New Zealand -- Enforcement Actions Regulatory Overview

New Zealand's cryptocurrency enforcement landscape over the last three years has primarily focused on Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) compliance by virtual asset service providers (VASPs) and preventing unregistered financial service provision. The Department of Internal Affairs (DIA) is the primary AML/CFT supervisor for crypto businesses, while the Financial Markets Authority (FMA) regulates financial services.

Here are the most significant cryptocurrency enforcement actions in New Zealand over the past three years (roughly June 2021 - June 2024):

1. Regulator: Department of Internal Affairs (DIA)
   • Entity Targeted: Coinstash Limited
   • Violation Type: Significant breaches of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act), including failures in customer due diligence, risk assessments, suspicious transaction reporting, and compliance programme.
   • Penalty Amount: NZD $2.3 million
   • Date: Infringement notice issued March 2024; public announcement May 2024.
   • Outcome: Coinstash admitted to the breaches and agreed to pay the penalty. The DIA noted this was the largest financial penalty issued under the AML/CFT Act for a single infringement notice.
   • Source URL: https://www.dia.govt.nz/Press-Release-DIA-issues-2-3-million-penalty-to-Coinstash

2. Regulator: Department of Internal Affairs (DIA)
   • Entity Targeted: Dasset Limited (now in liquidation)
   • Violation Type: Significant breaches of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act), including failures in customer due diligence, risk assessments, record-keeping, and the overall compliance programme.
   • Penalty Amount: NZD $1 million
   • Date: Infringement notice issued July 2023; public announcement August 2023.
   • Outcome: Dasset admitted to the breaches and agreed to pay the penalty. The company subsequently went into liquidation in October 2023, though the DIA noted the penalty was not the direct cause.
   • Source URL: https://www.dia.govt.nz/Press-Release-DIA-issues-1-million-penalty-to-Dasset

3. Regulator: Financial Markets Authority (FMA)
   • Entity Targeted: James Malcolm Allan (individual)
   • Violation Type: Operating an unregistered financial service provider, making misleading representations about financial products (including crypto-assets), and breaches of the Fair Trading Act 1986 and the Financial Service Providers (Registration and Dispute Resolution) Act 2008. Allan had been promoting investments via social media, purporting to offer high returns from trading shares and crypto-assets.
   • Penalty Amount: Permanent ban from providing financial services and from acting as a director or manager of any financial service provider. A pecuniary penalty of NZD $50,000 was also ordered.
   • Date: Decision issued and announced November 2022.
   • Outcome: The FMA successfully obtained orders from the High Court against Allan, resulting in the ban and penalty. This was a significant action against an individual promoting crypto-related investments without proper registration or disclosure.
   • Source URL: https://www.fma.govt.nz/news/all-releases/media-releases/fma-obtains-orders-against-james-malcolm-allan/

These actions highlight the New Zealand regulators' focus on ensuring compliance with AML/CFT obligations for crypto businesses and preventing individuals from operating unregistered financial services, especially those involving crypto assets, to protect consumers and the integrity of the financial system.