The Escalation of Financial Crime and Fraud in New Zealand

New Zealand is currently grappling with a significant surge in financial crime and fraud, presenting increasingly pressing challenges for both the nation’s economy and its financial stability. Over the past year, it has become evident that fraudulent activities are on the rise in New Zealand. A recent Ministry of Justice survey on crime and victimization revealed a concerning jump in the annual count of fraud and deception crimes, soaring from 288,000 to 510,000 cases in just one year.

The realm of financial crime encompasses a broad spectrum, including fraud, money laundering, cybercrime, and corruption. Recent data and trends strongly indicate that New Zealand is facing a troubling surge in these illicit activities.

Several notable examples illustrate this growing concern:
Cybercrime: In an era marked by increasing global interconnectivity, New Zealand has not remained immune to the rise of cybercrime. Phishing scams, such as the 2023 incident involving the NZTA, exemplify how criminals lure victims into divulging personal information, which is subsequently exploited for identity theft or monetary gain.

Investment Scams: Investment scams are also on the rise in New Zealand, as depicted in Nigel Latta’s documentary, “You’ve Been Scammed.” Fraudsters entice unsuspecting individuals with promises of high investment returns or cryptocurrency opportunities. The surge in popularity of digital assets heightens the risk of falling prey to fraudulent schemes, prompting active warnings from New Zealand’s Financial Markets Authority (FMA).

Anti-Money Laundering (AML): AML remains an enduring issue within the financial system, with perpetrators adapting to the digitisation of banking. As financial criminals grow more sophisticated, the AML/CFT Act undergoes continual adjustments, as witnessed by recent changes slated for implementation in 2023, 2024, and 2025.

In the second quarter of 2023 alone, New Zealand recorded 1,950 reported scams, resulting in losses totalling NZ$4.2 million according to data from the government’s Computer Emergency Response Team.

So, why has financial crime escalated?

Global Interconnectedness: The proliferation of online financial transactions, digital banking, and e-commerce has created opportunities for cybercriminals to target New Zealand individuals and businesses from anywhere in the world.

Economic Pressure: Economic uncertainties, especially amid rising living costs and stringent budgets, have caused financial stress for many. This vulnerability makes individuals more susceptible to fraudulent schemes, particularly when presented with seemingly too-good-to-be-true investment opportunities.

Cryptocurrencies: The emergence of cryptocurrencies has introduced a new dimension to financial crime. Digital assets offer anonymity, making them attractive to money launderers and fraudsters. Regulatory bodies in New Zealand and globally are still in the process of establishing effective oversight of the crypto space, leaving room for illicit activities.

Underreporting: A significant number of financial crime and fraud cases remain unreported, often due to victims’ embarrassment or a lack of awareness regarding reporting procedures. A recent Crime and Victimization Survey highlighted the underreporting of cybercrime, with as few as 7.5% of fraud and cybercrime incidents being reported to the police, hindering prevention efforts.

What’s happening now?

As of September 15th, New Zealand banks have announced a series of new measures to combat scams and protect their customers. These initiatives include the establishment of a national Anti-Scam centre, pooling resources to combat money laundering, and enhancing public awareness. The collaborative commitment of retail banks is expected to have a positive impact on fraud and scam mitigation.

Promoting Public Awareness

Raising awareness among the general public about the risks of fraud and scams is paramount. Organizations like the FMA are actively engaged in educating citizens about potential pitfalls.

The surge in financial crime and fraud in New Zealand is a multifaceted issue driven by a convergence of factors, including global integration, economic pressures, technological advancements, and regulatory complexities. Consequently, this sector is experiencing remarkable growth in the realm of Risk & Compliance. Teams dedicated to fraud detection in banks and cybersecurity are expanding, with a growing demand for individuals who excel in problem-solving, possess exceptional analytical skills, and can communicate complex topics effectively to build relationships and transform data into actionable intelligence.

If you are a financial institution that is looking to expand your expertise in this space give the Hunter Campbell team a call to source the right people for your team.

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