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New money-laundering bill to affect luxury car dealers

A new money-laundering bill introduced to Parliament by justice minister Amy Adams last night will strengthen existing anti-money laundering laws and widen the scope of investigation and prosecution by authorities.

The Anti-Money Laundering and Countering Financing of Terrorism Amendment Bill extends legislative power to lawyers, accountants, real estate agents, sports and racing betting, and business that deal in high-end goods, such as motor vehicles, jewellery and art.

“Extending the law will improve our ability to prevent, detect and prosecute many types of criminal activity and help protect New Zealand’s reputation as a good place to do business,” Adams said.

Businesses who sell high-end motor vehicles above a certain threshold (which is not specified in the bill) will now be classified as high-value dealers and subject to the bill. While the new legislations outlines some obligations, high-value dealers will not be subject to the same scrutiny as lawyers, accountants and real estate agents.

High-value dealers will be required to report large cash transactions and must conduct customer due diligence. Records must be audited according to compliance obligations if requested by an anti-money laundering official.

They will be “required to know who their customers are and on whose behalf they act” and must comply with certain prohibitions if they are unable to do so. High-end dealers will also be able (but not required) to report suspicious activity that comes to their attention.

The government will provide information and guidance for affected businesses and give them time to prepare for the legislation.

The Act will come into force on July 2017, but will not be applicable to high-end dealers until a certain date yet to be set by the Governor-General.

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VW pleads guilty in US

Volkswagen has pleaded guilty over the weekend to fraud, obstruction of justice and falsifying documents as part of its $6.2 settlement with the United States Justice Department, which was first reached in January, over the diesel emissions scandal.

VW’s general counsel, Manfred Doess, made the plea on the car maker’s behalf. The plea was accepted by U.S district judge Sean Cox, who has set a sentencing date for April 21.

Shares rose 0.3 per cent at the news in Germany to 143.70 euros.

A company spokesman told Reuters it was the first time the company has pleaded guilty to criminal conduct in any court in the world. The guilty plea follows ongoing investigations which began in 2015, when news emerged that Volkswagen had intentionally cheated on emissions tests for at least six years.

In total, VW has agreed to spend over $36 billion on settlements between owners, states, dealerships and environmental regulators in the U.S. and has offered to buy back approximately 500,000 polluting vehicles.

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ACCC files legal action against Audi

The Australian Competition & Consumer Commission (ACCC) has filed further legal action against VW subsidiary Audi, alleging the German car maker used a defeat device in its diesel vehicles to evade emissions regulations between 2011 and 2015.

The latest filing is a continuation of proceedings the consumer watchdog first launched against VW on September 1 last year.

The ACCC claims Audi “engaged in misleading conduct by representing that the vehicles complied with all applicable regulatory requirements for road vehicles in Australia when, because of the defeat software, that was not the case.”

“Audi Australia marketed the vehicles in Australia as being environmentally friendly, producing low emissions and complying with stringent European standards when this was not the case under normal driving conditions,” the report continued.

“Consumers expect that there is some relationship between the performance of the car as set out in the sales brochure and their day to day on-road use,” ACCC Chairman Rod Sims said.

“We allege that the installation of software which allows the vehicle to meet testing standards but then causes the vehicles to operate differently on the road… breach the Australian consumer law.”

While Skoda-branded vehicles are also affected by the VW emissions scandal, the ACCC has decided against further action against VW, noting the lower volume of Australian sales and continuing class actions.

Audi Australia has supplied more than 12,000 affected vehicles to Australian consumers, according to the ACCC.

In December 2016, VW and Audi Australia announced a recall and software update for the affected vehicles designed to repair diesel vehicles affected by the emissions scandal.

Audi Australia told Fairfax Media the ACCC’s action didn’t provide any practical benefits to consumers. “The company believes that the best outcome for those valued customers with an affected vehicle is to have the voluntary recall service updates installed,” its spokesperson said. The company will review the ACCC’s claims and defend class-action lawsuits from private drivers.

The Audi-branded vehicles covered by these proceedings are:

A1 3 Door – 2011 to 2013
A1 Sportback – 2012 to 2015
A3 Sportback – 2011 to 2013
A4 Allroad – 2012 to 2015
A4 Avant – 2011 to 2015
A4 Sedan – 2011 to 2015
A5 Cabriolet – 2012 to 2015
A5 Coupe – 2012 to 2015
A5 Sportback – 2012 to 2015
A6 Avant – 2012 to 2015
A6 Sedan – 2011 to 2015
Q3 SUV – 2012 to 2015
Q5 SUV – 2011 to 2015
TT Coupe – 2011 to 2014

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New disputes adjudicator appointed

Auckland barrister Brett Carter has been appointed as a motor vehicle disputes tribunal adjudicator by the Governor-General for a five year term beginning February 15.

Carter is formerly a chief adviser at the Commerce Commission, where he worked for 10 years.

“Mr Carter’s extensive legal background and experience in fair trading, credit and consumer laws will be particularly valuable to the Tribunal, which hears disputes between consumers and car dealers or other registered and unregistered motor vehicle traders,” said Jacqui Dean, the minister of commerce and consumer affairs.

Carter will mostly hear cases in Auckland and the Northern North Island. He takes the role of Christopher Cornwell, who recently stepped down as an adjudicator after more than 10 years in the role. Dean also acknowledged Cornwell’s service in her statement.

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VW emissions settlement approved

US District Judge Charles Breyer has approved the $1.7 billion settlement between Volkswagen AG and its American dealers over its long-running diesel emission scandal. The 651 VW dealers will receive an average payout of $2.5 million, which Breyer says “adequately and fairly compensates” the members of the class-action suit.

In September 2015, a VW spokesperson admitted to installing secret software in the company’s diesel cars to cheat exhaust emissions tests, when the vehicles actually emitted up to 40 times the legally allowable pollution levels. Dealers argued that the fall-out from the scandal tarnished the Volkswagen brand and cost billions nationwide in sales.

Vice-president and director of economics services for Fontana Group Edward Stockton estimated the lost profit from the American dealers to be within the range of $2 billion to $2.2 billion, a figure Breyer accepted in his verdict.

Seven dealerships opted out of the settlement, and eight dealerships filed objections to the final ruling, mostly related to the method of calculating the average settlement amount.

An agreement has also been made to maintain incentive payments to dealers and will allow them to defer capital improvements for two years. Over $30 billion has been spent addressing claims from environmental regulators, owners, dealers and state government bodies related to its fraudulent vehicle emissions in the US.

As well as a cash payment to dealers totalling $1.7 billion, the settlement also includes support payments of $270 million and ongoing VIP and continued sales incentives of $238 million. The class counsel estimates the settlement value at over $2.3 billion.

“The Volkswagen-branded franchise dealer class-action settlement finalised today represents an outstanding result for Volkswagen’s affected franchise dealers,” said Steve Berman, managing partner of Hagens Berman and lead attorney for the dealers, who said they were “blindsided” by VW’s fraud.

The ruling states that any responses must be filed by February 8.

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Manufacturers seek law changes

The Alliance of Automobile Manufacturers (ALAM) is waiting for a reply from a letter they sent President-elect, Donald Trump.
The eight-page letter, which was reported by Reuters, highlighted the need to revise fuel efficiency mandates and autonomous vehicle policies under the Obama administration.
ALAM includes General Motors Co, Ford Motor Co and Toyota Motor Corp and sent a letter which stated that “technology and change are swamping the regulatory capacity to manage our emerging reality. Reform is imperative.”
The letter also seeks a “robust examination” of the combined impact of “uncoordinated regulatory oversight” by at least 10 federal and state agencies.
It urges creation of a new timetable for regulators to respond to industry requests and seeks that regulators adopt a “whole car cost analysis” for new vehicle regulations.
In September, the Obama administration said it was considering seeking the power to review and approve technology for self-driving cars before they hit the road.
The National Highway Traffic Safety Administration (NHTSA) and Environmental Protection Agency (EPA) must decide by April 2018 whether the 2022 through 2025 model year requirements for fuel efficiency and greenhouse gas emissions should be changed or not.

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MoT staffer pleads guilty

A Ministry of Transport staff member who defrauded the government of $723,000 has pleaded guilty to the charges against her. (more…)

Takata charges considered

US prosecutors are considering criminal charges against Japanese supplier Takata, due to unlawful conduct in the handling of its rupture-prone airbags. (more…)

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$50k fine for trader

An Auckland based man acting as a motor vehicle trader has received the maximum penalty of $50,000 for continuing to trade motor vehicles while banned, his sixth fine for unlawful motor vehicle trading. (more…)

Youi faces 15 charges

The Commerce Commission has filed charges in the Auckland District Court against insurance firm Youi NZ Pty Limited, alleging it employed misleading sales techniques when trying to sell policies to consumers who were only seeking a quote. (more…)

Council boss pleads guilty

The Serious Fraud Office says the guilty plea this morning by an Auckland Council manager to corruption charges show the dangers in not questioning a culture of gratuities. (more…)