Criminal Proceeds (Recovery) Amendment Bill

2.1. Are there any publicly available inquiry, review or evaluation reports that have informed, or are relevant to, the policy to be given effect by this Bill?

YES

Colin Atkinson, Simon Mackenzie, and Niall Hamilton-Smith, (2017) A Systematic Review of the Effectiveness of Asset-Focussed Interventions against Organised Crime. Economic and Social Research Council. What Works: Crime Reduction Systematic Review Series, 9. Scottish Centre for Crime and Justice Research. https://dspace.stir.ac.uk/handle/1893/26091

Arie Freiberg, Richard Fox, (2000) Evaluating the Effectiveness of Australia's Confiscation Laws. Australian & New Zealand Journal of Criminology, Volume: 33 issue: 3, page(s): 239-265. https://journals.sagepub.com/doi/abs/10.1177/000486580003300301

Maíra Martini, Unexplained Wealth Order As An Anti-Corruption Tool. Transparency International, 27 November 2015. https://knowledgehub.transparency.org/helpdesk/unexplained-wealth-order-as-an-anti-corruption-tool

Committee on Legal Affairs and Human Rights, Parliamentary Assembly of the Council of Europe, Fighting organised crime by facilitating the confiscation of illegal assets. Report | Doc. 14516 | 26 March 2018, https://assembly.coe.int/nw/xml/XRef/Xref-XML2HTML-en.asp?fileid=24507&lang=en

New Zealand Police, Organised Crime & Our Operational Response Strategy: Five Year Strategy. February 2021. https://www.police.govt.nz/sites/default/files/publications/organised_crime_and_our_operational_response.pdf

New Zealand Police, Transnational Organised Crime in New Zealand: Our Strategy 2020 – 2025. September 2020. https://www.police.govt.nz/about-us/publication/transnational-organised-crime-new-zealand-our-strategy-2020-2025

2.2. Does this Bill seek to give effect to New Zealand action in relation to an international treaty?

NO

The Criminal Proceeds (Recovery) Act 2009 (CPRA) amendments are consistent with the:

• United Nations Convention against Transnational Organized Crime 2000, https://www.unodc.org/unodc/en/organized-crime/intro/UNTOC.html
  • Article 12. Confiscation and seizure, Paragraph 7: “States Parties may consider the possibility of requiring that an offender demonstrate the lawful origin of alleged proceeds of crime or other property liable to confiscation, to the extent that such a requirement is consistent with the principles of their domestic law and with the nature of the judicial and other proceedings.”
  • United Nations Convention Against Corruption 2005, https://www.unodc.org/unodc/en/treaties/CAC/
    • Article 31. Freezing, seizure, and confiscation, Paragraph 8: “States Parties may consider the possibility of requiring that an offender demonstrate the lawful origin of such alleged proceeds of crime or other property liable to confiscation, to the extent that such a requirement is consistent with the fundamental principles of their domestic law and with the nature of judicial and other proceedings.”

2.3. Were any regulatory impact statements provided to inform the policy decisions that led to this Bill?

YES

• Impact Summary: Reforms to the Criminal Proceeds (Recovery) Act 2009 to better target illicit assets, Ministry of Justice, 9 December 2020, accompanying the Cabinet Paper considered by Cabinet in 2021 [CBC-21-MIN-0040; CAB-21-MIN-0138].
• A second policy paper making refinements to the proposals was considered by Cabinet in 2022 [CBC-20-MIN-0092; CAB-22-MIN-0146]. It received an exemption from the requirement to provide a Regulatory Impact Statement, as the relevant issues had already been adequately addressed by the existing impact analysis, and the revised approach was analysed in the paper itself.

The impact analysis is available on the Ministry of Justice website: https://www.justice.govt.nz/justice-sector-policy/regulatory-stewardship/regulatory-impact-assessments/

2.3.1. If so, did the RIA Team in the Treasury provide an independent opinion on the quality of any of these regulatory impact statements?

NO

The regulatory impact summary identified above did not meet the threshold for receiving an independent opinion from the Regulatory Impact Analysis Team based in the Treasury. The Ministry of Justice provided an internal quality assurance panel.

2.3.2. Are there aspects of the policy to be given effect by this Bill that were not addressed by, or that now vary materially from, the policy options analysed in these regulatory impact statements?

YES

As noted in part 2.3, a second policy paper was considered by Cabinet, and a subsequent policy decision was made by the Cabinet Legislation Committee. These included:

• Refinements to the new restraint and forfeiture orders (responding to organised crime), which address potential limitations on rights under the New Zealand Bill of Rights Act 1990 (NZBORA). These changes:
  • clarified the meaning of “association” (to mean more than a mere acquaintance);
  • added a minimum threshold of $30,000, for the value of a person’s property that Police must show is not explained by known legitimate property;
  • required proportionality, by ensuring only the value of the property not explained by legitimate property is to be forfeited (and not any amount that does have a legitimate source); and
  • created a limited judicial discretion to decline to make a forfeiture order, if it would not be in the interests of justice to do so.
  • A new amendment to expressly provide that funds in KiwiSaver may be subject to CPRA, creating consistency with other retirement savings vehicles, such as bank accounts and managed funds, which can already be subject to CPRA. The proposal relating to forfeiture of KiwiSaver funds was exempt from an impact analysis on the basis of it having minor impacts on businesses, individuals, and not-for-profit entities.

2.4. Has further impact analysis become available for any aspects of the policy to be given effect by this Bill?

NO

2.5. For the policy to be given effect by this Bill, is there analysis available on:

(a)   the size of the potential costs and benefits?

YES

(b)   the potential for any group of persons to suffer a substantial unavoidable loss of income or wealth?

YES

Analysis of the expected benefits and costs for the policy is available in the regulatory impact summary.

2.6. For the policy to be given effect by this Bill, are the potential costs or benefits likely to be impacted by:

(a)   the level of effective compliance or non-compliance with applicable obligations or standards?

NO

(b)   the nature and level of regulator effort put into encouraging or securing compliance?

YES

Organised criminal groups, in particular, will always seek ways to avoid detection from, or subvert the efforts of, law enforcement. However, the level of resources dedicated to responding to illicit assets can impact the amount of assets seized. As noted in the regulatory impact summary, the budget for Police’s Asset Recovery Unit reflects an increase in baseline funding that will enable more CPRA investigations and civil proceedings to be progressed.

3.1. What steps have been taken to determine whether the policy to be given effect by this Bill is consistent with New Zealand’s international obligations?

As noted in part 2.2, the amendments are consistent with two UN Conventions regarding proceeds of crime to which New Zealand is a party.

There are also the technical and effective compliance standards for asset recovery, maintained by the Financial Action Task Force (FATF), the intergovernmental organisation that monitors policies to combat money laundering and terrorism financing:

• New Zealand was rated as having a high level of effectiveness for confiscation of proceeds of crime in 2021: Anti-money laundering and counter-terrorist financing measures – New Zealand, Fourth Round Mutual Evaluation Report, FATF, Paris, Pg 80. http://www.fatf-gafi.org/publications/mutualevaluations/documents/mer-new-zealand-2021.html
• This makes New Zealand one of only five countries rated as having a high level of effectiveness (alongside France, Honduras, Israel, and the United States, as of 1 August 2022): Consolidated table of assessment ratings, Effectiveness “IO8” (Immediate Outcome 8, Confiscation), FATF, Paris, https://www.fatf-gafi.org/publications/mutualevaluations/documents/assessment-ratings.html

3.2. What steps have been taken to determine whether the policy to be given effect by this Bill is consistent with the principles of the Treaty of Waitangi?

Although there was no consultation with Māori on the proposals in the Bill, officials consulted with relevant government agencies and analysed the proposals in this Bill against the principles of the Treaty of Waitangi and the Crown’s Treaty obligations.

Officials identified that there is a risk that Māori may be disproportionately impacted by the new restraining and forfeiture order created by the Bill, which is designed to respond to organised criminal offending. This is based on the fact that:

• While there are no reliable estimates of people associated with organised criminal groups, and gangs and organised crime are not synonymous (gang membership does not inherently entail offending, nor does an organised criminal group – such as drug trafficking network – need to be a gang);
• There is an overlap between some members of gangs and members of organised criminal groups. And Māori make up a disproportionate share of gang membership, Using Evidence to Build a Better Justice System, Chief Science Advisor, Pg 21, https://dpmc.govt.nz/sites/default/files/2021-10/pmcsa-Using-evidence-to-build-a-better-justice-system.pdf.
• Te Puni Kōkiri estimates that approximately 37,000 Māori are whānau of gang members, based on data from Police’s Gang Intelligence Centre. This equates to around 5% of the Māori population, including extended family, such as spouses, children, parents, siblings, and in-laws.

This impact is mitigated by the design of the proposal, intended to safeguard people’s rights under NZBORA, as noted in part 4.1. This includes the focus on organised criminal groups that have been involved in significant criminal activity; the standards of proof required to access the powers; and the judicial discretion as to making of orders where it is not in the interests of justice to do so. On balance, officials consider that the proposals are consistent with the principles of the Treaty.

3.3. Has advice been provided to the Attorney-General on whether any provisions of this Bill appear to limit any of the rights and freedoms affirmed in the New Zealand Bill of Rights Act 1990?

YES

Advice provided to the Attorney-General, or a section 7 report of the Attorney-General, is generally expected to be available on the Ministry of Justice’s website upon introduction of a Bill. Such advice, or reports, will be accessible on the Ministry’s website at http://www.justice.govt.nz/policy/constitutional-law-and-human-rights/human-rights/bill-of-rights/

3.4. Does this Bill create, amend, or remove:

(a)   offences or penalties (including infringement offences or penalties and civil pecuniary penalty regimes)?

YES

The Bill amends section 152 of CPRA, the offence for Failing to comply with orders and search warrants, by adding the new disclosure of source order.

The new disclosure of source order is intended to be available where a person is overseas. It creates an incentive to comply with the provision of information, as otherwise their property may be presumed to be derived from significant criminal activity, and liable to forfeiture.

This order puts overseas respondents in a similar position to domestic respondents, as existing production and examination orders are not enforceable where a person is overseas. However, if a respondent (re)enters New Zealand, after such a disclosure of source order has been granted, this offence may apply (as it would for domestic respondents).

(b)   the jurisdiction of a court or tribunal (including rights to judicial review or rights of appeal)?

NO

3.4.1. Was the Ministry of Justice consulted about these provisions?

NO

The Ministry of Justice led the policy development of the Bill.

3.5. Does this Bill create, amend or remove any provisions relating to the collection, storage, access to, correction of, use or disclosure of personal information?

YES

The Bill creates a new section 109A in CPRA, providing the court with a new power to make a disclosure of source order. These require the provision of information on restrained assets.

This new order is a reasonable and proportionate power addressing the specific circumstances where existing information gathering powers are not enforceable.

3.5.1. Was the Privacy Commissioner consulted about these provisions?

NO

The new powers are consistent with existing provisions under CPRA.

3.6. Has there been any external consultation on the policy to be given effect by this Bill, or on a draft of this Bill?

NO

3.7. Have the policy details to be given effect by this Bill been otherwise tested or assessed in any way to ensure the Bill’s provisions are workable and complete?

YES

Officials have worked closely with relevant agencies to ensure that the provisions in the Bill are workable.

4.1. Does this Bill contain any provisions that could result in the compulsory acquisition of private property?

YES

Three of the four amendments to CPRA enable forfeiture of property:

• the new restraining and forfeiture order (new sections 24A and 50C) for where a person is associated with an organised criminal group and their legitimate property is insufficient to have acquired the specific property subject to the order;
• the new disclosure of source order requiring respondents outside of New Zealand to provide information on the source of restrained property within 2 months, or else the court may presume the property was tainted (new sections 50(2A) and 109A); and
• the exception to the KiwiSaver Act 2006 to allow funds in KiwiSaver schemes to be subject to CPRA orders (new section 84A, and the Part 2 amendments to the KiwiSaver Act 2006).

These provisions are necessary to enable the confiscation of property derived from significant criminal activity or organised criminal activity, thereby depriving the opportunity to profit from, and to deter, criminal activity.

Any potential adverse outcomes are mitigated by:

• the burden of proof on the Commissioner of Police to satisfy the court the criteria are met, to the relevant standards, for the granting of any of the relevant orders;
• the ability of respondents to present evidence at restraint and/or forfeiture hearings;
• where a presumption that reverses the burden of proof against a respondent may be engaged, the court has the ability to decline to make an order if it would not be in the interests of justice;
• the existing provisions in CPRA that will apply. These allow the courts to:
  • sever a person’s interest in property from restraint or forfeiture, if the person did not unlawfully benefit from significant criminal activity; or
  • grant relief from restraint or forfeiture if it would cause undue hardship.

These provisions intend to protect peoples’ rights (in particular, to natural justice including a fair hearing, and to freedom from unreasonable seizure including unjust forfeiture).

4.2. Does this Bill create or amend a power to impose a fee, levy or charge in the nature of a tax?

NO

4.3. Does this Bill affect rights, freedoms, or impose obligations, retrospectively?

NO

The new provisions that enable forfeiture, identified in part 4.1, will apply to property that is in the possession of respondents when the amendments come into force.

4.4. Does this Bill:

(a)   create or amend a strict or absolute liability offence?

NO

(b)   reverse or modify the usual burden of proof for an offence or a civil pecuniary penalty proceeding?

NO

4.5. Does this Bill create or amend a civil or criminal immunity for any person?

NO

4.6. Does this Bill create or amend a decision-making power to make a determination about a person’s rights, obligations, or interests protected or recognised by law, and that could have a significant impact on those rights, obligations, or interests?

YES

As noted in part 4.1, the Bill allows the Commissioner of Police to apply for the new orders being created, which the High Court will determine consistent with existing procedures under CPRA, if satisfied of the criteria set out for the new orders. Existing rights to appeal any civil forfeiture orders made will also be available to respondents under the new orders created.

4.7. Does this Bill create or amend a power to make delegated legislation that could amend an Act, define the meaning of a term in an Act, or grant an exemption from an Act or delegated legislation?

YES

The Bill amends section 173 to allow the threshold amount for the new orders to be prescribed by regulation, by Order in Council. This enables adjustments (such as for inflation), above the initial minimum value.

4.8. Does this Bill create or amend any other powers to make delegated legislation?

NO

4.9. Does this Bill contain any provisions (other than those noted above) that are unusual or call for special comment?

NO