Inquiry on Illicit Firearms Customs presentation to the Law and Order Select Committee

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Mervyn Mosley
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1 Inquiry on Illicit Firearms Customs presentation to the Law and Order Select Committee 8 June 2016

2 Key points» Customs has a range of systems in place to ensure compliance over cross border movements of firearms.» These include a range of standard border management processes and risk assessment tools complemented by specific targeting operations.» Our view is that illegal firearms are primarily diverted from licit domestic sources, with only a small percentage from illegal imports. This is based on available New Zealand evidence and a comparison with the Australian experience.» Customs are not complacent about the risk of illegal firearms trafficking and we are consistently looking to improve our border enforcement processes. 2

3 Customs Role The Arms Act 1983 governs the ownership and import permit requirements for firearms and parts. These provisions act in conjunction with the Customs and Excise Act 1996, which controls export of prohibited goods. Breaches of these provisions can result in fines and imprisonment.» Customs risk assesses all goods crossing the border. Where firearms are detected and intercepted, Customs can intervene through their powers under the Arms Act and Customs and Excise Act» The Arms Act provides the legislative authority for import requirements. Customs has the ability to detain firearms if required and use the suite of Customs and Excise Act powers to investigate. Sanctions under the Arms Act includes imprisonment of up to one year and fines up to $2,000» The export of firearms is regulated by the Customs Export Prohibition Order. Except for specific circumstances, all exports require the consent of the Ministry of Foreign Affairs and Trade (MFAT). Sanctions under the Customs and Excise Act include imprisonment for up to six months or fines up to $10,000 for an individual, and $50,000 for a body corporate» Customs works closely with Police through the National Multi-Agency Firearms Working Group and the Firearms Community Advisory Forum, to promote inter-agency enforcement cooperation 3

International obligations New Zealand is party to one international agreement, the Arms Trade Treaty, that requires it to record the transboundary movement of strategic goods and conventional arms.

4 International obligations New Zealand is party to one international agreement, the Arms Trade Treaty, that requires it to record the transboundary movement of strategic goods and conventional arms. International Arms Trade Treaty Wassenaar Arrangement Obligation Multilateral treaty that establishes international standards in relation to the regulation of international trade in conventional arms. The treaty requires New Zealand to report on the exports and imports of conventional arms. New Zealand also participates in this multilateral arrangement that sets guidelines for the cross-border flow of conventional arms and sensitive dual use goods and technologies of strategic significance. New Zealand maintains a national export control systems similar to the requirements of the Arms Trade Treaty. 4

5 Intelligence-led enforcement Customs applies an intelligence-led risk management model to assure high assurance and light touch.» Intelligence-led risk management model» Approach is High assurance, light touch with compliant customers» Risk targeting capabilities delivered with other agencies through Integrated Targeting and Operations Centre (ITOC)» Customs has also participated in regional and global targeting exercises (including joint Border Five targeting operations) 5

6 Enforcement Processes at the Border Through its targeted risk assessment, intelligence-led model, Customs uses processes such as system-based alerts, screening of entries, and physical inspections of goods allow Customs to appropriately manage risks.» System-based alerts based around certain parameters (such as known importer details, weight or description of goods) are entered into CusMod» Screening of entries: All entry import information is reported on Cusmod on arrival into New Zealand. If a consignment hits an alert on CusMod, it will be intercepted by Customs officers» X-ray screening: Cargo, mail and passenger baggage may be subject to x-ray screening by Ministry of Primary Industries and Aviation Security as well as Customs.» Physical inspections: If goods are intercepted, Customs officers will physically inspect consignments and their contents» Document verification: If firearms/parts are found, Customs officers will contact importer to verify import permit and firearm licences» Audits: Random audits are performed by Customs on importers to ensure compliance» Questioning: Customs officers have the power to questions individuals under the Customs and Excise Act» Intelligence - based investigations: Intelligence gained will be used in investigations to target criminal offending 6

Managing firearms imports Customs applies a number of clearance processes depending on the way firearms enter New Zealand. Records of imports are kept on Customs reporting system CusMod.

7 Managing firearms imports Customs applies a number of clearance processes depending on the way firearms enter New Zealand. Records of imports are kept on Customs reporting system CusMod. Any firearms and parts handled by Customs are stored in secure and locked facilities. Shipments of firearms and parts enter into New Zealand through four main streams:» Import cargo stream (for goods over $1,000) where a full import entry is required» Electronic Cargo Information (ECI) Stream (for goods under $1,000 and above the de minimis, and below the de minimis)» Mail Stream» Passengers Importing Firearms through Airports Customs Handling and Reporting» Records of firearms import permits and any firearms intercepted retained on Goods Tracking records system» Firearms and parts (including those awaiting permit checks) stored in secure and locked facilities» Customs staff are trained in the safe handling of firearms 7

Managing firearms imports Cargo and Mail Streams Import Cargo Stream for Goods over $1,000 Electronic Cargo Information (ECI) for goods under $1000 Mail Stream Broker enters tariff classification and

8 Managing firearms imports Cargo and Mail Streams Import Cargo Stream for Goods over $1,000 Electronic Cargo Information (ECI) for goods under $1000 Mail Stream Broker enters tariff classification and description of firearms and/or parts in import entries. Goods under $1,000 but over the de minimis: An ECI Manifest by freight company provides summary details of firearm Goods under the de minimis: No alerts in place on CusMod for firearms permits, goods automatically cleared. Import information is limited to postal declaration made by sender of item Particular import entry details on firearm or parts may hit an alert on CusMod. Alerts can be placed on CusMod to recognise firearms and/or parts, (Alert parameters could include weight and recognised importer details). Consignments cleared automatically, unless they hit any alerts on Cusmod Targeted risk assessment through x-ray screening and physical inspections No alerts can be placed on mail so risk mitigation relies on x-ray, profiling and officers visually scrutinising packages. If firearm or parts are detected, Customs officer intercepts the item Holds firearm until May contact Police Importer can present: for verification if any - Import permit issues regarding - Firearms Licence 8 Firearms Permit arises.

Managing firearm imports Passengers Passenger Passengers with Import permits (applied for prior to arrival to New Zealand) - Visitors will also be required to have a temporary firearms licence to

9 Managing firearm imports Passengers Passenger Passengers with Import permits (applied for prior to arrival to New Zealand) - Visitors will also be required to have a temporary firearms licence to possess a firearm in New Zealand Passengers without Import permits: - Customs will inspect firearms and then refer them to police Customs officer inspects firearms and then refer passenger to Police for documentation check. Police Process: - Check passenger has a firearms licence from their country - Complete a temporary firearms licence application - Import permit documentation 9

Risk at the border Customs intelligence and interceptions data, Police data and comparisons with the Australian situation suggests that Customs provides a good

ECI and mail streams are most vulnerable due to the limited risk-assessment Customs can perform.

concealment)» Passenger Stream: Reliance on x-ray screening and passenger declarations, cursory checks of small craft» Export Stream: No routine checks of

10 Risk at the border Customs intelligence and interceptions data, Police data and comparisons with the Australian situation suggests that Customs provides a good level of assurance at the border. There is no indication that large numbers of firearms are being smuggled into New Zealand. ECI and mail streams are most vulnerable due to the limited risk-assessment Customs can perform. Potential non-compliance covers:» Import Streams: Misclassifications or misdeclarations, permit avoidance issues, smuggling (deliberate nondeclaration or concealment)» Passenger Stream: Reliance on x-ray screening and passenger declarations, cursory checks of small craft» Export Stream: No routine checks of passenger exports of firearms, no routine information-sharing between MFAT and Customs of export permits» Accurate classifications of parts: Customs officers may not have information or access to technical expertise to quickly and accurately identify certain firearms parts. 10

Import patterns of firearms Most legitimate importers of firearms and parts are commercial dealers, with a small number that are medium to high risk.

11 Import patterns of firearms Most legitimate importers of firearms and parts are commercial dealers, with a small number that are medium to high risk. There are also a small but significant number of private importers that import through the mail stream. Interactions with importers are based on targeted riskassessment and monitoring. Legitimate Importation Illicit importation Volume of firearms Commercial dealers Medium to highrisk commercial dealers Private importers Deliberately noncompliant importers Intervention by Customs Alerts placed on CusMod around certain parameters in import and ECI streams Firearms and import licence identification Interceptions and seizures, joint-targeting operations with Police resulting in arrests and information on other criminal activity 11

Importation levels As firearms are not a consumable good, accumulation can occur over a long period of time. Research for the Thorp report in 1997 estimated 1,064,000 imports between 1880 and 1996.

12 Importation levels As firearms are not a consumable good, accumulation can occur over a long period of time. Research for the Thorp report in 1997 estimated 1,064,000 imports between 1880 and 1996.» In general over the period from 2008 to 2015, imports of almost all firearms have been steadily increasing, although year to year fluctuations occur.» Fluctuations result from a range of factors such as: Supply and demand Rise/fall of the New Zealand dollar Popularity of different types of firearms Affordability and availability of certain firearms» The exception to the increase is the steady decline in paintball gun imports, potentially due to rising demand for air guns. 12

What does the trade look like? Trends show that volumes of firearms imports and parts are steadily increasing but year to year fluctuations occur.

13 What does the trade look like? Trends show that volumes of firearms imports and parts are steadily increasing but year to year fluctuations occur. Customs records demonstrated that approximately 29,000 firearms were legally imported in 2015 through the import cargo stream. Firearms/Parts Entry Tariff Items by Stats Qty Goods type Other (Military) Tariff Heading Stats Qty 2008 Stats Qty 2009 Stats Qty 2010 Stats Qty 2011 Stats Qty 2012 Stats Qty 2013 Stats Qty Handgun Antique Stats Qty 2015 Shotgun ,018 6,024 8,236 9,352 9,058 8,375 8,920 8,194 Rifle ,105 18,628 19,692 16,507 18,907 19,063 23,513 20,596 Air Gun ,287 18,179 23,519 31,465 27,432 35,257 21,482 27,437 Paintball Gun * 1326* 1034* Parts Total 50,665 43,058 51,853 57,511 55,654 64,489 55,480 59,947 13

14 Interception levels The number of interception incidents at the border are not high compared to the number of imports overall. This indicates a reasonable level of compliance across all imports streams. Intercepts Incidents for » Most border interceptions occur in ECI and mail streams Category of Goods Weapons Type of Goods Incidents 2013 Incidents 2014 Firearms Firearms - Parts of Fireworks/Explosives Weapons Firearms) (excl Incidents 2015» A 2012 Australian Crime Commission assessment on the illicit firearms market in Australia reported that firearms tracing had found less than one percent of those firearms traced had been illegally imported. There is no indication that the New Zealand illicit firearms market would be any different Total

Investigative activity Customs has conducted a total of 52 investigations in conjunction with Police since 2009.

15 Investigative activity Customs has conducted a total of 52 investigations in conjunction with Police since The outcomes of these investigations have been positive, resulting in the seizure of firearms, arrests, and clan labs and cannabis operations being located. Operational Cannibal is the Customs umbrella project for all investigations into the importation of firearms and restricted weapons for criminal use. Since 2009 this has involved:» 74 Search Warrants conducted (27 by Customs and 47 by Police)» 152 firearms seized» 973 stun guns seized» 61 separate border interception of firearms, parts and restricted weapons» 64 arrests (12 by Customs and 52 by Police) with seven individual charges via summons» Seven clan labs and five cannabis operations located. Case Study: Operation Polo Recent investigation into the importation of methamphetamine by internal couriers from the United States. The couriers had gang connections in the South Island. Search warrants located two sawn-off firearms at one address, along with a stun gun previously imported from Hong Kong. The investigators have laid a charge of unlawful possession of pistols in addition to drug import charges. 15

Emerging issues Transhipments of firearms and exports to South Pacific nations remain a risk for Customs Other issues such as 3D printing of firearms and the use of the Dark Web as a source of

Challenges with the current system include:» Transshipments of Firearms Difficult to identify transshipments so this issue remains a risk.

16 Emerging issues Transhipments of firearms and exports to South Pacific nations remain a risk for Customs Other issues such as 3D printing of firearms and the use of the Dark Web as a source of weapons are not thought to be a significant border issue at present. Challenges with the current system include:» Transshipments of Firearms Difficult to identify transshipments so this issue remains a risk. Customs has operational policies in place to mitigate risk and verify consignments» Increased monitoring of exports to South Pacific nations Risks of firearms being exported via the personal baggage of travellers (by commercial shipping crew or aboard small craft) to these particular countries. Customs is continuing to monitor this issue.» 3D Printing of Guns impact is no greater than firearms manufactured through any other method. Primarily an aviation and marine security issue, rather than a border issue» Dark web as a source of weapons usage for sourcing weapons is not thought to be high. Firearms purchased through the Dark web would be subject to the same border controls as any other import» Export of Firearms 2012 strategic assessment demonstrated New Zealand only exports 10.4% by value of the number it imports» Imitation and look-alike firearms Lawfulness is considered on a case-by-case basis at the border 16

Current strategies to improve the management of firearms at the border Several initiatives are either underway or under consideration to enhance the management of firearms and parts at the border.

17 Current strategies to improve the management of firearms at the border Several initiatives are either underway or under consideration to enhance the management of firearms and parts at the border. Further opportunities for improvement which can be explored include stronger reporting standards, greater information sharing between agencies and clarification of legislation and regulation.» Joint Compliance Strategy with Police to ensure greater cooperation and information sharing on illicit firearms. This is one of the initiatives being addressed through the National Multi-Agency Firearms Working Group.» Controlled Deliveries of Firearms under the Customs and Excise Act Review was considered but not progressed. This can be revisited should the need emerge.» Revisiting and considering on Action Points from a Customs Strategic Assessment on Firearms and Parts prepared in 2012 and updated earlier this year. 17

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