Chapter 16
Proceeds of crime requests

Foreign assistance provided by New Zealand

16.18MACMA creates a regime that relies on a combination of registering and enforcing foreign proceeds orders and obtaining domestic orders based on foreign evidence. This regime is heavily reliant on adopting provisions from CPRA.

16.19The MACMA regime allows for New Zealand to provide assistance to foreign countries at each of the four stages of the confiscation process.

The investigation stage

16.20International assistance at this stage largely consists of cross-border information sharing and is governed by inter-agency mutual legal assistance agreements of the type described in Chapter 18. For example, a New Zealand bank may have an obligation to report a suspicious financial transaction to the Financial Intelligence Unit within the New Zealand Police, which may then send that information to an interested overseas counterpart in accordance with an information-sharing agreement.

16.21The only role for MACMA at this stage is that a foreign country may request that the Attorney-General obtain an examination order, a production order, or a search warrant on its behalf under CPRA. These orders are designed to assist in gathering information about potential proceeds or instruments of crime, with a view to possibly making an application to restrain the relevant property. All three orders target slightly different information:

16.22Several technical problems have been brought to our attention regarding this type of assistance:

These problems could be addressed by fairly straightforward amendments to the relevant legislation.

16.23There are two further problems:

These two problems are not limited to foreign assistance, but they reflect more general problems with the domestic confiscation regime under CPRA. Further, the issues are not discrete. There would be wide-reaching ramifications both in changing the definition of one of the key concepts in the Act and in classifying proceedings as civil or criminal. The scope of our review does not extend that far.

The restraining stageTop

16.24Under MACMA and CPRA, this intervention may take one of two forms. The New Zealand authorities can obtain an interim foreign restraining order, or they can register a foreign restraining order. The aim of these orders is to secure the potential proceeds or instruments of crime whilst foreign confiscation proceedings are conducted.

16.25In accordance with international best practice, New Zealand would ideally register and directly enforce a foreign restraining order.711 However, in many cases, it may not be feasible to wait to obtain a restraining order overseas and then register it in New Zealand, as property might be dissipated in the meantime. In this case, the foreign country can request New Zealand to obtain an interim foreign restraining order.

Interim foreign restraining orders

16.26An interim foreign restraining order is a provisional order to secure property for a period of 28 days, during which a restraining order must be made overseas and then registered in New Zealand.712 The High Court can extend an interim order for a period of up to three months at one time.713

16.27The two potentially significant problems with the current provisions are:

The tests for interim foreign restraining orders
16.28The provisions governing interim foreign restraining orders are contained in CPRA.714 MACMA only contains an empowering provision, which provides that the Attorney-General may authorise the Commissioner of Police to apply for an interim foreign restraining order. The Attorney-General must be satisfied that:715

16.29The court must treat an application for such an order as if it is an application for a domestic restraining order and thus must consider whether the property does, in fact, fall within one of the four categories of property described above. This requires a much more extensive examination of the foreign evidence than that conducted by the Attorney-General.

16.30The tests applied by the Attorney-General and the High Court should not be so different. The Attorney-General might be satisfied as to the nature of the foreign investigation, but on the same information, the High Court may not have a clear understanding of the connection between the relevant property and the criminal activity.

16.31As a matter of principle, whether there should be an interim foreign restraining order should be determined by the likelihood of a foreign restraining order being obtained and then registered in New Zealand. It is for the foreign court to ultimately decide whether there is sufficient evidence to justify restraint, and there seems no need for a New Zealand court to make a preliminary decision on this matter. Accordingly, we consider that the Attorney-General and the Court should focus on the foreign proceeds investigation and proceedings rather than focusing on the link between the property and the criminal activity. A focus on the foreign proceedings rather than on the substantive case is consistent with international best practice and New Zealand’s international obligations.716
The efficacy of interim foreign restraining orders

16.32The second potentially significant problem with the interim foreign restraining order is delay. Delay can be caused by:

Delay undermines the core function of an interim foreign restraining order, which is to secure property as expeditiously as possible pending the registration of a foreign restraining order.

16.33Cabinet has asked whether there is a need for an additional provisional measure to secure property on behalf of a foreign country. The potential features of such a temporary freezing mechanism could be:

(i) the Attorney-General for an administrative foreign freezing notice; or
(ii) the court for an interim foreign freezing order;
16.34The Model Legislation supplementing the Harare Scheme includes an optional provision that is of similar effect.717

16.35In our view, there is no particular need for CPRA to contain two separate provisional measures for the following reasons:

16.36It would be better to have one process. One possible option would be to move from an order to a notice and allow the Attorney-General to make the notice without reference to a court. As originally drafted, the Criminal Proceeds (Recovery) Bill provided for administrative examination and production notices rather than court orders.720 As the Bill passed through the House, Parliament decided that these notices were sufficiently intrusive as to require judicial oversight.721 This is because the order prevents a person from dealing with his or her own property. On the other hand, it is only a temporary measure that could potentially last for as little as 72 hours. If the notice lasted for such a short time, however, this would create an additional difficulty of what to do next, as the foreign country’s mutual assistance request would not be ready within that timeframe. In the end, we are not convinced that there is a need for an administrative foreign restraining notice. There is no domestic equivalent to such notices, and we have not been informed of any real-life cases where property was dissipated before a court could be adjourned.

16.37The better option would be to streamline the existing process for obtaining an interim foreign restraining order. The time taken to prepare a formal MACMA request seems to be the main source of delay. One possible solution might therefore be to remove the requirement in MACMA that the Attorney-General must receive the formal request from the foreign country before authorising an application for an interim foreign restraining order.

16.38However, it would not be appropriate for New Zealand to provide this type of assistance solely on the basis of an informal request. The balance between the law enforcement need for expeditious restraint and protecting individual property rights might be struck by the following process:

(a) The foreign central authority should make the request.
(b) The New Zealand Central Authority should receive the request.
(c) The request should contain the requisite assurances that:
(d) In deciding whether to allow an application for an order, the New Zealand Central Authority should consider:723
(e) In decided whether to grant an order, the High Court should consider:


Q61 Should the current interim foreign restraining order regime in MACMA be reformed?

Foreign restraining orders

16.39The process for registering a foreign restraining order is largely contained in MACMA. Under MACMA, the Attorney-General may authorise the Commissioner of Police, in writing, to make an application for registration.725
16.40The Commissioner of Police’s application must be accompanied by a sealed or authenticated copy of the foreign restraining order. If the court is satisfied that the restraining order is in force in the foreign country, it must register the order.726 The foreign restraining order will then have effect in New Zealand as if it was a restraining order made under CPRA, subject to certain exceptions.727
16.41CPRA contains specific procedural rules governing matters such as the process of applying for registration, the duration of registration, and the ability of the court to grant relief to affected third parties.728

16.42Several concerns have been raised regarding the process of registering foreign restraining orders in New Zealand. Two concerns are addressed by the Organised Crime and Anti-corruption Legislation Bill, which proposes:

Legal expenses

16.43There remains a concern as to whether there should be any constraint on a respondent’s ability to pay legal expenses out of restrained assets.

16.44Under CPRA, the High Court may make a domestic restraining order subject to any conditions it considers fit. This may include conditions that provide for expenses (such as living or business expenses) to be met out of a respondent’s restrained property.731 The court, however, may not allow legal expenses to be paid out of restrained property.732
16.45This legal expenses exception does not apply to MACMA foreign restraining orders registered in New Zealand.733 This means that the High Court currently has discretion to release funds that are subject to a registered foreign restraining order to allow the respondent to pay their legal expenses. If legal proceedings in New Zealand become protracted, this could have a significant effect on the value of the assets that are restrained.
16.46Historically, the Proceeds of Crime Act allowed for restrained funds to be released for legal expenses, regardless of the type of restraining order.734 CPRA changed this position but only in relation to domestic restraining orders. The expectation was that legal aid would be available for respondents. This policy shift was not universally endorsed.735

16.47The relevant provisions of the Legal Services Act 2011 that allow for legal aid also appear to apply to respondents whose property is restrained by virtue of a registered foreign restraining order.

16.48The concern that foreign law, and foreign restraining orders, might contemplate payment of legal fees could explain the different treatment of legal expenses in this context, but that explanation would only apply to some, rather than all, foreign restraining orders.

16.49Arguably, the possibility of a foreign restraining order containing a provision allowing for the release of funds to pay legal fees is covered by section 135 of CPRA, which provides that, if a foreign restraining order is registered in New Zealand, the property “is not to be disposed of, or dealt with, other than is provided for in the order”. If the foreign order contains a provision allowing for the release of funds to pay legal fees, that provision can be given direct effect in New Zealand, that is, the person can apply to the Official Assignee to release funds in accordance with the foreign order.

16.50We do not wish to re-open the debate as to whether the legal expense exception is appropriate in the context of domestic restraining orders. Again, that issue is outside of the scope of our review. However, we see no basis to distinguish between domestic and registered foreign restraining orders in relation to legal expenses. Accordingly, we see the current options as being:


Q62 Should the High Court be able to release funds restrained under a registered foreign restraining order to allow a respondent to pay legal expenses?

The forfeiture stageTop

16.51We are not aware of any concerns regarding the appropriateness or effectiveness of the assistance that New Zealand provides at the forfeiture stage in the confiscation process.

16.52The Commissioner of Police can register a foreign forfeiture order, which vests the property specified in the foreign forfeiture order in the Crown absolutely.736 The property is then taken into the custody and control of the Official Assignee.737
16.53The registration process itself is similar to the process for registering a foreign restraining order. MACMA empowers the Attorney-General to authorise the Commissioner of Police to make a registration application to the High Court.738 The application must be made on notice. The High Court must then register the foreign forfeiture order if it is satisfied that the order is in force.739 The Court does, however, have the power to grant relief to an individual who has an interest in the forfeited property, in certain circumstances.740 This may include the person who is the subject of the order. An application for relief must be made to the High Court within six months of the registration of the foreign forfeiture order.

The disposal stageTop

16.54Unlike the other stages in the confiscation process, the international assistance that New Zealand provides at the disposal stage is not prescribed by statute.

16.55International best practice on confiscation requires that countries be willing to share assets and to enter into general agreements, including formal bilateral asset-sharing agreements, with other countries.741 In negotiating these general agreements, international treaties and best practice suggest that consideration should be given to:742

These considerations may be prioritised in a different order depending on the nature of the underlying crime.

16.56Given New Zealand’s relative size and geographical isolation, it may not be feasible to negotiate a comprehensive round of general asset-sharing agreements. Statutory guidance on New Zealand’s preferred approach would, however, help to create a framework for future negotiations, and it would at least provide a greater degree of transparency for foreign countries than is currently the case. This guidance could be as broad as a statement that the Central Authority (in consultation with the Ministry of Foreign Affairs and Trade) may enter into an agreement with the requesting country for the final disposal of the confiscated or forfeited property. Alternatively, it could provide the broad statement and could list, and even prioritise, the considerations that the Central Authority will take into account in making such an agreement.


Q63 Do you think MACMA should acknowledge the ability of the Central Authority to enter into case-by-case asset-sharing agreements with foreign countries?

702Mutual Assistance in Criminal Matters Act 1992, s 59; and Criminal Proceeds (Recovery) Act 2009, ss 101, 102, and 110.
703Mutual Assistance in Criminal Matters Act 1992, s 61; and Criminal Proceeds (Recovery) Act 2009, s 104.
704Mutual Assistance in Criminal Matters Act 1992, s 62; and Criminal Proceeds (Recovery) Act 2009, s 106.
705Mutual Assistance in Criminal Matters Act 1992, s 59.
706Mutual Assistance in Criminal Matters Act 1992, ss 61 and 62.
707Criminal Proceeds (Recovery) Act 2009, ss 104(1), 105(1), 106(1) and 107(1).
708Mutual Assistance in Criminal Matters Act 1992, ss 59(1)(b), 61(2)(a)(ii) and 62(2)(a)(ii).
709Criminal Proceeds (Recovery) Act 2009, s 7.
710Commissioner of Police v Burgess [2012] NZCA 436 at [15]–[35].
711Financial Action Task Force, above n 701, at [12(b)].
712Criminal Proceeds (Recovery) Act 2009, s 129(1).
713Criminal Proceeds (Recovery) Act 2009, s 130.
714Criminal Proceeds (Recovery) Act 2009, ss 128–131. Notably s 128(3) states that subpt 2 of pt 2 of the Act (relating to restraining orders) also applies to interim foreign restraining orders bar a few specific exceptions.
715Mutual Assistance in Criminal Matters Act 1992, s 60.
716For instance, pt VI of the Commonwealth Model Legislation on Mutual Legal Assistance in Criminal Matters (2014) covers assistance with asset recovery. The explanatory note to Part VI states: “One of the guiding principles in drafting these clauses is that the requested country should, to the extent possible, not interfere with an order obtained in the requesting country. The requested country should instead simply register and enforce the order. However, it will remain possible for a person with an interest in the asset to have the order varied or discharged, if it is in the public interest to do so.” See also Financial Action Task Force, above n 701, at [12(b)].
717Commonwealth Model Legislation on Mutual Legal Assistance in Criminal Matters (2014), cl 36.
718This is because the same concerns surrounding timing do not arise. There is no window of delay caused by waiting for a foreign court to issue a restraining order. As such, there is no need for a provisional or temporary mechanism to secure the property.
719The Financial Action Task Force, above n 701, advises at [12(b)] that provisional measures should have the following features: “The executing country is able to take freezing or seizing action, within the short timeframes that are necessary to be effective, upon receiving a request for provisional measures. Such requests may be enforced directly or indirectly. However, it should be noted that, as a rule, to the extent that it is not inconsistent with the fundamental principles of a country’s domestic law, direct enforcement (i.e. accepting/registering and directly instituting steps to enforce the freezing or seizing order issued by the requesting country) is a more effective and swift way to comply with foreign requests for provisional measures than indirect enforcement (i.e. the executing country will obtain a domestic order using the evidence contained in the foreign request).”
720Criminal Proceeds (Recovery) Bill 2007 (81-1), cls 111–115. 
721Criminal Proceeds (Recovery) Bill 2007 (81-2) (select committee report) at 4–5.
722This is significant because, under s 29 of the Criminal Proceeds (Recovery) Act 2009, the Commissioner of Police may be required to give the High Court an undertaking as to costs upon filing an application for an interim foreign restraining order. By requiring the foreign country to underwrite that undertaking, the financial risk to the New Zealand Government would be substantially decreased.
723The Central Authority would not undertake an advanced assessment of the merits of the request, but rather the Central Authority would be required to assess that the foreign country understands New Zealand’s requirements for registering a foreign restraining order and being satisfied with the foreign country’s assurance their pending request is likely to meet those requirements. This will require an assessment of New Zealand’s relationship with the foreign country, the foreign country’s understanding of the MACMA requirements, and a preliminary examination of the grounds for refusal to determine whether any obviously apply.
724As is the case when registering a foreign restraining order, the assessment made by the High Court should be limited to ensuring that the correct procedures have all been followed: Mutual Assistance in Criminal Matters Act 1992, s 56(1).
725Mutual Assistance in Criminal Matters Act 1992, s 54.
726Mutual Assistance in Criminal Matters Act 1992, s 56.
727Mutual Assistance in Criminal Matters Act 1992, s 57.
728Criminal Proceeds (Recovery) Act 2009, ss 136–139.
729Organised Crime and Anti-corruption Legislation Bill 2014 (219-1), cl 42.
730Organised Crime and Anti-corruption Legislation Bill 2014 (219-1), cl 41.
731Criminal Proceeds (Recovery) Act 2009, s 28(1).
732Criminal Proceeds (Recovery) Act 2009, s 28(2).
733Criminal Proceeds (Recovery) Act 2009, s 134(1)(d) states that only ss 28(1), (3) and (4) of the Act apply to registered foreign restraining orders.
734See Solicitor-General v Bujak [2012] NZHC 2453.
735Criminal Proceeds (Recovery) Bill 2007 (81-2) (select committee report) at 7.
736Criminal Proceeds (Recovery) Act 2009, s 144(a).
737Criminal Proceeds (Recovery) Act 2009, s 144(b).
738Mutual Assistance in Criminal Matters Act 1992, s 55.
739Mutual Assistance in Criminal Matters Act 1992, s 56(1).
740Mutual Assistance in Criminal Matters Act 1992, s 57(4); and Criminal Proceeds (Recovery) Act 2009, ss 148 and 149.
741Financial Action Task Force, above n 701, at [5(d)].
742Financial Action Task Force, above n 701, at [5(d)], [10(d)] and [29]; Scheme Relating to Mutual Assistance in Criminal Matters within the Commonwealth including amendments made by Law Ministers in April 1990, November 2002, October 2005 and July 2011 [Harare Scheme] at [29]; and Commonwealth Model Legislation on Mutual Legal Assistance in Criminal Matters (2014) at cl 39 (Optional Provision).