly motivated to make sure all aspects of this story see the light of day", and that he had a "treasure trove of information" about New Zealand companies' ties to the scandal.

The Taylors set up complex webs of companies, and one of them, linked to Russians in Cyprus, is administered out of a home in Albany near Auckland.

A United States Justice Department investigation into the banking giant Wachovia, also tied Taylor-linked companies to the movement of drug money. Wachovia was fined more than $202m for helping disguise the illegal origins of up to $479 billion for Mexican drug lords, predominantly the murderous Sinaloa cartel. Four Taylor companies "filtered" $50m in drug money through banks in Latvia and on to Wachovia. Each of the companies had just one director – Stella Port-Louis, 32, of the Seychelles, until recently a director of around 300 New Zealand companies.

Canada's Financial Transactions and Reports Analysis Centre, which assessed Wachovia, identified the "exploitation of New Zealand's weak company registration laws" as a problem.

International expert Martin Woods said shell companies were "ideal vehicles for money launderers, tax evaders and arms traffickers".

In 2009, a Georgia-registered cargo plane flew from North Korea to Bangkok and was found to have 35 tonnes of arms on it. The plane was chartered by SP Trading Ltd, a company set up by the Taylors.

The company's director was a Burger King cook named Lu Zhang, 29, who was later convicted of 75 breaches of the Companies Act for giving false addresses on registration forms, something she described in court as "one little mistake".

She is also a director of companies linked to Romanian Lorenzo Kiss, who is under arrest over an alleged $14.5m embezzlement.

Ian Taylor told the Sunday Star-Times media reports connected dots that weren't there.

PricewaterhouseCoopers Auckland's forensic services director Alex Tan said using company service providers had become common here.

"The money-laundering and even terrorist financing risks associated with them are high, particularly considering they can be set up over the internet."

Source: Sunday Star Times

Foreign students used as front to launder money

A Wellington businessman was today sentenced to nine months' home detention for tax evasion, fraud and money-laundering using foreign students as a front and involving more than 350,000.

Walter Law, also known as Xu Liu, 45, had earlier pleaded guilty in Wellington District Court to five charges of tax evasion, six charges of providing false income tax returns, 21 charges of aiding a company to file false GST returns, one charge of aiding a company to file false income tax returns and five charges of aiding a company to evade tax.

Law also pleaded guilty to one charge of money laundering under the Crimes Act.

Tony Morris, Inland Revenue's assurance manager investigations, said Law conducted his activities using separate companies and unregistered entities which he owned or controlled.

"Our initial investigation into one of Mr Law's companies, Holiday KTV Entertainment Limited, revealed that significant amounts of cash were unaccounted for and the company had only reported its Eftpos transactions to Inland Revenue. Our subsequent analysis showed the company had evaded GST amounting to just over $68,000, PAYE of over $41,000 and Income Tax amounting to over $29,000," Mr Morris said in a statement.

Inland Revenue's investigation into Law's foreign exchange and travel businesses found he deposited $2.5 million into bank accounts in the name of two overseas home-stay students. The students said Law had control of these accounts and they had no knowledge that the funds were used to repay loans on properties owned or controlled by Law.

"Mr Law's foreign exchange and travel businesses made a surplus of $540,000 between 2004 and 2010," Mr Morris said.

"These entities not only failed to return around $170,000 in income tax to Inland Revenue but these funds were deposited into the students' bank accounts and recharacterised as loans from a private trust in China. This money was the undeclared income from the business transactions and this action amounted to money laundering," Mr Morris said.

Law's offending resulted in a loss to Inland Revenue of just over $350,000, which had since been recovered.

"Mr Laws deliberately tried to evade his tax obligations by not declaring his income and hiding cash in other people's bank accounts. This case is a further reminder that Inland Revenue is using increasingly sophisticated analysis to detect those trading in the hidden economy," Mr Morris said.

"Businesses and individuals doing the right thing can be confident that Inland Revenue will detect those evading their obligations and those cheating on their taxes should be aware that we will take action when we detect deliberate non-compliance."

Law was also sentenced to 200 hours' community service.

Source: NZ HERALD

N.Zealand Consultation paper on anti-money laundering

Justice Minister Simon Power has released a consultation paper on proposed regulations to prevent money laundering and the financing of terrorism.

The proposals and codes of practice for financial institutions and casinos are integral to the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.

It was always intended that obligations for those institutions would be brought into force after the legislation was passed to allow regulations to be developed.

The consultation document seeks public feedback on the content of the regulations, and proposes that obligations in the Act come into force two years after regulations are published to give the industry time to prepare for the new system.

“This Act is an essential component of New Zealand’s fight against organised crime, allowing the enforcement authorities to follow the money trail through financial systems, and enabling Police to use the Criminal Proceeds (Recovery) Act to attack those profits,” Mr Power said.

“It engages the help of financial institutions and casinos to detect and deter money laundering and terrorist financing.

"Officials and the industry have worked together to develop regulations which strike the right balance between giving effect to the law and minimising red tape.”

Mr Power also confirmed arrangements are in place to help financial institutions if they feel they have been caught up unintentionally in the reforms as a result of the definition of financial institution being broadly defined.

“Some of those situations will be dealt with in regulations, and some I will consider on a case-by-case basis through a ministerial exemption process.”

The Ministry of Justice has published the exemptions policy, which sets out the process for making an application for exemption under the Act.

“The regime will affect a wide range of businesses and it’s important that all financial sector organisations take time to consider whether the Act will affect them.”

Information on the exemption process and the regulatory consultation document are available on the Ministry of Justice website.

Submissions on the consultation document close on 6 September.

Source: Scoop

NZ raids over money laundering

An Australian expatriate living in Vanuatu will face charges over a $A100 million ($NZ119.4 million) money laundering scheme that police say could involve up to 400 people after raids involving New Zealand.

Raids were carried out on Monday in Australia, New Zealand and Vanuatu and Australian police warned more arrests will follow, including from the "higher end of town".

Robert Francis Agius, 58, a former Sydney accountant, was on Monday ordered to be extradited from Perth to Sydney to face charges of conspiring to defraud the commonwealth, conspiracy to cause a loss and to laundering a total of more than $A1 million.

The Australian Federal Police (AFP) told Perth Magistrates Court it will be alleged the father of three evaded up to $A13 million in taxes on $A100 million of his customers' business profits.

They say he has received $A1.4 million in commissions, through foreign bank accounts, since 2000.

It's alleged Australian customers would transfer money to accounts in Vanuatu and New Zealand, claiming them as a business expense.

The money would then be returned to Australia less commission in the form of a loan, and a repayment would be treated as a tax reduction.

Agius told the court he had been arrested on Monday at the home of a Perth friend, in front of his friend's child.

Commonwealth Director of Public Prosecutions (DPP) prosecutor Pauline Caust said since November 2000, Agius had set up more than 49 bank accounts in foreign company accounts, allegedly used to launder the money, before it was deposited back in his clients' accounts.

Agius had charged clients $A8,000, ad hoc fees of between 3% and 6% and annual US fees of $US1,350 ($A1,445), she said.

Agius allegedly used the companies of trusted friends, including the late Sydney accountant Owen T Daniel, to recruit clients.

Caust said 13 of 20 of Agius's clients had been audited so far.

She said Agius held at least five passports and had used false addresses on incoming passenger cards on flights to Australia because he did not want his Australian premises to be raided.

Company names incorporated in different jurisdictions, mainly the United Kingdom, Ireland, the Unites States, Vanuatu and New Zealand, were used by Agius to establish New Zealand bank accounts, Caust said.

Agius, who was not represented during Monday's hearing, admitted to having bank accounts in New Zealand but said he did not do business in Australia.

He described the charges he would face in New South Wales as "trumped up", facetious and "nebulous matters".

"The figures and the documentation just aren't correct," Agius said.

Agius told Magistrate Elizabeth Langdon he was not a resident of Australia and did not work in Australia or hold an Australian passport.

"Australia doesn't control New Zealand and it certainly doesn't control Vanuatu," Agius said.

But Langdon said given the seriousness of the allegations she would grant a warrant to extradite Agius so he could appear in court in Sydney on Wednesday.

The AFP said further arrests were expected, with up to 20 people being investigated.

A total of 400 people would be contacted by letter, asking them to come forward, because they had been identified as participants in the scheme.

"Those people we believe knowingly participated in not paying their share of tax and further, they were involved in this money laundering scheme. We expect to make quite a few more arrests," AFP economic operations commander Warren Gray said in Sydney.

"We're certainly concentrating on the higher end of town at the moment."

Police in Vanuatu said four businesses in the island nation were raided today but no arrests were made.

An AFP spokeswoman said 19 search warrants were expected to be executed in Vanuatu.

Three New Zealand premises were raided but no arrests were made, the spokeswoman said.

The New Zealand raids are believed to have been carried out at a bank, an accounting firm and a private residence.

The Australian Taxation Office (ATO) says it is also conducting 80 audits examining allegedly false tax deductions exceeding $A90 million.

"Anyone involved in these schemes is encouraged to come forward voluntarily and co-operate with the authorities," it said.

http://www.amlosphere.com/australia/aml/nz-raids-over-money-laundering.html

Major firms linked to accused money launder Robert Agius

By Peter Gosnell
June 17, 2008 12:00am

SOME of Australia's biggest companies have unwittingly enriched the man accused of running a $100 million money laundering scheme.

Telstra, Optus, the Commonwealth Bank of Australia and National Australia Bank are among a list of high-profile firms counted as clients of Pyrmont-based security and investigative software outfit Nuix Pty Ltd.

As revealed exclusively in The Daily Telegraph yesterday, company documents show that alleged money launderer Robert Francis Agius is the sole director of Ferodale Limited, a New Zealand-registered company which owns 243,600 shares in Nuix.

Ferodale is owned by New Zealand businessman Anthony Bowden, currently under investigation by New Zealand's Companies Office and Securities Commission following the $80 million collapse of Five Star Consumer Finance group in New Zealand late last year.

In a statement yesterday, Nuix said it stood by its position as a reputable leader in the provision of software for forensic email discovery.

However Nuix's directors, who include former Macquarie Bank adviser and LookSmart director Anthony Castagna, refused to say whether Nuix received any funds from Ferodale, Agius or Bowden, in exchange for the shares.

"Nuix Pty Ltd acknowledges that while Ferodale Limited is one of a number of shareholders of Nuix, Ferodale's associated entities and directors have no management or other involvement with Nuix," Nuix chief executive Eddie Sheehy said.

"The investment by Ferodale Limited is legal and was made and accepted in good faith."

Any such funds could potentially be subject to legal processes under proceeds of crime legislation brought by investigators from Project Wickenby, the multi-agency probe into tax evasion which is alleging Agius to be the mastermind of Australia's biggest money laundering scheme.

Spearheaded by the Australian Federal Police and codenamed Operation Starlifter, the investigation is examining whether up to 400 Australians are evading tax by shifting it through offshore tax structures in Vanuatu and New Zealand set up by Agius.

Source: The Daily Telegraph