Case Study

DIA Formal Warning NZForex Limited — 3,182 Unreported PTRs Lan’s Enterprise Limited Training Program Presented by: Angela Ji Contact: aml@gmfinance.co.nz Emergency Hotline: +64 09-309-8808 Overview DIA issued a formal warning to NZForex Limited on 18 March 2025 3,182 prescribed transactions were not reported to the FIU Reporting gap spanned 1 November 2017 → 28 February 2024 — over six years All unreported transactions were non-NZD denominated No allegation of money laundering — this was a system / reporting-control failure Who is NZForex? Online foreign-exchange and international payments business Reporting entity under the AML/CFT Act 2009 Required to file: International Funds Transfers (IFTs) ≥ NZ$1,000 cross-border Large Cash Transactions (LCTs) ≥ NZ$10,000 in cash Collectively known as Prescribed Transaction Reports (PTRs) What Went Wrong The system issue A defect in NZForex’s PTR processing pipeline Affected transactions not denominated in New Zealand Dollars Non-NZD volumes silently bypassed the reporting workflow The defect persisted for 6 years and 4 months undetected by internal monitoring What was missed 3,182 individual prescribed transactions Each was a separately reportable obligation under section 48A How It Was Discovered NZForex itself identified the issue The defect surfaced through internal system review — not a DIA finding NZForex voluntarily disclosed the non-compliance to DIA Backfill: all 3,182 transactions were submitted to the FIU An independent audit was commissioned voluntarily The Regulator’s Position “DIA acknowledges that NZForex has voluntarily disclosed the non-compliance, and we commend NZForex for disclosing the non-compliance, admitting fault and taking steps to resolve the system issue.” ...

AML Case Study The Jiaxin Finance Investigation Lan’s Enterprise Limited Training Program Presented by: Angela Ji Contact: aml@gmfinance.co.nz Emergency Hotline: +64 09-309-8808 Training Objectives Understand the Jiaxin Finance DIA investigation and its context Identify the compliance failures that triggered regulatory action Recognise the enforcement pathway DIA follows for money remitters Apply the lessons learned to LEL’s own compliance operations Reinforce the importance of proactive compliance over reactive remediation Overview DIA conducted a compliance investigation into Jiaxin Finance, a money remitter Investigation revealed systemic AML/CFT compliance failures Case is part of DIA’s escalating enforcement posture against non-bank reporting entities Money remitters remain a high-priority supervisory target for DIA Follows a pattern of enforcement actions against remitters: Ping An Finance, Lidong Foreign Exchange, NZForex DIA Enforcement Context Money remitters under the spotlight The AML/CFT Act 2009 applies equally to all reporting entities — banks and non-banks alike DIA has explicitly signalled that money remitters face heightened scrutiny Remittance sector is identified as high-risk for money laundering due to: High-volume, cross-border cash flows Customer base often involving migrant remittances Potential for structuring and layering Variable compliance maturity across the sector DIA Enforcement Pathway Escalating regulatory tools Educational guidance — informal engagement Directions — formal requirement to act Formal warning — public record under s80 Civil penalty — pecuniary penalty order Criminal prosecution — for knowing or reckless breaches “Money remitters should expect stronger action for serious breaches. DIA uses escalating enforcement tools — from educational guidance through to prosecution.” ...

Record Sentence Ye Hua and NZ’s Largest ML Conviction Lan’s Enterprise Limited Training Program Presented by: Angela Ji Contact: aml@gmfinance.co.nz Emergency Hotline: +64 09-309-8808 Overview 7 years 6 months — the longest money laundering sentence in NZ history At least NZ$18 million laundered for an international drug syndicate Sentenced 16 November 2023 in Auckland District Court This deck focuses on sentencing reasoning and operational red flags — the offending pattern itself is covered in the Q3 2022 Ye Hua case study Who Was Convicted Ye “Cathay” Hua, 58 years old Churchgoing matriarch of a prosperous Auckland family Money exchange business funded a St Heliers mansion Director of Lidong Foreign Exchange — money shop at 1 Kent St, Newmarket In Valent’s encrypted messages: “Newmarket money lady” / “money shop” Found guilty of 15 of 19 charges (jury verdict, July 2023, three-week trial) Maximum penalty per charge: 7 years The Underlying Criminal Enterprise Principal: Xavier Valent Sentenced to life imprisonment for leading the syndicate Imported 100+ kilograms of methamphetamine into NZ between 2016 and 2020 Hua was the syndicate’s primary money-laundering channel for cash proceeds How the cash moved Cash deposits at Lidong Foreign Exchange International wires from the same money-changer Bitcoin conversions Direct transactions with low-level dealers and Valent’s lieutenants The Numbers Argued at Trial Party Dollar amount Crown $26 million Judge’s finding At least $18 million Defence $6-10 million “By value, Ms Hua’s offending is many magnitudes more serious than any other case which has been before a court in this country.” ...

First AML Criminal Case R v QF, FC and JFL [2019] NZHC 3058 Lan’s Enterprise Limited Training Program 2024 Q1 Training Training Objectives What you’ll learn today: Understand New Zealand’s first AML/CFT Act criminal prosecution Recognize corporate and personal liability under derivative responsibility Identify the four representative charges and their legal implications Learn the objective test for suspicious transactions Understand the critical importance of credibility in AML compliance Case Overview R v QF, FC and JFL [2019] NZHC 3058 22 November 2019 ...

Record-Breaking Money Laundering Case Study Lan’s Enterprise Limited Training Program Case Analysis & Compliance Lessons Case Overview Largest money laundering prosecution in New Zealand history Currency exchange business used to launder drug cartel proceeds At least $18 million laundered over multiple years Record prison sentence of 7.5 years imposed Multiple AML red flags ignored Business Background Lidong Foreign Exchange in Newmarket, Auckland Operated by Ye “Cathay” Hua, 58 Appeared as legitimate money exchange business Funded purchase of St Heliers mansion Connected to Xavier Valent drug cartel Red Flags & Warning Signs Cash Characteristics: ...

DIA Formal Warning Hills Real Estate Limited Lan’s Enterprise Limited Training Program Presented by: Angela Ji Contact: aml@gmfinance.co.nz Emergency Hotline: +64 09-309-8808 Overview DIA issued a formal warning under s80 AML/CFT Act 2009 Warning date: 8 May 2023 — publicly announced 6 July 2023 Second formal warning to a real estate agent within two months Signals DIA’s escalating enforcement posture against non-bank reporting entities Who is Hills Real Estate? South Auckland real estate agency A reporting entity under the AML/CFT Act since 1 January 2019 (real-estate sector phase-in) Required to maintain a full AML/CFT compliance programme, conduct CDD, monitor activity, and keep records — the same obligations that apply to financial institutions What DIA Found Four areas of non-compliance AML/CFT Programme — failed to establish, implement and maintain an adequate programme Ongoing CDD — neglected ongoing customer due diligence obligations Monitoring & review — insufficient transaction monitoring to detect grounds for SAR reporting Record keeping — failed to maintain records as required by the Act The Regulator’s Position “Real estate agencies should take note of the two recent warnings and expect stronger action for serious breaches. DIA uses escalating enforcement tools — from educational guidance through to prosecution.” ...

KYC Issues and Challenges The Barclays Private Banking Case Study Lan’s Enterprise Limited Training Program Training Objectives What you’ll learn today: Understand the importance of Enhanced Due Diligence for high-risk customers Recognize critical failures in KYC processes with PEPs Identify the consequences of prioritizing profit over compliance Apply lessons learned to prevent similar violations Strengthen ongoing monitoring and record-keeping practices Case Overview The Barclays Bank Incident Year: 2011-2012 transaction, fined in 2015 Regulator: UK Financial Conduct Authority (FCA) Transaction Value: £1.88 billion Customer Type: Ultra-high net-worth PEPs Fine Amount: £72 million (highest AML fine by FCA at the time) The Background High-Risk Private Banking Transaction What happened: ...

The Billion Dollar Scam How Companies Used Premier League Sponsorship to Target Unsuspecting Football Fans Lan’s Enterprise Limited Training Program Training Objectives What you’ll learn today: Understand how global fraud networks recruit and target retail investors through sports marketing Identify red flags and warning signs of high-return investment scams Recognize the role of sports sponsorships and celebrity endorsements in creating false legitimacy Implement enhanced controls and due-diligence processes to detect and prevent similar scams Apply lessons learned to strengthen our AML/CFT practices and investor protection About This Case Study BBC Eye Investigation Documentary: “The Billion Dollar Scam” First Broadcast: April 12, 2023 (BBC World Service) Lead Reporter: Simona Weinglass Duration: 27 minutes Scope: Global criminal network investigation spanning multiple continents Note: Original YouTube video may no longer be available ...

FIU/ACAMS Conference 2022 Case Study Review Lan’s Enterprise Limited Training Program Presented by: Angela Ji Contact: aml@gmfinance.co.nz Emergency Hotline: +64 09-309-8808 Training Objectives What You’ll Learn Today Understand the role of the NZ Financial Intelligence Unit (FIU) and its priorities Review key case studies presented at the FIU/ACAMS Conference 2022 Identify AML/CFT compliance lessons directly relevant to money remitters Learn about evolving enforcement trends and regulatory expectations Apply conference insights to strengthen our day-to-day compliance practices Conference Background FIU/ACAMS Conference 2022 Annual event hosted jointly by the NZ Police Financial Intelligence Unit and ACAMS Brought together regulators, law enforcement, and reporting entities Focused on emerging ML/TF typologies and real-world enforcement case studies Key themes: remittance sector risks, proceeds of crime, and CDD failures Provided critical insights into how FIU analyses suspicious transaction reports (STRs) The NZ Financial Intelligence Unit Who They Are Part of NZ Police, based in Wellington Receives, analyses, and disseminates Suspicious Transaction Reports (STRs) Produced over 5,000 financial intelligence disclosures in the 2021/22 year Works with the three AML/CFT supervisors: DIA, RBNZ, and FMA Key partner in identifying and disrupting money laundering networks The NZ Financial Intelligence Unit Their Role in Our Business Every SAR/STR we file goes to the FIU FIU connects our reports with intelligence from other sources Their analysis can trigger criminal investigations They assess whether remittance businesses are meeting their reporting obligations Under-reporting is a red flag — FIU knows the expected volume for our sector Key Theme 1: Remittance Sector Under Spotlight Why Money Remitters Were a Focus Remittance businesses identified as high-risk for money laundering FIU reported that the DNFBP and remittance sector had lower STR filing rates than banks Conference highlighted patterns of structuring, smurfing, and third-party transfers through remitters Regulators expect remitters to have robust transaction monitoring and proactive SAR filing Key Theme 1: Remittance Sector Under Spotlight What This Means for LEL We are in a high-priority sector for regulatory attention Our SAR filing patterns are compared against sector benchmarks Failure to detect and report suspicious activity is treated as a compliance failure Transaction monitoring must be documented and reviewable “Remitters are a gateway for cross-border value transfer. That makes you both a risk and a line of defence.” — FIU Conference Presenter ...

Anti-Money Laundering Training Case Study of Ye Hua Lan’s Enterprise Limited Training Program Understanding Money Laundering “Money laundering is not just a crime - it’s a gateway to enabling other serious criminal activities.” Definition: The process of making illegally-obtained money appear legal Global Impact: Estimated $2 trillion laundered annually Our Responsibility: Prevention, detection, and reporting Why This Training Matters Regulatory Requirements AML/CFT Act compliance Regulatory reporting obligations Personal liability risks Business Protection Reputation safeguarding Financial security Criminal liability prevention The Ye Hua Case: A Warning Tale Key Facts Laundered: $18 million Method: Money exchange business Sentence: 7½ years imprisonment Connection: Drug trafficking syndicate Red Flags Missed Unusual Transaction Patterns ...