An international report suggests the extent of money laundering in New Zealand equates to more than $1 billion a year.
The Financial Action Taskforce, an inter-governmental body, has released its report on New Zealand's efforts against money laundering and in countering the financing of terrorism.
The report says there appears to be a higher degree of sophistication in laundering the proceeds of crime in New Zealand than in previous years.
It says in the past two years, the purchase of real estate, the use of professional services and foreign exchange dealers have been popular means to launder funds.
Before this, the majority of proceeds of crime were laundered through retail bank accounts.
The report says that between 2004 and 2008, 75% of the 197 files associated with money laundering investigated by police related to fraud associated activity, predominantly internet banking fraud.
It says drug-related activity is the second-most investigated offence associated with money laundering, making up 10% of the total money laundering associated
Though authorities consider the risk of terrorist financing in New Zealand to be low, the taskforce does raise concerns about preventative measures taken by financial institutions against money laundering.
It has made several recommendations to the Government, including introducing licensing requirements and comprehensive "fit and proper" criteria for all financial institutions, not just banks.