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Money Laundering in the Electronic Age - by Sharon Ritchie



Ever wondered how money laundering is dealt with now that money is electronic? Not by handing over banknotes in brown envelopes, to be sure.


The essence of laundering is moving money about so its dirty origins can't be seen.. If someone is laundering money, they are involved with serious crime. Laundering itself is now a crime, so that has to be hidden too.


Serious criminals are prepared to break the law in all sorts of ways. They will threaten anyone they think will expose them. Money launderers are part and parcel of that. They are scared of being


In New Zealand, money laundering was not illegal at all until a few years ago. It didn't need to be hidden and there was nothing to be found out for. Lawyers could make money laundering quite legally by just not asking questions about the money they were dealing with, and claiming legal privilege if anyone asked about what was on their files.


If it was done through shell companies, with no bank accounts in New Zealand just using the lawyer's trust account, that would be what one of the judges involved would call "watertight", and it still is, at least for "foreign trusts", where there is nobody involved who knows where the money comes from who is also in New Zealand, except the lawyer.


Then there was a big change.




The big difference between money laundering and other crimes is that the burden of proof is reversed. You are convicted of the serious crime of money laundering if you are required to explain how you got rich and you don't.


You are also convicted if you are obliged to report "suspicious transactions" and you don't.


Anti-money laundering laws were passed in 2009 so the end of legal laundering was coming.


The laws weren't brought into force though so they were useless. New Zealand lawyers could keep laundering through shell companies without risk, unless the government actively pursued launderers - which it wasn't going to do.


Launderers are the support system of the serious criminals. Those serious criminals are involved in government corruption, child pornography, drug smuggling, people trafficking and financing terrorism.


After pressure from the international community, New Zealand required shell companies to have a director in New Zealand from 2015 and lawyers were required to report suspicious transactions. But that didn't happen until July 2018.


In the meantime, how did the lawyers and judges ensure that big money could be laundered safely, without putting themselves at risk? Especially as the evidence is so easy to get now that money is moved electronically.


Shifting big money used to mean sports bags full of banknotes.



Some launderers of drug money still do that. It's a big problem for the main New Zealand drug dealers. Sacks and sacks of New Zealand dollars are anonymous but they can't easily be transferred to the syndicates let alone Columbia or Mexico.


The money has to be put into the banking system to be laundered, and that is electronic - which is what makes it so easy to get out of the country. It's what makes New Zealand and other offshore laundering hubs function.


Drug dealers with a lot of NZ cash pay little people to put small cash sums into different NZ banks. The authorities call those "smurfs". Sometimes they get caught, but the people caught are the little "smurfs", not the dealers.



In any case, the money ends up being transferred electronically back to the dealers and suppliers. Do the New Zealand authorities not know that? of course they do.

Can the New Zealand authorities not trace that? of course they can. Sums of about $4000 are monitored routinely by the police. Of course they know. So how are the launderers getting away with it?


We know that the Fraud team in Wellington agreed not to record reports of the offences. Evidence of that was produced in open court to Judge Kerry Smith but he said he wasn't going to allow it. The evidence showed Inspector John van den Heuvel agreeing with Geoff Davenport to suppress evidence. Judge Kerry Smith thinks Geoff Davenport is a really good lawyer.


You may have heard lawyers and judges saying "there is no evidence". Of course not. The launderers have got protection under New Zealand law, by the judges bringing in rules that evidence can be hidden.


The total opposite of international money laundering laws.


That's where the brown envelopes might come back in.





Though actually we doubt it was "bread" in brown envelopes that the lawyers and judges were offered. It's cleverer than that. Remember this is the Law Lords and their mates, often their Ladies.


Employment lawyers all over the world have been suppressing evidence of sex offences for decades by paying the victims off and requiring them not to make the allegations again. In most countries they do it quietly because they know it's an offence by lawyers to suppress evidence of offences, and they know they could only enforce by exposing the whole story and risking the criminal prosecution of their clients. You'd hope lawyers wouldn't hide evidence, but if they think they can get away with it, they do.


In New Zealand, Graeme Colgan as the Chief Judge of the upper employment tribunal did it openly in 2015. That is a criminal offence, except that if a judge does it they have legal immunity. You'd hope judges wouldn't do that, but they know they can get away with it and they do.


Then employment lawyers started hiding evidence routinely. Pushed to obey the law or support the coverup, faced with a challenge by the whistleblower Geoffrey Brown, Judge Corkill sent Geoffrey Brown to prison for exposing privately-run thefts and corruption in the Tauranga City Council in 2017.


Corruption corrupts a society. Geoffrey Brown kept exposing the corruption but nobody listened. They listened to Judge Corkill. Who wouldn't listen to a judge rather than the "disgruntled" person he has destroyed?


By 2020 the Mayor of Tauranga couldn't stand it any more and resigned.


Graeme Colgan got a nice job investigating the Council when he privately investigated the corruption in 2020 and his report was also kept private. Nice work, Graeme. How much did you get paid? - oh, it's confidential?


Were there brown envelopes involved? We doubt it. We think it was just trading in influence.


There's a tangled web of mates involved and they all get their financial rewards electronically, covered by documents. Corruption corrupts - ask the Italians. They've been trying to deal with this for much longer. If it's in your judicial system, rewards can be as hidden as judges not being hounded out of their jobs for grassing up their mates, or as obvious as judicial appointments for people with highly questionable histories. Or they can be nice jobs, like Graeme Colgan reporting, for money, confidentially, on a coverup system he helped set up himself.


The point about the suppression of evidence is that it's all you need to run money laundering.


If you have judges prepared to enforce contracts to suppress evidence, you have a watertight system for covering up theft and fraud.


And for covering up moving the proceeds of theft and fraud around.


And for covering up moving the proceeds of drug dealing, child pornography, people trafficking, and just plain theft from government agencies ... such as the money paid to private lawyers to do coverups of transferring the proceeds for that.


We even think there might be judges out there who were tricked into this and want out, but it's much too late now.


These New Zealanders have to hope the international authorities won't realise it also works for covering up the financing of terrorism.


If you start weaving a web, you might get caught.











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