Chapter 19
Managing the overlap with inter-agency mutual assistance regimes

Inter-agency mutual assistance regimes

19.6Due to the increasing means by which activity can occur across borders, regulators need tools to enable them to access assistance from their foreign counterparts. This is clearly illustrated by a case in which the SFO was involved:869

In September 2009, Natural Dairy (NZ) Holdings Limited (Natural Dairy), a company listed on the Hong Kong Stock Exchange, made an announcement of its plan to purchase the New Zealand farm assets of the Crafar family. The plan involved an intermediary in New Zealand, a group of companies called UBNZ, purchasing the farm assets for $240 million. Natural Dairy undertook to purchase the farm assets from UBNZ for $500 million.

In September 2010, following concerns raised by the Overseas Investment Office and the New Zealand Police, the SFO opened an investigation into these transactions. A parallel investigation was opened in Hong Kong by the Independent Commission Against Corruption (ICAC). After extensive cooperation – between the two agencies, the SFO consulted ICAC regarding the prospect and nature of charges being laid in Hong Kong.

19.7Charges were subsequently laid. Regulators such as the SFO,870 Inland Revenue,871 the Financial Markets Authority (FMA),872 and the Commerce Commission have statute-based mutual assistance regimes.873 The most recent statute-based regime has been introduced by the Organised Crime and Anti-corruption Legislation Bill.874 Under this Bill, the New Zealand Police will be able to share personal information with its international counterparts where it is necessary to enable the overseas agency to carry out policing functions in its own jurisdiction. This followed the Agreement on Enhancing Cooperation in Preventing and Combating Crime between New Zealand and the United States of America (PCC Agreement).875

19.8The focus of some of the inter-agency mutual assistance regimes is not on criminal investigation and prosecution, but rather it is to facilitate regulatory compliance and enforcement. For example, New Zealand law taxes its tax residents on their worldwide income. Because income can be derived in different countries and New Zealand tax residents do not necessarily live in New Zealand, Inland Revenue needs information-sharing mechanisms with its foreign counterparts to ensure that its residents are complying with this law and, where necessary, mechanisms to enforce compliance. Compliance and enforcement of the laws for which a regulator is responsible can lead to criminal investigations and prosecutions.

Types of assistance under inter-agency regimes

19.9The main type of mutual assistance that can be provided by a regulator tends to be information sharing. The information that is exchanged is usually information that the regulator holds or can access in carrying out its domestic duties. For example, the FMA can provide documents to its foreign counterparts:876
19.10We understand that, in practice, the majority of requests relate to a request for information that is already held by the agency. For Inland Revenue, the information exchanged with other countries generally takes the form of accounting information, information on the ownership of legal entities and arrangements, and financial information. However, a regulator will generally be able to obtain information for foreign agencies using its powers to obtain information for domestic purposes. For example, amendments to various Acts in 2012 empower the Commerce Commission to provide compulsorily acquired information and investigative assistance to recognised overseas regulators.877 Specifically, the Commerce Commission is able to use its powers to gather information, including by way of search powers, for a recognised overseas regulator or to provide information already gathered to assist the foreign regulator in performing its functions.

19.11Likewise, Inland Revenue can use all of its domestic statutory powers to obtain information for its foreign counterparts. Article 5(2) of the OECD Convention on Mutual Administrative Assistance in Tax Matters, which was given legislative force through the Double Tax Agreements (Mutual Administrative Assistance) Order 2014, provides:

If the information available in the tax files of the requested State is not sufficient to enable it to comply with the request for information, that State shall take all relevant measures to provide the applicant State with the information requested.

The phrase “shall take all relevant measures” is interpreted as giving Inland Revenue the ability to use all of its domestic statutory-given powers to obtain the information requested from a foreign country. This would include, for example, the wide power in section 16 of the Tax Administration Act 1994 enabling the Commissioner of Inland Revenue to access premises to obtain information.

19.12However, some regulators are not permitted to use their full range of domestic powers to fulfil a foreign agency’s request. For example, the FMA’s power to enter and search a place or vehicle cannot be exercised for the purpose of providing information to a foreign agency.

Safeguards under inter-agency mutual assistance regimesTop

19.13Each inter-agency regime is specific to the regulator. Safeguards may include the following:

19.14The difficulty is that there is no consistency of safeguards across inter-agency regimes. This is particularly apparent in two areas: ministerial oversight and the role of the Privacy Act 1993. Both the Commerce Commission and the SFO have ministerial oversight of their international cooperation arrangements,882 but the FMA does not. In relation to the application of the Privacy Act, the Commerce Commission must “consult with the Privacy Commissioner on possible privacy issues before entering a cooperation arrangement”.883 In contrast, personal information shared under the proposed Police overseas information-sharing regime is not subject to the Privacy Act despite the Privacy Commissioner pushing for an oversight role.884

19.15We think there needs to be consistency with some fundamental safeguards included in all regimes.


Q81 What fundamental safeguards do you think should be included in all inter-agency mutual-assistance regimes?

869Serious Fraud Office, above n 867, at 27.
870Serious Fraud Office Act 1990, s 51.
871Under New Zealand law, all tax treaties are given effect by virtue of an Order in Council empowering mechanism in s BH 1 of the Income Tax Act 2007. In particular, see the Double Tax Agreements (Mutual Administrative Assistance) Order 2013, which gives effect to the OECD Convention of Mutual Administrative Assistance in Tax Matters ETS 127 (opened for signature 25 January 1988), as amended by the 2010 Protocol (opened for signature 27 May 2010, entered into force 1 June 2011) [OECD Tax Convention].
872Financial Markets Authority Act 2011, ss 31–32.
873Commerce Act 1986, ss 99B–99P; Fair Trading Act 1986, ss 48B–48O; Credit Contracts and Consumer Finance Act 2003, s 113(ea); Telecommunications Act 2001, s 15(ha).
874Organised Crime and Anti-corruption Legislation Bill 2014 (219-1).
875Under the PCC Agreement, New Zealand and the United States agreed to exchange information for the purpose of preventing, detecting, and investigating criminal offences. Because there is no specific authority in the Policing Act 2008 that allows the sharing of this information, the Police currently rely on a combination of domestic legislation and international agreements. There was a concern that the present state of the law does not allow the sort of information sharing envisaged by the PCC Agreement. In particular, the lack of express legislative authority is thought to create a risk that information sharing will breach the Privacy Act 1993.
876International Organisation of Securities Commissions, above n 866, at [7]. See the discussion above at [13.27]–[13.29].
877Amendments were made to the Commerce Act 1986, the Fair Trading Act 1986, the Credit Contracts and Consumer Finance Act 2003, and the Telecommunications Act 2001. See Commerce (International Co-operation, and Fees) Amendment Act 2012, cl 5; Fair Trading (International Co-operation) Amendment Act 2012, cl 5; Credit Contracts and Consumer Finance (International Co-operation) Amendment Act 2012, cl 4; and Telecommunications (International Co-operation) Amendment Act 2012, cl 4.
878Serious Fraud Office Act 1990, s 51(2)(c).
879Commerce Act 1986, s 99J.
880Article 21 of the OECD Tax Convention, above n 871, given effect in New Zealand through the Double Tax Agreements (Mutual Administrative Assistance) Order 2013.
881International Organisation of Securities Commissions, above n 866, at [6(e)].
882Serious Fraud Office Act 1990, s 51(1); Commerce Act 1986, s 99F; Fair Trading Act 1986, s 48F; Credit Contracts and Consumer Finance Act 2003, s 113(ea) (incorporates s 99F of the Commerce Act); and Telecommunications Act 2001, s 15(ha) (incorporates s 99F of the Commerce Act).
883Commerce Act 1986, s 99E(2)(c).
884Ministry of Justice “Departmental Disclosure Statement: Organised Crime and Anti-corruption Legislation Bill” (21 May 2014) at 9.