This is the outcome of an investigation based on more than 11.9 million documents revealing the flow of money linked to property and other assets concealed in offshore financial systems around the world.

What is most worrying is that New Zealand trusts have been caught up with at least two reported cases. The first is an international paedophilia scandal where nearly $300 million in assets were squirrelled away in a trust and the second involves a former Moldovan politician now on the run for his role in a fraud coined the “Theft of the Century”. In this case he used a trust based in New Zealand to transfer tens upon tens of millions of dollars to his family.

This and many other reports from around the world bring to light yet again the money laundering risk attached to trusts. All three AML/CFT supervisors have consistently reported the non-compliant behaviour of reporting entities when it comes to completing enhanced due diligence when onboarding trusts as new customers. These stories provide a timely reminder to have thorough policies and procedures in place when dealing with clients like trusts that are considered high risk.

Top tip:

The most important aspect to completing enhanced due diligence is to ensure you get the explanation of the ‘source of wealth’ and the ‘source of funds’ directly from the client, in writing if possible. Once you have reviewed this, take time to determine what supporting documents you should request from the client that will best support the explanation given. Requesting a standard list of documents from a template each time you conduct enhanced due diligence will only cause extra work for yourselves and more angst from your clients. Lastly ensure that you verify the information received. Criminals are masters of deception and will know what you will be looking for.

Get in touch with our team if you have any questions or need a helping hand with your due diligence processes. We’re here to help.