Government officials and the employees of banks, insurance companies, trust & corporate entities are compelled to observe secrecy and failure to do so leading to an unauthorized disclosure will result in penal sanctions.

The general rule prohibiting disclosure is subject to 3 exceptions namely:

    * Under the International Companies Act 1981 the high court on application of an interested party has power to order disclosure of corporate information in a case involving drug trafficking or money laundering. The power to order disclosure does not extend to fiscal crime. Appeal lies to the Islands' Court of Appeal and thereafter to the Privy Council in London.
    * Under the Offshore (Criminal Provisions) Act 1996 an officer or employee of a registered trust entity (which incorporates and manages companies and trusts ) who has cause to suspect that a company or trust is involved in drug trafficking or that a person related to or involved with that entity has been convicted of serious criminal activity, must refer the matter to the Government regulatory body. Furthermore the registered trust entity is to provide such reasonable assistance, documentation and other information as may be required by the Government regulatory body under the law. Serious criminal activity is defined as drug trafficking or any other activity whether in the Cook Islands or elsewhere which if committed in the Islands is or would be an offence under the Crimes Act 1969 carrying a maximum penalty of 5 years or more. Information provided in these circumstances does not breach confidentiality provisions of the Cook Islands. Disclosure never extends to fiscal crime.
    * The Trustee Companies (Due Diligence) Regulations 1996 require the officers and employees of a registered trust company to take reasonable precautions to ensure that an International Trust is not being used to shelter assets derived from drug smuggling, money laundering or other serious crime and to report any such activity.

Cook Islands International Agreements

In 2003 a Finance Intelligence Unit was established, which in July 2004 was accepted as a member of the Egmont Group – the internationally recognised body for FIUs. Cook Islands FIU head Cath Kara said the unit had been working through a sponsorship process for several months with their New Zealand counterpart. This process included the manager of the New Zealand FIU conducting two on-site inspections to assess the unit’s functionality and ability to comply with the standards of the Egmont Group.

Under Sections 10 and 11 of the Financial Transactions Reporting Act 2003, a broad range of “financial institutions” are required to submit ML-related reports to the FIU on suspicious transactions and cash and/or electronic transactions above $NZ 10,000. The FIU has the authority to require reporting parties to supplement reports and has broad powers to obtain relevant information needed to combat ML. The FIU is able to exchange information with counterpart FIUs or like agencies without violation of secrecy provisions.

During the Egmont Group meeting at Guernsey in the English Channel Islands in 2004, the Cook Islands FIU signed a memorandum of understanding with its Australian counterpart, AUSTRAC. The agreement supports the “desire by both parties to facilitate the investigation and prosecution of persons suspected of money laundering and serious crimes in the spirit of cooperation and mutual interest.” The Cook Islands FIU is now working with its Thailand and New Zealand counterparts to sign similar agreements in the near future.