Banks told to do more to track child exploitation payments
Banks and other money transfer services need to be more rigorous with customer checks to avoid supporting child exploitation.
The New Zealand Police Financial Intelligence Unit warned identifying payments made by sex offenders was challenging, but necessary.
"We are working closely with our larger remitters, which include banks, around the risk associated with child exploitation," Detective Inspector Christiaan Barnard said.
Australia's anti-money laundering agency Austrac filed civil penalty orders against Westpac bank last week, accusing it of facilitating payments from paedophiles to the Philippines and South East Asia.
It alleged Westpac's 'serious and systemic non-compliance' broke the law 23 million times, and it failed to tell the regulator about more than 19 million international transactions worth $11 billion over five years.
"The failure to pass on information about international funds transfer instructions to Austrac undermines the integrity of Australia's financial system and hinders Austrac's ability to track down the origins of financial transactions, when required to support police investigations."
Westpac New Zealand distanced itself from the allegations, however told RNZ Business that some of its systems and processes were similar to that of its Australian parent.
Barnard said it could be difficult to track payments.
"[The transactions] pose some challenges in terms of identifying because often they are quite small payments, which are not consistent with the trends that we are generally looking for with money-laundering."
Police were encouraging banks and other providers to do rigorous due diligence on their customers, he said.
"We are getting some variation across the different sectors, but, by and large, we are seeing some really interesting intelligence arise out of the customer due diligence [process] and particularly as it relates to the child exploitation payments that we have been observing.
"There is a small part of the remittance (money transfer) sector that operate in an unregulated manner and are either partly or entirely non-compliant."
Barnard would not name companies which had failed to report suspicions to police.
New Zealand remains at risk of money-laundering and terrorism financing, especially through money transfer services, according to a police report.
The 2019 National Risk Assessment of money laundering and terrorism financing listed international wire transfer services, alternative payment methods and emerging technology as vulnerabilities of highest priority.
"The scale of money moving through these channels continues to present opportunities to money launderers," the report said.
Cash remained a risk because it was difficult to track.
"We have seen a trend towards more cash being printed yet that is not consistent with the trend towards less cash being used for the payment of salaries," Barnard said.
Police had upped the ante against terrorism financing, following the Christchurch mosque attacks in March, including improving its systems to better detect illegal activity, however Barnard would not detail the changes.
"We have investigative techniques that I am not at liberty to disclose . . . But, we have looked at improving our ability to respond in that space," he said.
The report said the financing of terrorism in New Zealand was small scale, however established international terror groups posed risks.
"[Risks are] that radicalised individuals will support overseas groups, and that terrorism financing networks will abuse New Zealand's vulnerabilities to [launder money]."
Barnard said authorities had not seen either of those happen.
This article was originally published on RNZ and re-published with permission.
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