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Dishonesty crime

by Carl Walrond

In the minds of many, paying cash for a job or file sharing on the internet are not crimes – whereas breaking into a home to burgle it certainly is. Yet the total cost of tax evasion and copyright infringement, together with scams, benefit fraud, insurance fraud and other frauds, outstrip burglary and theft costs many times over.


What is dishonesty crime?

Stealing

Dishonesty crimes include theft, burglary, fraud and tax evasion. The most commonly reported dishonesty offences are theft (taking something that does not belong to you) and burglary (breaking and entering with intent to commit a crime, usually theft). Fraud has no precise legal definition but generally describes crimes that deprive someone of something by deceit.

Crime against property is the most common crime, accounting for around 70% of New Zealand’s total reported offences in the 2010s. A vast amount of dishonesty crime goes unreported. Information about thefts among family or between friends is often not passed on to the police. Stock goes missing from businesses and is attributed to breakages and administrative errors, most shoplifters are never caught, and inflated expense claims go unnoticed.

Thumbing a ride

A compulsive thief who accumulated 28 convictions, 27 for theft or false pretences (the other for ‘supplying liquor to natives’ in 1919), was on the run: ‘he was hitchhiking in Taranaki, and “thumbed” a ride in a police car. He had not gone far when a “wanted” call giving his description and modus operandi came over the radio. Quite unperturbed, he turned to the driver and said, “By Jove, that chap must be a bad b-------”’.1

In the year to July 2018 the numbers of burglaries decreased by 9% compared to the previous 12 months. Over 70% were residential burglaries and most happened in the early afternoon.

Burglaries and thefts have the lowest rates of being solved (around 13% for burglary) as they often occur when the victims are not present, few clues are left and victims are usually unable to identify offenders. While these crimes are common, they usually involve goods of small or moderate value. Less frequent are crimes carried out by professionals in positions of power and authority. These often involve the misappropriation of hundreds of thousands, even millions, of dollars of shareholders’, clients’ or taxpayers’ funds.

Punishment

In the late 1800s and early 1900s the approach to those involved in theft or burglary was to jail them for terms roughly relative to the scale of the offence. By the 1950s thinking had changed and efforts were made by the police and courts to keep young people out of jail, through the use of fines, probation and periodic detention. The Crimes Act 1961 lays out the punishments for most property crimes. It was amended by the Crimes Amendment Act 2003 with laws revised to deal with crimes involving computers, money laundering and forgery.

Under the Sentencing Act 2002 courts must consider the desirability of keeping offenders in the community rather than sending them to prison, as long as this is practical and does not threaten the safety of others. As a result only 6% of those convicted of theft are imprisoned. The maximum sentence for burglary is 10 years and almost half of those convicted receive a prison sentence.

Car conversions are forms of theft where the value of what is stolen is higher than other forms of theft. Stealing cars constitutes approximately 14% of all crimes against property and about 30% of those convicted for stealing cars go to prison.

Recidivism is very high among those engaged in crimes against property, with thieves and burglars reconvicted more often than any other group of offenders.

Crime prevention and DNA

Young people are overrepresented in theft and burglary statistics. Police have programmes to target youth at risk, and youth education about crime also occurs at schools. In the 21st century police prioritised solving burglaries along with violent and sexual attacks and car theft. One reason was that some burglars went on to commit more serious crimes such as rape.

In the 1990s police adopted a more forensic approach to burglary. The National DNA Databank was established in 1996 to hold DNA of individuals, and the Crime Scene Database was set up in 1998 to hold DNA collected from crime scenes (burglars often cut themselves breaking and entering, leaving behind blood). These databases have been very successful in helping to increase the resolution rate for burglaries. New Zealand was only the second country in the world to set up a DNA profile databank. Some 78% of matches between the two databases come from burglary crime scenes – usually from blood left by the burglar. In 2008 the police adopted a digital fingerprint screening system and a database holding over 500,000 fingerprints which can find a match in seconds.

Target hardening

As burglaries increased during the 1980s property owners adopted better locks, fences, burglar alarms and security patrols to prevent losses. A large security industry has grown in New Zealand to help protect private property.

Background checks

Another strategy to prevent crimes against property involves reference checks and background checks of criminal records for prospective employees entrusted with handling cash or goods. Yet in many cases, even for high-powered jobs, these are not carried out, or are not done properly.

Footnotes
    • Department of Justice, Crime in New Zealand. Wellington: Government Printer, 1968, p. 313. Back

Burglary and theft

Burglary

Theft involves taking something that does not belong to you. Burglary differs from theft as it involves breaking and entering with intent to commit a crime (almost always theft). Burglary makes up around 30% of recorded victimisations (or people notifying the police of a crime) and the maximum sentence is 14 years imprisonment for aggravated burglary (when a weapon is carried or used in the crime). Burglary victims often feel violated as intruders have entered their personal space. In 2014 over 6000 people were interviewed for the New Zealand Crime and Safety Survey – 31% thought that there was a crime problem in their neighbourhood and 70% identified burglary or break-ins as what concerned them most.

Rates of burglary vary across the country – for home burglaries Northland had a rate of 126.5 per 10,000 people in 2014 while Tasman had a rate of 59 per 10,000 people. Reported burglaries grew over the 1980s, reaching over 100,000 per year in the early 1990s, before declining during the 1990s and early 21st century. Most people take some security measures to protect their homes, such as deadbolts. Improved security is effective as those homes with no special security measures are more likely to be burgled.

The majority of house burglars are youthful and inexperienced – 45% of those apprehended for burglary/breaking and entering offences in 2017 were aged 20 and under. More experienced burglars tend to target businesses. Tightened bank security and commercial property security has seen the ‘tank man’, or safe blower, become a colourful figure of the past.

House theft

In the early 1970s Odlins timber company had a house stolen: A man phoned orders for precut frames, roofing and fittings from a number of Auckland companies and booked them to Odlins’ account. The materials were delivered to a vacant site in a new subdivision. He loaded them onto another truck, and built his house on a different section. He was never caught.

Theft

Most thefts are minor and involve goods of little value – yet cumulatively the value of stolen property is high. The cost of retail crime (for example, shoplifting, burglary, employee theft or fraud) in New Zealand in 2017 was estimated at $1.1 billion a year.

Many thefts are opportunistic and never detected, or are dealt with by those involved without police involvement. Reported thefts grew from around 100,000 in 1980, to a high point of 185,725 per year in 1996. Theft-related crime dropped to 153,460 in 2006 and there were 119,323 offences reported in 2014. In the year to July 2018 there were 136,514 victimisations in the theft and other offences category (using new data recording processes set up in mid-2014).

Car theft

Cars are the exception to the rule of thefts being of minor value. Due to their prevalence and mobility, cars are major targets for thieves. While many cars are stolen by joyriding youths, gangs of organised thieves also steal cars to order or dismantle them in ‘chop shops’ and sell the parts. In 2014 thefts of, or from, vehicles accounted for 14% of all crime recorded by police. Valuables left in cars are a major target for thieves. Only around one in two thefts of belongings from cars are thought to be reported, and, only one in five cases of wilful damage to cars.

Through the early 21st century thefts of vehicles steadily declined, probably due to increased vehicle security. A 2014 New Zealand crime and safety survey found that 45% of victims who had their cars stolen answered ‘very much’ or ‘quite a lot’ when asked how they were affected by the crime.

Shoplifting

Shoplifting is a form of theft sometimes referred to as ‘ripping off’ or ‘five finger discount’. Many young people shoplift something during their teenage years but then cease once they are older. In 1966 a security service was established in Wellington to help stores combat shoplifting. Many large department stores have for decades had their own security services, shop detectives and surveillance cameras.

A major study of retail crime, carried out in 1996 and 1999 by University of Otago researchers, revealed that staff theft was as big a problem as shoplifting. Shoplifting was more common but involved goods of lesser value. Most dishonest staff were caught by closed-circuit camera footage or tip-offs, while most shoplifters were detected by sales staff. Only 16% of shoplifters were referred to police and half of these were convicted. One in three staff caught thieving were dismissed, yet only 3% were referred to police. Of these nearly 60% were convicted.

In 2017 a retail crime survey by Retail New Zealand found that crime cost New Zealand retailers an estimated $1.1 billion a year. The retailers surveyed reported an increase in losses as a result of internal crime (dishonest staff) and a small drop in losses associated with external crime (shoplifting).

Receiving

A receiver of stolen goods is known as a ‘fence’. In the chain of supply and demand the person who receives (and usually buys) the stolen property (asking few questions) is also culpable, as most criminals want to convert their stolen property into cash. Receiving stolen goods carries a maximum penalty of seven years in jail.


Fraud

Fraud involves the deliberate practice of deception to receive unfair, unjustified and unlawful gain. It covers many different dishonesty offences and includes bribery, forgery, extortion, corruption, conspiracy, embezzlement, misappropriation, false representation, concealment of material facts, collusion and money laundering. A Treasury estimate from the early 2000s put the annual cost of fraud at $1.17 billion. Nationally, police dealt with 9,037 fraud offences in 2014, down from 17,084 in 2004. Fraud carries a maximum jail term of seven years. Many frauds are exposed by whistleblowers (colleagues who suspect inappropriate behaviours), audits or staff changes.

Benefit fraud

Benefit fraud is the deliberate claiming of benefits from the state to which claimants are not entitled. Fraudulent benefit claims of $30.5 million resulted in 868 successful prosecutions in 2013/14. Given that the Ministry for Social Development was allocated $18.5 billion in the 2013/14 government budget for benefit payments, proven losses to the New Zealand government due to benefit fraud were a very small proportion of total yearly benefit costs. Welfare fraud has been estimated as 0.001% of total benefit costs, including national superannuation.

The Ministry instituted data-matching techniques in the 2000s, sharing information with other government agencies to catch those engaging in benefit fraud. Fraudulent claims to the Accident Compensation Corporation by individuals and health professionals have also been identified and in 1994 the corporation established its own fraud unit.

Insurance fraud

Making false insurance claims or inflating insurance claims is viewed by many people as a victimless crime, yet those who commit insurance fraud raise the premiums of other policy holders. The Insurance Council of New Zealand estimate that the cost of fraudulent insurance claims is $615 million per annum.

Internet scams

Since the arrival of the internet in the 1990s many New Zealanders have been caught out by scams. One of the most infamous involved variations on emails from Nigeria, in which bank-account details were asked for, supposedly in exchange for a percentage of millions of dollars.

A government estimate in 2010 put the number of people scammed a year at around 20,000 – each losing on average $2,500, with a total bill of $487 million. Police advise people never to give personal details or bank details over the phone or internet. The New Zealand government recommends people protect themselves from internet scams by using hard to guess passwords on mobile phones and computers, not responding to unsolicited emails or texts and never opening email spam.

Re-thinking our archetype of the thief

Michael Swann was convicted of stealing $16.9 million while working for the Otago District Health Board. In 2009 detective Neville Aiken of the Dunedin police questioned commonly held perceptions of property criminals: ‘They're not covered in tattoos and unemployed. These are the “pillars of society” and for greed or gambling or whatever reason, they find a way to obtain funds dishonestly.’1

CV fraud

Embroidering a curriculum vitae (CV) may not seem like a crime, yet it can be classified as a dishonesty crime if false pretences are used to gain a higher salary. Canadian John Davy was appointed the first head of Māori Television before he was exposed as a fraud for claiming false qualifications. Sentenced to eight months imprisonment, he served just three months before being deported in 2002. Several high-ranking government advisors have been exposed for CV fraud. In March 2010 Mary Anne Thompson, former head of the Immigration Service, was sentenced to 100 hours of community service and fined $10,000. She had claimed to have a doctorate from the London School of Economics, of which there was no record. The head of an Auckland company specialising in background checks estimated that a third of people omit, add or embellish important information on their curriculum vitae.

Marry me

New Zealand’s most infamous con artist was a woman. Tasmanian Amy Bock settled in Auckland and engaged in a variety of dishonesty offences around the country in the 1880s and 1890s. In Dunedin in 1909 she even managed to marry a young woman by pretending to be a wealthy man before being charged with false pretences and forgery and being declared a habitual criminal.

Identity theft

Stolen driver’s licences, birth certificates or passports are often used to open bank accounts. A thief utilises the credit limit and then discards the identity. Accounts taken from people’s rubbish may also be used to help prove an address. Risks can be minimised by closing all accounts when identity theft occurs and keeping personal documents secure. Victims of identity theft have to spend a lot of time restoring their reputation and creditworthiness with financial institutions. In some cases identities that are stolen are those of deceased people and this can be particularly traumatic for the families involved.

Con artists

While there are few cases of confidence (con) men (or women), they achieve notoriety and the press elevates their stories so that some enter folklore. Con artists rely on their charm to dupe people, usually convincing those who trust them to invest money. In the 20th century con artists operated by passing bad cheques or obtaining credit from gullible shopkeepers, but the use of automatic teller machines and internet banking has ensured that this form of fraud is seldom practiced in the 21st century. Con artists are often recidivists and well-known to police.

Ponzi schemes

Pyramid or Ponzi schemes are another way in which fraudsters acquire money illegally. These schemes involve using capital paid into finance investment schemes by new investors to pay returns to earlier investors rather than the capital being invested to generate profits. When the rate of new investments slows, there is no money to be paid out, and investors lose their money. Ponzi schemes are an offence under the Fair Trading Act of 1986.

New Zealand's largest Ponzi scheme was run for several decades by Ross Asset Management director, David Ross, whose fraudulent investment practices led to charges by the Serious Fraud Office and the Financial Markets Authority. In 2013 he pleaded guilty to fraud associated with a multimillion-dollar Ponzi scheme that lost $115 million invested by over 600 investors. He was sentenced to over 10 years in prison. Many older investors lost their life savings. A High Court decision in August 2018 supported the position of the liquidators of Ross Asset Management to pay out the remaining $17.5 million in assets to creditors and investors on equal terms, meaning different groups of investors will receive very different rates of return on their original investments. In 2018 the government was exploring fairer ways of winding up Ponzi schemes, which currently benefit investors who withdraw money from the scheme before it collapses. 

Footnotes
    • Otago Daily Times magazine, 4 April 2009, (last accessed 23 December 2010). Back

White-collar crime

Invisible for decades

The term ‘white-collar crime’ was coined in 1939 in the United States to refer to crimes committed by people in positions of power and high social status in the course of their jobs. Also referred to as ‘commercial crime’, its scope is extensive, including embezzling funds from employers or clients, theft of stock, padded expense accounts, tax evasion, insider trading and misrepresentative advertising.

For most of the 20th century commercial crime or white-collar crime had a low public profile. The first white-collar investigation took place in 1934 and the next in 1958. This did not mean that there was little fraudulent behaviour in New Zealand companies, but rather that it was not reported or detected. The New Zealand Police had little experience in the investigation of business practices and it was not until 1985 that a Corporate Fraud Unit (initially of three staff) was created within the Department of Justice’s Auckland office. This fraud unit was underfunded and insufficiently prepared to respond to the challenges posed by the collapse of a number of high-profile businesses following the 1987 sharemarket crash that exposed previously hidden levels of corporate fraud.

The puzzle

Investigating corporate crimes is an exacting task, as the first head of the Serious Fraud Office, Charles Sturt, recalled when he investigated the collapse of Equiticorp in the early 1990s: ‘It was rather like completing a 100,000-piece jigsaw puzzle from a million pieces. The dilemma was to work out which 900,000 pieces did not form part of the final picture. This is all the more difficult in an investigation where no crime has been established before you start.’1

Establishment of the Serious Fraud Office

Following the 1987 sharemarket crash there were many suspicions of corporate crime. In response the government set up the Serious Fraud Office (SFO) in 1990. Staffed by investigators with backgrounds in law, accountancy and senior police work, its investigative powers are considerable. If the office suspects that a serious fraud may have been committed they can require any person to produce documents or to reveal where they are located. Lawyers, accountants and other professionals cannot refuse on the basis of client confidentiality, and unlike interviewees in other investigations, there is no right to remain silent. The Minister of Police is responsible for the Serious Fraud Office but the government has no influence over its investigations.

The establishment of the office with its very wide-ranging powers and staff of specialists, lifted the lid on white-collar crime. One of its first investigations resulted in Allan Hawkins, executive chairman of Equiticorp, being sentenced in 1992 to six years imprisonment for stealing $88 million. Many more prosecutions of company directors, lawyers, politicians, bureaucrats and accountants occurred over the 1990s and in the early 21st century.

In 2018 the SFO had 50 full-time staff, the majority of whom were front line, and received 831 complaints in 2016/17. Between 2014 and 2016 the total value of fraud for cases prosecuted by the SFO exceeded $150 million – an average fraud value per prosecuted case of over $8 million.

Some professions have taken their own action against white-collar crime. The Law Society has a fidelity fund, established in 1984. This gives clients of dishonest lawyers some level of compensation – although the maximum payout to an individual is $100,000.

National Organised Crime Group

The National Organised Crime Group (previously the Organised and Financial Crime Agency New Zealand) was established in 2008 within the New Zealand Police to help fight organised crime, which was increasingly using international financial networks to launder money. It draws on information and resources from across government. The group was originally meant to absorb the SFO, but an incoming National government decided to maintain the SFO as a separate entity. 

The group focuses on cases of serious or complex fraud. As perpetrators are often highly intelligent and use complex company structures and transactions to try to cover their tracks, investigations can take years. Standard fraud cases are dealt with by fraud squads within the police.

Economic crime

A 2018 PricewaterhouseCooper survey of New Zealand businesses reported that 51% had been the victim of economic crime in 2016/17 (an increase since the last survey). The most frequently reported form of economic crime was consumer fraud (42%), followed by cybercrime (37%). Eight per cent of businesses reported experience of bribery and corruption and attempts at money laundering (attempts to hide the proceeds of crime by disguising the origins of the money).

Cybercrime was expected to cause the most disruption to New Zealand businesses in the future. The most frequent cyberattacks on businesses took the form of phishing (attempts to access logins, passwords and financial details) and malware (software that affects business networks, servers, or end user computers). Businesses reported increased attempts to improve their cybersecurity. They were also working on anti-money laundering strategies and plans to combat the financing of terrorism in response to the Anti-Money Laundering and Countering Financing of Terrorism Act, which came into full effect in 2013.

Conflict of interest

In 2017 two employees of the Canterbury Earthquake Recovery Commission were investigated by the SFO for setting up a private company to provide sales advice for earthquake-damaged properties in Christchurch. The State Services Commissioner described their actions as a serious conflict of interest. The employees argued that they were recruited to work in the government agency because of their private business networks, but acknowledged their personal business interests should have been declared in writing.

White-collar sentencing

Huge losses by investors in the 1987 sharemarket crash and the collapse of finance companies in the early 21st century have hardened the public’s attitude toward corporate criminals. Penalties have been criticised for their leniency. For example those found guilty in prosecutions taken by the Serious Fraud Office in the 1990s got on average three and a half years in jail but often served only a third of their sentence before being eligible for parole.

There is some argument for more severe sentencing, but no matter how much money has been lost, the severity of the punishment can only reflect crimes that have been proven. For example, convicted Dunedin fraudster Michael Swann stole $16.9 million and was sentenced to nine years and six months imprisonment in 2009. In Auckland Mark Bryers’ property investment company Blue Chip collapsed in 2008 owing investors $80 million. Yet he was convicted only on charges relating to bookkeeping failures and failure to attend creditors’ meetings. In 2010 he was sentenced to 75 hours of community work and had to pay a fine of $37,500, plus court costs. Many of those affected called for a jail term, but under the charges Bryers was found guilty of, the judge could not impose any such penalty.

The anger of investors is attributable to devastating losses – often their whole life savings, which in turn affect their retirement income and their family’s prospects. When David Ross was sentenced to 10 years and 10 months for running a Ponzi scheme that lost $115 million of investors' money, his victims argued that the sentence was not long enough. Ross was ordered to serve a minimum of five years and five months. A spokesperson for victims argued in 2013 that the sentence was not a sufficient disincentive to stop this form of white collar crime.

Footnotes
    • Charles Sturt, Dirty collars. Auckland: Reed, 1998, p. 99. Back

Copyright crime and tax evasion

A large portion of the population has at some time in their lives engaged in some form of dishonesty or theft but few are ever caught. There are few who could claim to have never taken something that did not belong to them or, for example, never evaded tax by paying someone in cash or never broken copyright rules by sharing an illegally downloaded television series.

Copyright infringement

While laws generally reflect a society’s mores, the arrival of the internet has challenged traditional models of ownership of certain types of property – most notably intellectual property relating to software, games, movies and music. Downloading many of these files, often dubbed ‘file sharing’, is illegal but it is so widespread that it is not viewed in the same way as stealing a physical object such as a DVD from a store. A 2010 estimate put lost revenue for the film industry due to internet piracy at $70 million. Widespread acceptance of file sharing is often rationalised with the line that ‘everyone else is doing it’. As the public’s actions and attitudes are not aligned with the law, policing this type of dishonesty crime is likely to prove very challenging for some time to come. 

In 2011 the Copyright (Infringing File Sharing) Amendment Act proscribed illegal downloading and uplifting of copyright material and set up a system whereby those doing this could be fined after three warnings.  This legislation made internet service providers the watchdogs of illegal downloading by requiring them to issue warnings and cease providing a service to repeat offenders. This has not been seen as an effective way to control illegal downloading of copyright material.  

The Ministry of Business, Innovation and Employment (MBIE) initiated a review of the Copyright Act 1994 in 2017. The review intended to look at issues of fair use, safe harbour schemes and illegal downloading of film and television content. InternetNZ welcomed the review, arguing that current legislation was not fit for purpose. Their deputy chief executive, Andrew Cushen, described New Zealand's current copyright law as 'iPod law in a smart phone world.'1

Tax evasion

Tax evasion is the deliberate non-payment of legal tax obligations (paying cash for trade services for which GST is neither charged nor paid) or not declaring earned income. While many people do not see these actions as criminal, they do involve breaking the law. 

Tax avoidance involves using accountants and lawyers to exploit loopholes and accountancy techniques to minimise tax payments. These practices are complex and their legality is often open to interpretation. 

High profile tax evader

Some prominent personalities have engaged in tax evasion. In 2014 Alex Swney, the chief executive of Auckland’s business association, Heart of the City, and a former Auckland mayoral candidate, pleaded guilty to tax evasion of $2.8 million and misappropriating $2.5 million from Heart of the City.

In the early 2000s the BNZ, ASB, ANZ-National, and Westpac banks faced a massive tax bill of $2.2 billion over transactions seen to be tax evasion by the government. They used a mechanism defined as ‘structured finance’ to reduce their tax. After five years of legal wrangling the companies reached an agreement to settle with Inland Revenue in 2009. The cost to the government of pursuing this case was about $40 million.

Those who have access to companies, trusts or portfolio investment entities can sometimes reduce their levels of taxation by directing their income to these entities. This could explain why a study in 2010 found that only half of the 100 wealthiest individuals in New Zealand were paying the highest marginal tax on their income.

In 2011 the payment of earned income into special entities was challenged by a Supreme Court ruling after Inland Revenue charged two orthopaedic surgeons of paying their salaries into companies and family trusts to lower their income and avoid a higher personal tax rate.

Tax avoidance by multi-national companies has also been the focus of attention. Multi-national companies have been able to avoid paying company tax on income generated in New Zealand by shifting these profits to parent companies based in countries that have lower company tax rates. Legislation passed in June 2018 will make it more difficult for these companies to avoid paying tax on profits generated in New Zealand. Tax revenue is estimated to increase by $200 million a year as a result.

It is very difficult to estimate the extent of tax evasion. In 2016/17 New Zealand’s total tax revenue was $75.6 billion. The revenue lost through evasion or avoidance is probably at least several billion dollars as the size of New Zealand’s hidden economy has been estimated at around 6–10% of the formal economy. Many individuals do not see tax evasion as wrong, even though it is illegal. However, a recent online survey of New Zealanders enrolled in a major retail rewards programme indicated that people were more critical of tax evasion than benefit fraud. The high visibility of prosecutions for serious tax evasion may be one of the key reasons for these trends and could have prompted a revision of earlier tolerant attitudes towards tax evasion.  

Matter of perception

Those engaging in tax evasion are less likely to receive a prison sentence for defrauding the state than beneficiaries, even when the amount of money involved is significantly larger. Whereas receiving benefits to which you are not entitled is clearly defined as ‘benefit fraud’, tax evasion is often referred to as ‘tax discrepancies’ rather than fraud. 

International tax evasion

Controversy relating to tax evasion, tax avoidance and money laundering through tax-exempt foreign owned or ‘offshore’ trusts has led to increasing scrutiny of foreign trusts in New Zealand. From 21 February 2017 a foreign trust with one or more New Zealand trustees must register with Inland Revenue and file annual disclosure returns. Foreign trusts can still be tax exempt as long as their income is generated outside of New Zealand and they meet disclosure requirements. Inland Revenue announced that it would pass on the information about these foreign trusts to other countries.  

In late 2016 there were 11,750 foreign trusts in New Zealand. In mid-2017 only 3,000 foreign trusts had registered for tax exemption under the new regulations. This suggests that some of the pre-existing foreign trusts had been wound up, or that overseas trustees had replaced New Zealand trustees and the trust transferred to another country. This increased regulation of foreign trusts is to ensure that New Zealand is not a ‘tax-haven’ and has robust information about tax-exempt foreign trusts. Existence of this detailed information is also a way to counter money laundering – hiding money generated through criminal activity by disguising its origins. 

Footnotes

Hononga, rauemi nō waho

More suggestions and sources


How to cite this page: Carl Walrond, 'Dishonesty crime', Te Ara - the Encyclopedia of New Zealand, http://www.TeAra.govt.nz/mi/dishonesty-crime/print (accessed 24 September 2019)

Story by Carl Walrond, published 5 May 2011, reviewed & revised 2 Nov 2018