The Ministry of Economic Development is defending its company registration system, even as Commerce Minister Simon Power considers tightening up the system, after a New Zealand company was linked to allegations of North Korean arms trading.
An anti-corruption organisation says it is concerned gaps in the company registration system make New Zealand vulnerable to money laundering and terrorist activities.
Officials are investigating an Auckland-based company, which is believed to be linked to a North Korean plane found to be carrying 35 tonnes of illegal weapons during a search in Thailand last month.
A company based in Queen Street, SP Trading, chartered the plane.
Transparency International New Zealand says the case raises questions about the stringency of New Zealand's company incorporation laws.
But the business registries manager at the Ministry of Economic Development, Justin Hygate, says the system is stringent enough.
Mr Power says the review may result in more stringent identity checks of directors and shareholders, as well as giving the Companies Office more powers to suspend companies it suspects of illegal activities.
The OECD warned the Government last year that there were gaps in the company registration system which could be used by shell companies to launder money and finance terrorism.
Despite this, Mr Power says he was only prompted to act after the arms case, amid concerns about sharp rise in the number of new companies registering that have only overseas directors.
