“For the past 2½ years I have been looking after financial intelligence, money laundering and asset recovery. One of the biggest issues is that people don’t know what we are talking about – that this is organised crime, not just criminals who are slightly organised.”
When the Comancheros, a proper transnational organised crime group, arrived in New Zealand, they brought serious competitive behaviour and the local gangs responded, he told the Police Association conference.
“The Waikato Mongrel Mob went ballistic and the Greasy Dogs now have well over 180 members. The Filthy Few are growing like mad and we are seeing the re-emergence of Hells Angels.
“They are all trying to attract more people with the bling, the gold-plated Harley, the $500,000 Rolls Royce (both now in Police care). These are symbols of power and wealth.”
And if there’s a gap in the market, like in the South Island, they will get into it.
“The way they operate is through money, it’s as simple as that. There’s over $2 trillion of laundered money flowing through the legitimate global banking system. Law enforcement worldwide gets about 0.2 per cent of that. It’s barely a rounding error.”
He said police had to realise “the money is just as relevant as the drugs”.
“Gone are the days when cops would kick in a door, see a big pile of money and a big pile of drugs. They seize the drugs but don’t know what to do with the money.
“The money is the evidence of the drugs. It’s a mindset we have to shift.
“Police have the tools available to take the money if they suspect it is the proceeds of crime under the Search and Surveillance Act and the Criminal Proceeds (Recovery) Act.
“It’s a mindset that after searching an address for drugs, it’s a NANE – no arrest, no exhibits. They had to sidestep around three Harleys and two Club Sports in the driveway as they were walking out but still said we didn’t get anything.”
Those items in the driveways are just as relevant as the drugs – they are the proceeds of crime, Iain said.
The small-time dealers selling pot who were limited by having to deal in cash would have the trinkets, the Harleys and Club Sports but they would never be truly international, he said.
At the next level – the import-export of large quantities of meth – they will be getting into big assets, houses, buildings and commercial buildings. And at the top are the likes of Mexican drug lord El Chapo who use trade-based money laundering – the only way to move billions of dollars across borders without physically carrying it.
“Between those three levels of sophistication, there’s the constant – the lawyers, accountants real estate agents and high-value dealers. We start with those people and move towards the target from that point.
“They are all equally responsible for enabling that business. Corruption is an enabler of organised crime. It is one of our biggest risks.“
Those people will soon come under a reporting regime under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.
The 10-year-old Act is “incredibly powerful” but to be truly effective in shutting down big criminal organisations, there will need to be a public-private partnership. That has been proven internationally.
The UK set up the Joint Money Laundering Intelligence Task Force, Australia has the Fintel Alliance and the US has the Consortium, a group of four banks that have formed an intelligence sharing company.
“If US law enforcement gives the Consortium a target, it will return on average 10-fold a spider web i2 chart saying, this is your target. Each bank may have a piece of the jigsaw.
“We are working hard with justice to have bank-to-bank and bank-to-police sharing which will enable us to share suspicious activity reports from banks and reporting entities. Every remitter in the country will have to report.“
Failing to comply could be costly. A direct result could mirror the example of the Commonwealth Bank in Australia which failed to monitor transactions that went through its smart ATM machines. It was fined A$700 million.
“Let’s eliminate the criminal groups’ ability to transact through the legitimate financial system and force them into a cash-only society.”
“The CPRA lets us target the asset, not the person and it has a remarkable ability to force the overt display of power and wealth underground. People will start paying tax to avoid scrutiny.
“We are eliminating the ability for criminals to transact in the legitimate banking system by forcing them to do risky things like body pack cash if they want to get it out of the country.”