Revealed: $15m scam

David FisherDavid Fisher is a senior reporter for the NZ Herald.


An immigration scheme to attract wealthy foreigners to New Zealand is suspected of having been used by two rich Americans to launder $15 million in "illicit funds".
The discovery of suspicious bank transfers by the police's financial intelligence unit (FIU) has led to claims the Investor Plus scheme is running without proper scrutiny.
The two Americans moved large amounts of cash in and out of this country - including through government bond accounts.
It was reports from banks that led to an FIU report raising "serious questions and concerns that both individuals have breached New Zealand immigration rules and potentially laundered illicit funds through New Zealand".
The Investor Plus scheme grants residency to rich foreigners who agree to invest at least $10 million here. It's the same scheme that saw internet entrepreneur Kim Dotcom and Hollywood director James Cameron become NZ residents.
The Government is preparing to put the scheme into overdrive with a "New Zealand Investment Attraction Strategy", which aims to bring in $3.5 billion in the next three years from wealthy migrants.
The FIU tracked the Americans' entry into New Zealand to the Investor Plus scheme, finding they set up a company and both signed on as directors, while opening separate accounts on the same day to receive the investment money needed to qualify for New Zealand residency.
To do so, they needed to keep the cash invested in New Zealand for three years, at which point their residency would become permanent.
But the money didn't stay that long. The first investor brought in $10.5 million, then sucked the money back out less than two years later and put it into his own account in the United States.
The second investor put about $5 million into an Immigration NZ portfolio account, believed to be a facility through which government bonds are bought. An additional $5 million was also brought into New Zealand and appears to have been held in the private sector.
The FIU found that 18 months after bringing the money in, the would-be Kiwi put the cash in a corporate account, then in another domestic bank account a day later.
"When questioned, [the investor] was unwilling to provide details about the large account withdrawal and soon after he closed his [Immigration NZ] portfolio account."
The FIU said the transfers were still being investigated.


Its report stated they appeared to "fall into the 'layering' stage of money laundering, where the goal is to create a complex series of financial transactions to disguise the source and/or ownership of the funds".
The two men pulled the cash out of NZ before the Investor Plus two-year audit, which checks to see that an applicant still meets the criteria.
Immigration NZ assistant general manager Stephen Vaughan said "existing controls in the Investor Plus process" were behind the two Americans withdrawing their application for residency.
"Both individuals withdrew their investment funds from New Zealand before INZ conducted their two-year assessment check and as a result, they do not hold New Zealand residence. Neither individual is currently in New Zealand."
He said Immigration Minister Michael Woodhouse had not been told of the incident because it was considered an "operational matter".
Labour immigration spokesman Iain Lees-Galloway said he was concerned at what he believed was a lack of scrutiny of the Investor Plus scheme. He said there was also no detailed information spelling out the benefits of the scheme; officials did not produce answers at a select committee hearing last year.
"The Immigration Minister should be making it a priority to satisfy himself the Investor Plus category is not being used for nefarious reasons. It reflects on the lack of oversight of the Investor Plus category and the willingness to give people of high wealth a free pass into New Zealand."
In July last year, Justice Minister Amy Adams described money laundering as an "insidious crime and a significant facilitator of economic crime".
She said new legislation introduced to combat money laundering meant 1760 different organisations had a legal responsibility to report suspicious financial transactions.


Money watch

1760 banks and financiers bound by law to report suspicious financial transactions to police.
12000 transactions worth $545 million were reported in 2012-13.
86500 transactions worth $3.5 billion were reported in 2013-14.

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