Two remittance firms were fined a total of $7.5 million for breaching laws to deter money laundering. The Auckland High Court fined $3.1 m for the Auckland-based OTT Trading Group Ltd and $4.4 m for MSI Group Ltd, based in Christchurch. The fines arose from criminal proceedings under the Anti-Money Laundering and Countering Financing of Terrorism Act brought by the Department of Internal Affairs.
OTT and MSI were part of a company in New Zealand and Australia offering money remittance and foreign exchange services. Manager of the Anti-Money Laundering Division of the Department of Internal Affairs Mike Stone said these companies were at high risk of being used by criminals to conceal and hide the proceeds of crime, and OTT and MSI regularly sought to escape investigation and insurance checks.
Breaches of the act had taken place over a period of five years, and he said "aggravating actions" involved multiple attempts to deceive the agency. An OTT restraining injunction was issued and similar injunctions were enforced in May against three persons affiliated with both companies: Tonghui Qi, Lee Chon Woon, and Ye Duan.
According to the judgment, MSI was incorporated in 2014 but never licensed as a financial service company and never submitted an annual report despite at least $213 million in transactions performed or processed.
Department officials investigating MSI in 2017 were told they exchanged New Zealand currency into Chinese currency and had about 2000 clients, some of whom carried cash to the business premises, while others transferred it to MSI's bank account.
Checking of MSI transactions found that many lacked any verification of the identity of the customer and customers were not asked to provide evidence of the source of their funds.
A member of staff told investigators that MSI was wound up and sold its business to OTT, which also routinely failed to perform even normal consumer due diligence, and did not complete enhanced due diligence on transactions totalling more than $60 m.
Efforts were made to confuse the department by disguising the relationship between OTT, MSI Financial, and MSI Group and by concealing the true nature of the group 's activities.
Stone said the department offered numerous incentives for OTT and MSI to meet their responsibilities, but those efforts were ignored or obstructed, and it would try to impose the penalty and costs.
He said that every year New Zealand companies were laundering an additional $1.3 billion from fraud, and illicit drugs.
Maintaining confidence and faith in the legitimacy of the financial system was crucial, and undertakings that breached money laundering laws will face enforcement action.