Organised Crime in New Zealand

2010

2

Commissioner's ForewordOrganised crime is a global threat, but local in its impact and damage to New Zealand society. It affects every community in New Zealand. It is widely recognised that the most effective way in which to combat this threat is through cooperation and collaboration.

Organised Crime in New Zealand 2010 brings together information and intelligence provided by a wide range of agencies from the New Zealand Government and the private sector. I am particularly grateful to these agencies for their ongoing assistance and for working together to better understand the threat and develop solutions.

The report reveals that today's organised crime networks are involved in a range of illegal markets. They are agile, innovative and operate across international borders. The world-wide profits run to billions of dollars annually and organised crime presents a current and growing threat across the globe. The responses required to address these threats need to be equally sophisticated and New Zealand Police, together with our partners, are engaged in a range of initiatives. Some of these are highly visible - for example running traditional criminal investigations - while others involve supporting legislation reviews, tightening regulations or cooperating with international partners to make the New Zealand environment increasingly hostile for organised criminals.

But it is not just the police and our partners that are responsible for combating organised crime. We are all responsible for helping to reduce organised crime; it requires us as all to be vigilant; to recognise, report and respond to these threats so that we stay ahead of the criminals that do so much harm to our society. The aim of this report is to put into the public domain a clear picture of the problems and challenges we face, and to help engage our community in the joint efforts needed to disrupt and dismantle organised crime in New Zealand.

Howard Broad Commissioner of Police 2010

3

CONTENTS

INTRODUCTION ................................................................................................................4

DEFINING AND IDENTIFYING ORGANISED CRIME ...................................................................4

ORGANISED CRIME GROUPS AND MEMBERS IN NEW ZEALAND................................................5

New Zealand Adult and Youth GangsFamily syndicatesTransnational organised crime groupsFacilitators and specialists

ILLEGAL MARKETS ............................................................................................................7

Illicit drugsBurglary, theft and links to organised crimeViolenceKidnappingIllegal trade, possession and use of firearmsIllegal migrationIdentity crimeFinancial crimeElectronic crime (e-crime)Environmental crimeIntellectual Property (IP) crimeBribery and corruption

EFFORTS TO DISRUPT AND DISMANTLE ORGANISED CRIME................................................... 21

Collaboration - international, government and private sectorLegislation

4

INTRODUCTIONAccording to the United Nations (UN), transnational organised crime is a major threat to human security, impeding the social, economic, political and cultural development of societies worldwide. Organised crime groups throughout the world are involved in a range of criminal activities including drug trafficking, human trafficking, firearms trafficking, environmental crime, cyber crime and money laundering. As part of the global community, New Zealand is not immune to the organised crime threat. A number of organised crime groups, both domestic and international, are involved in a range of illegal markets impacting on New Zealand.

Organised Crime in New Zealand 2010 aims to provide insight into the nature and extent of the threat in New Zealand. The analysis in this report draws from information provided by a range of agencies from the New Zealand Government and the private sector. Open source research on national, regional and global trends relating to organised crime is also included. Further, the report highlights efforts that aim to disrupt and dismantle organised crime in New Zealand.

DEFINING AND IDENTIFYING ORGANISED CRIMENew Zealand has signed and ratified the UN Convention Against Transnational Organised Crime that defines an organised criminal group as ‘a structured group of three or more persons, existing for a period of time and acting in concert with the aim of committing one or more serious crimes1 in order to obtain, directly or indirectly, a financial or other material benefit’. Under New Zealand domestic law, membership of an organised criminal group is punishable pursuant to Section 98A of the Crimes Act 1961, and could result in up to 10 years imprisonment. Section 98A draws from the UN definition but also includes penalties for group violence, or committing crimes overseas, that if committed in New Zealand, would be an offence.

“Today’s organised crime networks are more agile and inventive, quick to embrace new technologies and seek out new markets and supply routes. They run like sophisticated and modern multi-national businesses”.

United Kingdom, Home Office 2009

A number of groups engaged in organised crime in New Zealand are traditional, in the sense that they operate as a structured group with a rigid hierarchy. However, consistent with international trends, some organised groups impacting on New Zealand are fluid, flexible and dynamic criminal networks, where structure is less obvious. Increasingly, these organised crime groups expand and contract depending on criminal opportunities. In this way, the networks are entrepreneurial and often use facilitators and specialists, as well as legitimate businesses, to facilitate their illicit activities. While organised crime definitions provide a useful starting point, defining and identifying organised crime groups is problematic due to their continuing evolution and the complexity of emerging networks. Despite the challenges in defining and identifying organised crime groups, those involved are linked by two common characteristics; they all pose a risk to New Zealand and they are largely motivated by financial gain.

1 The UN Convention against Transnational Organised Crime defines serious crime as conduct constituting an offence punishable by a maximum deprivation of liberty at least four years or a more serious penalty.

5

ORGANISED CRIME GROUPS AND MEMBERS IN NEW ZEALANDOrganised crime in New Zealand is perpetrated by a range of groups. Importantly, not all organised crime groups pose the same level of risk. The diagram below highlights that organised crime group involvement in criminal activity varies from street level offending to transnational organised crime. Consequently, the impact these groups have on the community, and the law enforcement response, varies greatly.

New Zealand Adult and Youth Gangs

A New Zealand Adult or Youth Gang is an organisation, association or group with the following characteristics: a common name; one or more common identifiers; and whose members or associates either individually or collectively promote, encourage or engage in criminal activity that is driven by a desire for profit and/or to create an atmosphere of fear and intimidation, all of which are enabled by virtue of membership in the gang.

New Zealand Police

Currently, it is noted that there are 30 adult gangs in New Zealand. These adult gangs are present in towns and cities throughout New Zealand and are involved in a wide range of criminal offending. While tension often exists between these groups, an observable trend in the last few years is their willingness to work together where there is profit to be made from criminal activity. New Zealand Adult Gangs have also evolved and are now less likely to be collectively linked to a single criminal venture. Rather, individuals use their gang membership to enable and facilitate criminal activity.

New Zealand Youth Gang presence is also noted widely throughout the country. However, their fluid nature makes determining membership particularly problematic. New and emerging youth gangs continue to be identified but groupings are often observed to disband or merge with other gangs. New Zealand Youth Gangs are commonly noted for their involvement in drug offending, burglary, vehicle crime, disorder, intimidation, wilful damage and graffiti. While not always considered ‘organised’, offending is often facilitated and driven by membership in a youth gang and sometimes the gangs’ affiliation to an adult gang.

6

Family syndicatesOrganised crime groups in New Zealand can also be linked by family relationships. Family syndicates are noted throughout New Zealand and are involved in a range of offending including burglary, violence, threats, possession of weapons, drugs and vehicle crime.

Transnational organised crime groupsLaw enforcement continues to identify transnational organised crime groups impacting on New Zealand. These groups often have links to international criminals or networks, increasing the risk that they pose. Commonly linked by either ethnicity, or their involvement in a specific illegal market, these groups are often flexible and entrepreneurial. West African, Vietnamese, Chinese, Iranian, Italian, Romanian, Pakistani and Malaysian organised crime groups have all been noted for their involvement in a range of organised offending including fraud, Intellectual Property (IP) crime and illicit drug activity. Asian organised crime groups in particular continue to pose a serious threat to New Zealand, due to their ongoing involvement and central role in the illicit drug market.

Facilitators and specialistsOutsiders are commonly recruited or exploited where specialised skills are required to facilitate organised criminal activity in New Zealand. They may be outside contractors or part of a criminal network and include complicit lawyers, accountants, chemists and computer hackers, or even those with access to particular goods including firearms, false documents or precursor chemicals.

7

ILLEGAL MARKETS

Illicit drugs

Methamphetamine, precursor chemicals and clandestine laboratories

Oceania is recognised internationally as having one of the highest amphetamine-type substance user rates •per capita in the world.

The New Zealand methamphetamine market is estimated to be worth approximately NZ$1.2 billion per •year at street level prices.

The recently published • Tackling Methamphetamine: Action Plan aims to reduce methamphetamine use in New Zealand and the subsequent harm it causes.

Asian organised crime groups are a key threat due to their involvement in the importation of •methamphetamine and pseudoephedrine, as well as domestic manufacture of the drug.

Reporting indicates domestically sourced pseudoephedrine is commonly used in clandestine laboratories.•

Organised crime group involvement is noted at every stage of the methamphetamine supply chain in •New Zealand.

Oceania is recognised internationally as having one of the highest amphetamine type substance2 user rates in the world ‘per capita’. Methamphetamine, commonly referred to as ‘P’, is supplied to the New Zealand market via importations and domestic manufacture. It is estimated that the methamphetamine market is worth NZ$1.2 billion per year at street level prices and is the most significant driver of profit for organised crime in New Zealand.

The recent publication Tackling Methamphetamine: An Action Plan3 released by the New Zealand Government demonstrates a commitment to reducing methamphetamine use in New Zealand and the subsequent harm it causes. The Action Plan outlines the aim to implement stronger controls over methamphetamine precursors, provide better routes into treatment for problematic users, increase community support, and ensure that agencies are working together to reduce the use of, and harm associated with, the drug in New Zealand.

The global demand for methamphetamine that emerged in the 1990s, has driven the demand for precursor4 substances, namely pseudoephedrine and ephedrine, typically used as the primary ingredients in the manufacturing process. Manufacturing methods that use pseudoephedrine are often preferred, because it is (relatively) easily converted to make methamphetamine. China is currently the primary source country for both pseudoephedrine and ephedrine predominantly in the form of ContacNT5.

New Zealand continues to be targeted by Asian organised crime groups who dominate the supply of overseas sourced pseudoephedrine, however, these groups are also linked to importations of methamphetamine, and more recently its domestic manufacture. It is likely their involvement in the methamphetamine market in New Zealand will continue.

2 For the purposes of this report, ATS includes amphetamine, methamphetamine and MDMA.3 Refer link: http://www.beehive.govt.nz/sites/all/files/ActionPlan.pdf4 Precursor substances are those used in the manufacture of illicit drugs. 5 ContacNT is a medicine widely available in China.

ContacNT granules concealed within a bicycle frame.

8

Operation Jacaranda in 2009 targeted one of the largest methamphetamine clan labs ever detected in New Zealand. The investigation revealed that pseudoephedrine was being extracted in a motel in Auckland and then transported to a rural property for conversion into methamphetamine. A hollow, cracked marble table and statues at the rural site indicated imported precursors had been used. Four full truckloads of chemicals were removed from one of the sites. Chemicals present at the scene also indicated experimentation with alternate manufacturing methods not requiring pseudoephedrine. The manufacturing operation was run by an Asian offender.

Another source of pseudoephedrine is the diversion of pseudoephedrine-based medicines brought over the counter from pharmacies; a practice known as ‘pill shopping’. Pill shoppers are often either contracted by domestic organised crime groups and paid in cash, or they may be users obtaining the medicine in exchange for drugs. Domestically sourced pseudoephedrine is commonly identified at clandestine laboratories. Forthcoming legislative changes that intend to make pseudoephedrine a prescription-only medicine aim to significantly reduce domestic diversion.

New Zealand methamphetamine manufacturing methods also use chemicals that are not controlled by legislation, for example, phosphorous and iodine. These chemicals are typically obtained domestically and diverted for illicit purposes. New Zealand Adult Gangs continue to be involved in the manufacture and distribution of methamphetamine, with 104 of the 133 clan labs dismantled (78 percent) in 2008 linked to Adult Gangs.

Cannabis

New Zealand is self sufficient in the cultivation of cannabis, which is the most commonly used illicit drug in •New Zealand.

Organised crime groups and members can be linked to every stage of the cannabis supply chain.•

There has been an increase in indoor cannabis operations linked to Vietnamese organised crime groups.•

While ‘drug dealing houses’ once sold only cannabis, a range of illicit drugs are now sold at these locations.•

Since the early 1990s New Zealand has been self sufficient in the cultivation of cannabis, which is the most widely used illicit drug in New Zealand. According to international research, New Zealand is acknowledged as having one of the highest rates of use per capita in the world.

Both indoor and outdoor cannabis cultivation is noted in New Zealand. Whilst outdoor cultivation of cannabis remains the preferred means, indoor soil and hydroponics operations producing higher potency cannabis are becoming more prevalent. Vietnamese organised crime groups have been linked to several recent indoor growing operations.

Operation KristyThe 2008/2009 New Zealand Police National Cannabis and Crime Operation resulted in the destruction of approximately 141,000 cannabis plants. Police arrested 1,175 individuals and seized approximately NZ$400,000 worth of stolen property and 191 firearms.

In addition, four methamphetamine clan labs were detected. It is believed that Operation Kristy cannabis plant seizures alone prevented an estimated NZ$377 million in harm to the New Zealand community.

Some of the chemicals located during Operation Jacaranda.

9

Organised crime continues to be linked to every step of the cannabis supply chain. A ‘typical’ cannabis supply chain consists of a cultivator using a trusted buyer, or a small select group of trusted buyers, who then on-sell to a wider range of buyers. In 2009 a number of New Zealand Adult Gangs were linked to seizures of cannabis.

Locations selling cannabis are colloquially referred to as ‘tinnie houses’, due to cannabis often being sold in small quantities wrapped in tinfoil. However, a range of illicit drugs are increasingly being sold at these locations, prompting a change of name by the New Zealand Police from ‘tinnie houses’ to ‘drug dealing houses’.

MDMA and MDMA mimics

Tablets that users believe to be MDMA are increasingly found to actually contain a range of synthetic •substances (MDMA mimics).This also means it is more difficult to determine the true nature of the MDMA market in New Zealand.

MDMA in New Zealand is sourced from illegal importations.•

Both domestic and transnational organised crime groups are involved in the MDMA market in New Zealand.•

MDMA is commonly referred to as ‘ecstasy’. Importations of MDMA into New Zealand first emerged in the mid-1990s and originated from Europe (specifically the Netherlands and Belgium). However, in recent years a wider range of regions and source countries, including Eastern Europe and Asia, have been noted. From the late 1990s, domestic organised crime groups became increasingly involved in the importation and distribution of MDMA. Only a small number of clandestine MDMA laboratories have been dismantled in New Zealand in the last 20 years, indicating MDMA in New Zealand is primarily sourced from illegal importations.

Both domestic and transnational organised crime groups have been identified importing and distributing MDMA in New Zealand. Approximately 14,500 MDMA tablets6 were seized in 2009 in 112 seizures.7 However, since 2007, it has become difficult to identify MDMA tablets because they increasingly include a range of alternative synthetic substances (MDMA mimics).8 This includes BZP9, which has been classified as a Class C Controlled Drug under the Misuse of Drugs Act 1975. These developments have essentially altered the MDMA market, making it difficult to determine trends. It is likely MDMA tablets will continue to contain other synthetic substances, which presents a greater risk for users who believe that they are taking MDMA.

6 Tablets refer to tablet equivalents as MDMA is imported in both tablet and powder form.7 Tablets have been recorded as MDMA but may have included other synthetic substances.8 Alternate synthetic substances can include but is not limited to piperazines, mephedrone and methylone.9 Benzylpiperazine (BZP) is a recreational drug with stimulant properties. The effects produced by BZP are believed to mimic those produced by amphetamine, although at

reduced potency.

Cannabis seized during a police investigation.

Seized MDMA tablets and granules.

10

Cocaine

By international standards the current cocaine market in New Zealand is believed to be small.•

It is possible that organised crime groups will seek to expand the cocaine market in New Zealand.•

New Zealand and the Pacific region are used as transit points for shipments of cocaine.•

Cocaine is derived from the coca plant, which is grown in South America, specifically Colombia, Peru and Bolivia, and there is no evidence that cocaine is currently produced in New Zealand. It is believed that New Zealand’s cocaine market is relatively small, however, during the latter part of 2009 and early 2010, reporting indicated increased availability of cocaine.

It is possible that transnational organised crime groups, as well as New Zealand Adult Gangs, might seek to expand the cocaine market in New Zealand. Intercepted shipments of cocaine indicate New Zealand and the Pacific region are used as transit points for illicit drug consignments destined for other international markets.

Opiates and opioids

Hospital admissions indicate an increasing number of younger individuals are using opioids.•

The New Zealand market is currently dominated by the diversion of opiate-based pharmaceuticals.•

It is possible that organised crime groups will seek to exploit any expansion in the opiates and opioids •market in New Zealand.

There are no current indicators to suggest there is a market for imported heroin in New Zealand and there have been no significant seizures of imported heroin since 2001.

While New Zealand has had a long period of relatively low opiate10 abuse since it was targeted by the Mr Asia syndicate in the 1970s, there are early indications that this market is expanding. Hospital admissions highlight an increasing number of younger individuals who are using potentially addictive opioids11.

The New Zealand opiate market is currently dominated by the diversion of opiate-based pharmaceuticals, including those that can be obtained via doctor’s prescription. It is difficult to determine the most widely abused opiates in New Zealand. Codeine is most widely available but morphine features more regularly in seizure incidents. The abuse of methadone is also commonly noted. It is possible that any increased use of opiates and other opioids in New Zealand could lead to the recommencement of imported heroin and the expansion of this market by organised crime groups.

10 An opiate includes, but is not limited to, heroin, opium and methadone.11 Opioid includes, but is not limited to, morphine, codeine and oxycodone.

Scored Opium Pod.

11

Burglary, theft and links to organised crime

Organised crime groups and family syndicates continue to be noted for their involvement in volume crime •offending.

There are ongoing examples of New Zealand Adult and Youth Gang, as well as family syndicate, involvement in burglary, theft and a range of other ‘volume’12 crimes. Investigations reveal theft and burglary are often undertaken to support a drug habit.

Organised crime groups in New Zealand are also involved in the movement of illicit and stolen commodities to satisfy national supply and demand. Both the road and air transport networks are utilised to move goods including, for example, stolen property, firearms, counterfeit items and illicit drugs.

Violence

The majority of organised crime groups engage in violent offending.•

New Zealand Adult Gangs engage in overt displays of violent offending commonly perpetrated within and •against other organised crime groups. Many of these incidents remain unreported.

Organised crime groups provide a structure as well as a set of values and behaviours that actively encourage and normalise antisocial behaviour, including violence. In New Zealand, the majority of organised crime groups engage in violence and intimidation as a way of life, in random acts of aggression or in self defence.

New Zealand Adult Gangs often engage in overt displays of violent offending commonly linked to incidents of both inter and intra gang tension. Gang members in New Zealand are noted for their ongoing involvement in ‘standovers’13 and ‘taxing’,14 which are often linked to the illicit drug trade. This is consistent with international reporting that notes violence is used to enforce criminal business dealings and recover debts.

12 Volume crime generally includes burglary, unlawful taking of motor vehicles and general theft (including theft from motor vehicles and shoplifting). 13 A standover involves the use of intimidation to create fear of consequences if a certain demand is not complied with.14 Taxing is the removal or theft of property, drugs or money by a gang member in payment of a debt, whether real or imagined. Taxing often involves the use of intimidation or

violence to overcome resistance.

Operation BerylAn operation was launched in 2009 following the identification of organised offending relating to the theft of over 500 Toyota Hiace Vans in the Auckland Region. A small percentage of these stolen vehicles were subsequently recovered. The police targeted ‘chop shops’ as well as the offenders who were stealing the vehicles. To date there have been 12 arrests and 444 criminal charges laid.

In addition, the operation has resulted in the recovery of 127 or NZ$690,000 worth of stolen vehicles or parts, four firearms, stolen property, methamphetamine and cash. Parts were being shipped to the Middle East via the United Arab Emirates, sometimes at a rate of one container per week. This highly organised criminal syndicate had a significant impact on vehicle theft across Auckland.

Stolen vehicle and parts ready for export.

12

While some gang members have legitimised their involvement in debt collection in New Zealand, it is likely that their status as a gang member is used to intimidate victims. Further, organised crime groups and members are often found in possession of a range of weapons, including firearms. New Zealand Youth Gangs are commonly involved in violent offending including fighting, assault and intimidation. Organised crime group involvement in violent offending is often unreported out of fear, or due to the victims being criminals themselves.

Kidnapping

Organised crime groups in New Zealand are involved in criminal vendetta kidnappings as well as •kidnappings for gain.

Organised crime group involvement in kidnapping in New Zealand is under reported.•

There are a number of examples of organised crime group involvement in kidnapping in New Zealand. It is believed that kidnapping incidents are under reported, commonly due to the victims being criminals themselves. These incidents are sometimes referred to as ‘criminal vendetta’ kidnappings. For example, an indoor cannabis growing operation shut down by police in 2008 led to a standover in relation to lost drug money. A violent incident ensued and kidnapping charges were subsequently laid against four individuals. In another example, a well-known criminal involved in illicit drug activity was charged with kidnapping following an incident in 2008. Along with two others, and armed with a cattle prod, a knife and a pistol, they entered the victim’s address and demanded the return of cannabis that had allegedly been stolen.

Organised crime groups in New Zealand have also been noted for their involvement in kidnapping for gain. In a recent example, a brothel client was kidnapped, threatened with violence and had a large amount of money withdrawn from their account. The brothel is believed to be one of several in the wider Auckland region run by an Asian organised crime syndicate. In an incident in early 2010 a New Zealand Adult Gang member who, while armed with a weapon, kidnapped an individual from their apartment complex. The victim was transported in the offender’s vehicle, robbed of possessions and made to withdraw money from their bank account.

Operation BillyOperation Billy related to a violent clash between two rival youth gangs in 2005. Thirty members of one gang, armed with weapons, confronted members of another gang at an Auckland address. The ensuing violence resulted in gang members being knocked unconscious, and beaten about the head and body with baseball bats, hammers, glass bottles and pieces of wood. Victims were hospitalised with life threatening injuries. Eleven individuals were charged with attempted murder, wounding with intent and serious assault. This violence highlights that tensions between rival gangs can often lead to violent offending.

Operation ConvoyOperation Convoy related to the kidnapping of a female from her home. One of the four offenders had undertaken contracting work at the victim’s residence prior to the kidnapping. Armed with a knife and a fake gun, three of the offenders entered the victim’s home in the early morning and tied her and her elderly parents up.

They told the victim’s parents they wanted NZ$500,000 by noon and another NZ$500,000 by noon the next day. They said if the kidnapping was reported to the police all three of them would be murdered. The victim was blindfolded and driven away in her own vehicle. Realising their demands would not be met, the offenders left the victim in an industrial area. The offenders were subsequently arrested.

13

Illegal trade, possession and use of firearms

Organised crime groups and members are involved in the illegal trade, possession and use of firearms.•

Firearm use is noted in inter and intra gang violence. Incidents involving members of the public are rare.•

Organised crime groups undertake burglaries and continue to target legitimate firearm owners and •collectors in order to gain access to firearms.

The dynamics of organised crime lends itself to conflict and consequently, the possession and use of firearms. Organised crime groups use firearms for their protection, the enhancement of their status and the commission of crime including intimidation, robbery, assault and homicide. International reporting highlights that the possession of firearms by organised crime groups is often linked to the illicit drug trade.

Organised crime groups in New Zealand continue to illegally possess and use firearms. Inter and intra group conflict, often involving weapons,15 has existed in New Zealand for decades and firearms have featured in a number of high profile cases in recent years. For example, in 2007 a New Zealand Adult Gang member killed the two year old daughter of a rival gang member in a drive-by shooting. Fortunately, organised crime group use of firearms in incidents involving members of the public are rare. However, any use of firearms by the criminal fraternity poses an unacceptable risk to the public.

Consistent with international reporting, organised crime groups undertake burglaries and continue to target legitimate firearm owners and collectors in order to gain access to firearms. For example, 22 firearms were stolen in six targeted burglaries in rural Northland in 2009.

Illegal migration

International migration is set to increase in the future, driven by a range of factors.•

Human trafficking has not yet gained a foothold in New Zealand.•

There is a risk of future seaborne people smuggling attempts targeting New Zealand.•

Illegal migration is facilitated by application fraud, the use of irregular travel documentation or the •contravention of permits once an individual arrives in New Zealand.

Organised crime groups are involved in the production and use of false, fraudulent or stolen documents to •facilitate entry into New Zealand.

The UN estimate there are approximately 200 million migrants worldwide, a figure that has more than doubled in the last 25 years. Increased migration has been driven largely by globalisation and the dramatic improvements in transport and communications. While economic incentives will continue to drive migration in the future, environmental pressures and climate change will almost certainly become more relevant. Conflict and war also result in the displacement of people to other countries. Consequently, illegal migration as a subset of all migration looks set to increase.

Human trafficking is distinct from people smuggling in that it involves coercion and exploitation of the migrant. It is believed human trafficking has not yet gained a foothold in New Zealand.

15 Firearms most commonly used are ‘long arms’ such as rifles and shotguns.

Weapons and ammunition seized from an address by police in 2008.

14

People smuggling has emerged as a major organised crime problem in Australia. There is a risk of future seaborne people smuggling attempts targeting New Zealand. The success of any venture is dependant on a number of factors including the determination of the smugglers, the seaworthiness of the vessel, the weather, as well as required food and fuel provisions. Proactive law enforcement intervention will also hinder the success of any venture.

Illegal migration continues to be facilitated by application fraud, the use of irregular travel documentation or the contravention of permits once an individual is in New Zealand. The presence of foreign nationals working illegally in New Zealand’s sex industry has also been identified.

The abuse of legitimate entry to New Zealand by organised crime groups is likely to continue as border controls tighten in regard to illegal migration. Such groups are often involved in the production and use of false, fraudulent or stolen documents to support legitimate applications to gain entry and remain in New Zealand. It is likely organised crime groups will produce increasingly sophisticated documentation in support of elaborate scams to deceive immigration authorities.

Identity crime

Identity crime is often essential to facilitate successful, and sometimes large-scale, offending. •

Information and Communications Technology, including the Internet, are used as a means to facilitate, as •well as commit, identity crime.

Organised crime groups and specialists continue to use fraudulent identity documents to commit a range of •offending.

The misuse of personal identity information, commonly referred to as identity crime16, describes illicit activity that forms part of an offence. It is important to examine identity crime as a separate illegal market because it remains poorly understood and facilitates a range of criminal activity. The misuse of personal identity information can directly expedite an offence by allowing a deception to occur. This is evidenced in many financial and immigration frauds. While identity crime is described as an ‘enabler’, it is often essential to facilitate successful, and sometimes large-scale, offending.

16 Internationally, terms relating to the misuse of identity vary widely and can include identity theft, identity fraud and identity crime.

CASE STUDYIn 2004, a male Malaysian national was one of the first individuals to be convicted of people smuggling in New Zealand. The investigation related to the smuggling of Malaysian and Thai nationals into New Zealand to work illegally in the horticulture industry.

Upon arranging entry into New Zealand through Auckland International Airport and transiting the workers to Blenheim, the offender retained his employees’ passports and provided sub-standard accommodation. The offender was subsequently convicted and sentenced on 12 immigration charges relating to people smuggling and sentenced to two years imprisonment.

Cash and gold bars retrieved from an identity crime offender’s property.

15

Information and Communications Technology, including the Internet, provides avenues that assist identity crime offending. For example, technology provides the means to produce high quality manufactured identity documents, while the increasing online storage of personal information and online transaction systems are also being exploited. Online identity crime activity, currently based around phishing17, account compromise and credit card fraud, is often committed against New Zealanders by offenders based elsewhere in the world. The scope and reach of this offending can be vast with minimal financial outlay. Many items used in the production of false identity documents are widely available on the Internet, including card readers, card encoders, card printers and over-laminates used to produce cloned credit cards.

Organised crime groups and their specialists continue to use fraudulent identity documents to facilitate a range of offending, commonly linked to fraud and illegal migration. An example in 2009 related to the fraudulent reporting of ‘lost’ passports that were then used to gain illegal entry into Australia. Of note is the fact that identity documents, including passports and driver licences, continue to be targeted in thefts and burglaries in New Zealand.

Financial crime

Money laundering

Organised crime groups are involved in money laundering in New Zealand.•

The complexity of money laundering methods depends largely on the sophistication of the offenders •involved.

New legislation will result in increased scrutiny of financial institutions and transactions, and it well enable •law enforcement to more easily seize proceeds of crime.

Money laundering is the process by which income and assets used in, and derived from, illegal activity are converted into, or disguised, as apparently legitimate income. Organised crime groups launder proceeds of crime to avoid detection, preserve profit, further their criminal enterprise and support their lifestyle. The primary aim of organised criminal activity is the pursuit of profit. Therefore, combating money laundering is fundamental to effectively addressing serious and organised crime.

Money laundering is a criminal offence and separate to the original (or predicate) offence18 that generated the proceeds of crime. In essence, money laundering occurs whenever a criminal deals with the proceeds of a serious crime19 with the purpose of concealing the origins, and with the knowledge that the proceeds have been derived from serious crime. There is no reliable estimate as to the extent of proceeds of crime. However, organised crime is financially motivated and therefore it is likely that the criminal proceeds laundered are of substantial value.

Most money laundering occurs through the regulated financial system. The complexity of the money laundering depends on the sophistication of the offenders involved. For example, the laundering of proceeds of crime can range from the sale of a stolen item20 and the deposit of the money into a retail bank account, through to multiple transfers of illicit drug money through shelf companies’21 trust accounts. Organised crime groups in New Zealand have been observed using a range of money laundering methods including:

Use of the retail banking sector, credit cards, cheques, stored value cards, promissory notes etc.•Cash conversion.•Currency exchange.•

17 Phishing commonly involves sending fake emails to a victim purporting to come from a legitimate source and requesting information (such as bank account details and/or passwords), or directing a victim to a fake Internet website where this information can be captured.

18 Predicate offence refers to a serious offence (or specified drug offence) from which the proceeds can be laundered.19 In this context, serious crime is defined as an offence punishable by five years imprisonment or more or an offence committed overseas that, if committed in New Zealand,

would be punishable by five years imprisonment or more - Section 243 (1) Crimes Act 1961.20 Under New Zealand legislation, stolen property must have a value of NZ$1,000 or more before it can be laundered.21 A shelf company is a legal company that exists in name only and does not perform or operate in anyway.

16

Purchase of portable valuable commodities (gems, precious metals etc).•Purchase of valuable assets (real estate, vehicles etc).•Alternative remittance services/underground banking.•Casino, pub and bar gambling, horse racing.•Co-mingling (business investment).•Use of nominees, trusts, family members or third parties.•Use of professional services (lawyers, accountants, brokers etc).•

The Anti Money Laundering and Countering Financing of Terrorism Act 2009 will be implemented over two years. The Act will result in increased scrutiny by financial institutions of financial transaction activity. Since the Criminal Proceeds (Recovery) Act 2009 came into force, NZ$36 million worth of assets have been identified that are believed to have been obtained through criminal activity. Of the NZ$36 million under investigation, a large proportion is believed to be linked to the illicit drug trade. Targets in these investigations have included organised crime groups and members.

Fraud

International and domestic organised crime groups continue to be noted for their involvement in a range of •fraud offences impacting on New Zealand.

It is sometimes difficult to identify an organised element to fraud offending as offences are often viewed in isolation. Despite this, the use of similar modus operandi by offenders is often noted, highlighting knowledge sharing within the criminal fraternity.

Consistent with international reporting, New Zealanders continue to be targeted in advance fee frauds, commonly perpetrated by West African nationals and organised crime groups. The principal strategy of these scams is to target vulnerable individuals with promises of personal gain. A recent scam in New Zealand involved online vacancy advertisements for ‘receipts payment clerks’. The receipts payment clerks were required to bank stolen or fraudulent funds in varying forms, predominantly counterfeit traveller cheques, before forwarding funds offshore.

These scams are commonly referred to as mule recruitment22. The clerk essentially acts as a mule, laundering funds on behalf of the offender and subsequently receives a commission for conducting the transactions. Advance fee fraud and other online fraud offences are challenging to investigate, as the Internet enables offenders to conceal their whereabouts and maintain anonymity. The Ministry of Consumer Affairs in New Zealand provides the public with information to help them recognise and protect themselves from such scams.23

Organised crime group involvement in credit card fraud is ongoing and often involves international gangs. An example of this is a recent investigation identifying increased theft of credit cards by courier drivers. It is believed the cards were being passed to ‘distributors’ who arranged for ‘shoppers’ to make the first purchase for the distributor. Shoppers were then able to continue using the cards for their own benefit.

In March 2008, two Malaysian nationals were arrested in Whangārei using professionally cloned credit cards to purchase high-end electrical goods for on-sale. In addition, 18 cloned Visa and MasterCard credit cards were seized from two Singaporean nationals at Auckland International Airport. It is believed that these two incidents are linked and the offenders were connected to an organised crime group in Australia.

22 ‘Mule Recruitment’ is an attempt to get a person to receive stolen funds using his or her bank account, and then transfer those funds to criminals overseas.23 http://www.consumeraffairs.govt.nz/scamwatch/index.html

17

Electronic crime (e-crime)

Cyber crime and online theft is believed to be costing the global economy US$1 trillion annually.•

Computer users in New Zealand continue to be targeted, mostly by cyber attacks originating from overseas.•

The Internet provides an opportunity for offenders in New Zealand to communicate and extend their •criminal networks.

Electronic crime (e-crime) refers to offences where information and communications technology (ICT)24 is used as a tool in the commission of a crime, is the target of an offence, or is used as a storage device in the commission of a crime. Online theft is estimated to cost the global economy US$1 trillion annually. Some international reporting states that cyber crime is currently in a transition period and that, left unabated, there will be a significant increase in offending in the coming years.

Society has become increasingly dependant on the Internet and ICT in general. Public, private, social, economic and military institutions all now rely heavily on computer networks, and throughout the world the Internet is used for communication, information gathering and sharing, as well the purchase of goods and services. Despite the progress facilitated by the Internet, it has been likened to a new frontier where users can exist anonymously and physical identity and location are irrelevant. Criminals are increasingly exploiting this space to engage in criminal activity that threatens individuals, organisations and governments.

International organised crime groups are noted for their ongoing involvement in using ICT to facilitate traditional offending, as well as launching cyber attacks. The Internet is being used to exploit vulnerabilities in computer systems to launch cyber attacks against both individuals and organisations. Attacks against individuals often involve malicious software (malware25) or codes that are used to harvest personal information or data while the individual is online. Criminals are also launching cyber attacks using malware to gain access to large amounts of personal information held by organisations. Computer users in New Zealand are targeted, predominantly by attacks originating from overseas.

The Internet provides an opportunity for offenders in New Zealand to communicate and extend their criminal networks. For example, organised crime groups and members are using social networking websites26 to advertise their gang connections, communicate and share information with each other.

24 ICT describes a range of technologies used for gathering, storing, retrieving, processing, analysing and transmitting information. ICT technologies can include computer systems and mobile phones.

25 Malware is malicious software that covers any unwanted program that makes its way onto a computer system26 A social networking website is an online community which allows users to send messages, write blogs and post images. Popular social networking websites include MySpace,

Facebook and Bebo.

CASE STUDYIn April 2010, a joint investigation conducted by the FBI, United States Secret Service and Romanian law enforcement agencies resulted in the arrest of 70 individuals from three separate organised cyber crime syndicates. The individuals were charged for their involvement in online auction scams that targeted eBay users. It is believed the groups launched phishing attacks to obtain login credentials and set up fake auctions selling high value commodities. The offenders fraudulently obtained in excess of £1million and targeted more than 800 victims in 11 countries, including New Zealand.

Forensic examination of a computer hard drive.

18

Environmental crime

The illegal trade in environmentally sensitive items is lucrative.•

New Zealand Adult Gangs as well as Asian organised crime groups are involved in poaching and black •market activity relating to environmentally sensitive items.

Environmentally sensitive items are being traded online.•

There is an ongoing risk relating to the illegal importation of biosecurity risk materials into New Zealand. •

The illegal trade in environmentally sensitive items, including endangered species, marine resources, timber, ozone depleting substances, toxic chemicals and hazardous waste is a serious problem with global impact. The involvement of organised crime entities in the exploitation of marine resources, the illegal trade in wildlife and illegal logging is well documented.

Environmental crime is one of the most lucrative and fastest growing areas of international criminal activity. For example, the international illegal trade in wildlife is estimated to be worth at least US$5 billion and potentially in excess of US$20 billion annually.

New Zealand Adult Gangs as well as Asian organised crime groups are involved in poaching, and black market activity linked to environmentally sensitive items. New Zealand fisheries, including paua and rock lobster, are commonly targeted.

In March 2007, an investigation resulted in the apprehension of a black market paua buyer who had links to Asian organised crime entities. The offender was identified over a two-month period as having received and on-sold 1.6 tonnes of illegal product. He was paying NZ$17kg to purchase the illegal paua and on-selling it on the Auckland black market for NZ$46kg. It is believed the offender, who was active over a 12-month period, made in excess of NZ$270,000 in profit.

New Zealand is considered both a source and destination for Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) items. The Wildlife Enforcement Group27 (WEG) confirms that environmentally sensitive items from New Zealand are being traded online.

There is an ongoing risk relating to the illegal importation of biosecurity risk materials that have the potential to adversely impact New Zealand, both from an economic and biosecurity perspective. For example, any deliberate importation of foot and mouth virus would severely impact the New Zealand economy, and grape phlox could destroy the wine industry. In the past, there have been attempts to smuggle the calicivirus into New Zealand. The honey industry has also been severely affected by the introduction of the varroa mite, believed to have been brought in on a smuggled queen bee.

27 The New Zealand Customs Service hosts the Wildlife Enforcement Group, which is resourced and staffed by the New Zealand Customs Service, the Department of Conservation and the Ministry of Agriculture and Forestry.

A jewelled gecko, the target of a smuggling attempt.

CASE STUDYIn February 2010, three individuals were involved in trafficking of 16 jewelled geckos, nine of which were pregnant. The geckos would likely have fetched approximately NZ$200,000 on the international black market. WEG had previously noted one of these individuals for his involvement in wildlife trafficking internationally.

19

Intellectual Property (IP) crime (counterfeiting and piracy)

Globalisation and technological advances have facilitated the growth in IP crime.•

While domestic and transnational organised groups have been noted for their involvement in IP crime in •New Zealand, much of the current offending is opportunistic.

It is estimated IP crime, namely counterfeiting and piracy, constitutes five to seven percent of global trade. The World Health Organization (WHO) predicts that 10 percent of medicines available worldwide are counterfeit. Globalisation and technological advances have facilitated the growth in IP crime by enabling widespread distribution of high quality counterfeit goods, some of which are hard to differentiate from the genuine articles. The global increase in the use of the Internet has further facilitated the advertising, sale and distribution of counterfeit and pirated goods.

International reporting has established a link between organised crime and the manufacture, distribution and sale of Intellectual Property Rights (IPR) infringing goods. While transnational and domestic organised groups have been noted for their involvement in IP crime in New Zealand, much of the current offending is opportunistic, exploiting market demand for particular goods.

CASE STUDYIn March 2008, the New Zealand Police and the New Zealand Federation against Copyright Theft (NZFACT) seized over 6,300 pirated DVD movies. The burning set-up, located at an apartment in the Auckland CBD, had a capacity to burn 430,000 discs annually, potentially generating NZ$2.6 million for the offenders involved. Two individuals were arrested in relation to these seizures.

The piracy operation was identified by NZFACT investigators who discovered advertisements for pirated discs being offered for sale on the Skykiwi trading site. The offenders had moved three times in four months and on one occasion left a substantial amount of equipment behind purchasing new equipment at the new address. While not organised in the traditional sense, this operation involved a degree of sophistication, significant profit, as well as tax evasion.

Film piracy continues to threaten New Zealand’s film industry.

20

Bribery and corruption

New Zealand is internationally recognised as one of the least corrupt societies in the world.•

There are isolated incidents whereby bribery and corruption have facilitated organised crime group •offending in New Zealand.

International experience has shown that despite increased scrutiny and surveillance at the border, as well as enhanced law enforcement effort, organised crime groups continue to carry out criminal activity such as illicit drug trafficking, illegal migration and identity crime. This activity is facilitated in part by the corruption of public officials through the payment of bribes and extortion. Although there are few incidents of corruption in New Zealand, organised crime groups continue to look for ways to exploit weaknesses.

New Zealand has implemented international standards28 that criminalise corruption and promote transparency in decision-making as a way of combating corruption by organised crime groups. To date, New Zealand has been able to prevent and detect wide-spread corruption through a combination of public antipathy to corrupt practices, effective legal frameworks and strong integrity systems29.

28 New Zealand has ratified the UN Convention on Transnational Organised Crime, which is concerned with the corruption of domestic public officials, and the OECD Convention on Bribery of Foreign Public Officials in International Business Transactions, which is concerned with bribery of overseas public officials.

29 ‘Integrity systems’ refers to those democratic institutional and constitutional arrangements that provide for transparency and public accountability. These include appropriate checks and balances between the executive, legislature and judiciary, respect for the rule of law, and an active civil society (including an independent free media, free and fair elections and participation in public affairs).

21

EFFORTS TO DISRUPT AND DISMANTLE ORGANISED CRIME

Collaboration - international, government and private sector A number of law enforcement agencies in New Zealand work with international partners, sharing information and resources, to target transnational organised crime groups.

To disrupt and dismantle organised crime in New Zealand, government and private sector partners continue to collaborate. Drawing on collective knowledge, expertise and resources ensures effective targeting of organised crime groups and members.

Organised and Financial Crime Agency New ZealandFormed in July 2008, the Organised & Financial Crime Agency New Zealand (OFCANZ) aims to attack national and transnational organised crime threats, and increase cooperation between New Zealand Government agencies. OFCANZ has commenced a number of multi-agency taskforce operations targeting organised crime networks in New Zealand.

Combined Law Agency Group (CLAG)The Combined Law Agency Group (CLAG) is a group of intelligence, enforcement and compliance professionals who collaborate on a whole of government approach to leverage combined resources. CLAG partnerships are utilised to tackle the threats of cross-agency crime.

Legislation

Criminal Proceeds (Recovery) Act 2009 This Act enhances the criminal forfeiture regime and introduces a new civil regime to recover proceeds of crime. Under this legislation, a conviction is not required to trigger forfeiture proceedings for criminal proceeds. It will simply be sufficient to prove on the balance of probabilities that a person has unlawfully benefited from significant criminal offending.

Anti-Money Laundering (AML)/Countering the Financing of Terrorism (CFT) Act 2009This Act will result in increased scrutiny of a wider range of financial institutions and transactions.

Crimes Amendment Act 2009 and Sentencing Act 2009The Crimes Amendment Act 2009, and Sentencing Amendment Act 2009 increase the penalty for participating in an organised criminal group, clarify the evidential requirements to prove that offence, and make participation in an organised criminal group an aggravating factor at sentencing. The Local Government Amendment Act 2009 enables a District Court to issue a removal order if a property is regularly used by an offender or suspected offender and its fence, structure or vegetation is regarded as intimidating.

Criminal Investigations (Bodily Samples) Amendment Act 2009 This Act amends the Criminal Investigations (Bodily Samples) Act 1995 and allows the police to collect, without prior judicial approval, a bodily sample from any person that they intend to charge with certain specified offences.

Search and Surveillance Bill This Bill aims to balance the values of law enforcement and human rights by providing consistent thresholds for the exercise of police search and surveillance powers. It also seeks to consolidate and rationalise these powers.

22

Sentencing and Parole Reform Act 2010 This Act came into force on 1 June 2010 and provides for parole to be denied for repeat serious violent offenders and those convicted of the worst murders. It also requires the maximum term of imprisonment to be imposed on offenders who commit a third serious violent offence after having received a first and a final warning by the court at the time of the previous convictions.

Arms Amendment Bill (No 3) This Bill aims to improve controls on the sale, supply and ownership of firearms by individuals, and to better regulate their importation.

Trade Marks (International Treaties and Enforcement) Amendment Bill 2008This Bill is an omnibus Bill to amend the Copyright Act 1994 and the Trade Marks Act 2002 to provide the Police, the New Zealand Customs Service and the Ministry of Economic Development with search and seizure powers to enforce the criminal offences for dealing in counterfeit goods and pirated works.

www.crimestoppers-nz.org

Crimestoppers is an independent charity dedicated to providing a way for people to pass on information about crime to the authorities and remain anonymous. If you have information that could help the New Zealand Police or any other law enforcement agency in their efforts to disrupt and dismantle organised crime and you would prefer to remain anonymous, please call 0800 555111 or use the encrypted web form at: