$4 million penalty for repeated non-compliance

17 October 2019

Jin Yuan Finance Ltd (Jin Yuan), an Auckland based money remitter, has been fined $4 million plus costs for repeated non-compliance under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009. The High Court judgment for the penalty was delivered on 3 October 2019 following a penalty hearing on 24 July 2019.

Jin Yuan (company number 4083558) was monitored closely by the Department of Internal Affairs as it had a history of non-compliance since 2014 and was issued a formal warning for compliance failures in 2015. Jin Yuan had repeatedly breached requirements to conduct customer due diligence, adequately monitor accounts and transactions, keep records, establish, implement, and maintain an AML/CFT programme, and ensure that its branches and subsidiaries complied with the AML/CFT Act.

Mike Stone, Director AML Group, Department of Internal Affairs said, “This result highlights the severity of the offending for businesses that persistently fail to comply with the AML/CFT Act – the cost of non-compliance is high.”

“This judgment demonstrates the use of effective, proportionate and dissuasive sanctions against businesses that don’t comply with their AML/CFT obligations.”

Despite numerous engagements with the Department, Jin Yuan repeatedly failed to meet their obligations under the Act and didn’t action remediation plans that were put in place to help them meet their compliance requirements.

"When there are serious breaches and systemic non-compliance, we are willing to take strong regulatory action. It is important that we take regulatory action when there is a risk that criminals are exploiting New Zealand businesses to launder the proceeds of crime,” says Mr Stone.

Every year about $1.35 billion from the proceeds of crime is laundered through New Zealand businesses causing harm to communities and damaging the reputation of New Zealand businesses.

“Our role is to educate businesses on their compliance requirements, and we work closely to help them understand their AML/CFT obligations. By detecting and deterring money laundering and terrorism financing, they are doing their bit to protect New Zealand’s financial system and its reputation as a good place to do business,” says Mr Stone.

The Department supervises a range of businesses who must comply with the AML/CFT Act, including financial institutions, trust and company service providers, lawyers and conveyancers, accountants, real estate agents, high value dealers and the Racing Industry Transition Agency.

ENDS
Media contact:
Department of Internal Affairs
Media Team 027 535 8639

Questions and Answers

Q. Is Jin Yuan still operational?

• Jin Yuan ceased operating in 2018.

• In September 2015, Jin Yuan Finance received their first public warning issued by the Department of Internal Affairs under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009.
• Jin Yuan was ordered to immediately rectify the non-compliance.
• The warning was issued because the company failed to comply with several requirements under the AML/CFT Act:
  • Failed to conduct customer due diligence as required by subpart 1 of Part 2 of the Act (section 78(a) of the Act).
  • Failed to adequately monitor accounts and transactions (section 78(b) of the Act).
  • Failed to keep records in accordance with the requirements of subpart 3 of Part 2 of the Act (section 78(e) of the Act).
  • Failed to establish, implement, or maintain an AML/CFT programme (section 78(f) of the Act).
  • Failed to ensure that its branches and subsidiaries comply with the relevant AML/CFT requirements (section 78(g) of the Act).

• Since the AML/CFT Act came into force on 30 June 2013, the Department has issued 30 formal warnings and accepted four enforceable undertakings either for failure to meet particular risk assessment or AML/CFT programme obligations or for failing to submit an annual AML/CFT report.

• Ping An Finance – pecuniary penalty of $5.29 million plus court costs and an injunction against its director from providing financial services
• Qian DuoDuo Limited – pecuniary penalty of $356,000 plus court costs
• Jin Yuan Finance Limited – pecuniary penalty of $4,007,750 million plus court costs and an injunction against its director and the company from providing financial services