Company faces penalty for breaching money laundering and terrorism financing laws

A consultancy service's actions have been questioned in court as the Government seeks to penalise a company for breaching money laundering and terrorism financing laws.

In the High Court at Auckland today, the Department of Internal Affairs claimed Qian DuoDuo Limited (QDD) - trading under Lidong Foreign Exchange - failed to meet Anti-Money Laundering and Countering Financing of Terrorism Act (AML/CFT) requirements for customer due diligence, account monitoring, record keeping and risk assessment.

QDD has not been accused of money laundering or financing terrorists.

Internal Affairs' lawyer David Johnstone said the case would unfold like a criminal sentencing as QDD had largely accepted liability. But the role of a consultancy service and a cultural and language barrier had set the parties "a little further apart than may have been anticipated at first blush".

In setting the financial punishment range, the court was expected to consider the seriousness of the offending based on nature, timing, duration, scale and consequence.

Representing QDD, lawyer Mai Chen said her client, QDD director Ye (Cathay) Hua, for whom English is a second language, largely relied on advice from consultancy firm Starfish and forwarded on its instructions unchanged.

Consultant Claire Piper, who went on to co-found Fiducia Limited and Isonomy Limited, said she was following Hua's instructions at the time and that decisions remained with Hua.

"You're characterising Cathay as very naïve … there was never any sniff of a misunderstanding in my experience," she told the court.

Piper said it was "very clear" from the outset she was not offering legal advice, and it would be "unconscionable and completely stupid" if it were to appear otherwise.

Chen asked Piper why she did not explicitly tell Hua in an email that she needed a lawyer at an earlier point.

"I did not wish to put my client in jeopardy," she said.

Piper later clarified to Justice Grant Powell that she had been uncertain of the right course of action because there was no methodology outlined by Starfish for how to handle such concerns.

"I was afraid I could be disclosing my client to something that was not due."

Chen submitted that Piper had tried to distance herself from the business after seeing how the advice had affected the company.

It was a claim Piper denied and she said she regretted trying to help them for as long as she did.

Working with QDD she said she had enough knowledge to know the "level of chaos and speed at which they were moving was not keeping up with the level of compliance rigor" expected, which brought her to the decision she could not continue to work with them.

Hua took the stand late this afternoon and was set to continue giving evidence tomorrow morning when the court will resume before Justice Powell. (via NZ Herald)