Typically, it was Hu’s job to take cash from clients and arrange for funds to be transferred to offshore bank accounts nominated by the client.
At best, Hu was reckless about the true source of the funds. Surveillance during Operation Martinez showed him meeting furtively with criminals, often in carparks, where he was handed large sums of cash.
Fuati was then responsible for arranging for the unexplained cash to be deposited into the legitimate banking system, without raising suspicion.
Between January 2018 and November 2020, a network of a dozen “third party depositors” — often young or vulnerable individuals hired as money mules — deposited a total of $123,455,400 in cash into about 400 bank accounts.
They would be paid $100 for every $100,000 deposited.
Those accounts were often in the names of aliases — for example, Hu had passports in different names from China, Antigua and Barbuda, and Mexico — or in the names of other individuals who let the Wanda Group use them.
The ‘money mules’ would be paid $200 for every $100,000 deposited.
The Wanda Group would also get a cut: customers were charged a commission of 10 to 20 per cent of the funds sent overseas.
Hu and Fuati pleaded guilty to structuring a transaction – an offence under New Zealand’s anti-money laundering laws – and punishable by up to two years in prison.
The structuring charge for both men covered the $123 million of cash deposits made by their network of “money mules”.
Hu also admitted four charges of money laundering, carrying a maximum penalty of up to seven years in prison.
The money laundering convictions for Hu covered $200,000 of ill-gotten gains from the supply of meth, the $118,000 invoice fraud and more than $600,000 netted from the sale of illegal cigarettes.
Daniel Hu, also known as Jun Jin, was placed under close surveillance in 2020 by police investigating his business. Photo / NZ Police
In 2023, Hu and Fuati were sentenced to home detention of 9 and 2 months respectively.
The non-custodial sentences prompted senior police to suggest harsher penalties for money laundering in briefings to Cabinet ministers.
The government has since announced that the maximum penalty for money laundering will double to 14 years in prison.
However, when Hu and Fuati were arrested in November 2020, the police also restrained millions of dollars of assets, cash and bank funds under the Criminal Proceeds Recovery Act.
The law is designed to strip criminals of any profits made from their illegal activity.
In October, Justice Michele Wilkinson-Smith ordered that Fuati pay nearly $585,000 from the proceeds of the frozen assets after his lawyers reached a settlement with the police.
Last week, his business partner Hu also made a deal with the police and was ordered to pay $3.29 million.
The sum will be comprised of proceeds from the sale of four luxury vehicles (a Mercedes-Benz V350, a Range Rover, Porsche Cayenne and a Rolls-Royce Wraith), more than $900,000 in frozen bank accounts, more than $200,000 in seized cash and the sale of two properties.
If there is any shortfall of the $3.29m sum, Hu must make an additional payment of the remaining balance.
More than $161,000 in cash seized from Daniel Hu during Operation Martinez. Photo / NZ Police
A Range Rover seized from Daniel Hu and sold following part of Operation Martinez in 2020. Photo / NZ Police
Operation Martinez was one of the first investigations of its kind in New Zealand as part of a strategic shift by police to focus on professional money launderers.
An audit in 2012 by the Financial Action Taskforce (FATF), a global body that audits the anti-money laundering performance of member countries, had noted New Zealand had a poor rate of prosecuting money laundering.
At that time, investigations into financial affairs were more likely to support asset recovery cases, or focus on the crime generating the funds to be laundered — usually drug manufacture or supply.
As a result, there had been a lack of attention on identifying “high risk” money laundering targets such as lawyers and accountants, who help criminals hide their money through companies and trusts, or money remittance firms taking dirty cash and wiring funds overseas.
The FATF recommendations led police to establish a specialist Money Laundering Team with a deliberate focus on professional money launderers.
The so-called “third party” launderers are not involved in making money through criminal activity, most often drug dealing in New Zealand, but are engaged as contractors solely to disguise the origins of dirty cash or get it out of the country.
Instead of reconstructing the financial transactions through forensic accounting alone, the money laundering teams also use investigative techniques more commonly found in covert drug operations.
Intercepting private communications, hidden cameras, physical surveillance and even undercover agents — along with combing through spreadsheets of banking data — are among the tools needed to gather necessary evidence.
Last year, the government set up an expert panel to provide advice on how New Zealand should tackle the growing threat of organised crime.
As well as tightening controls on cash and cryptocurrency – such as banning 200 “crypto ATMs” – the advisory group made a number of recommendations to assist police investigations.
These included giving police more powers to freeze suspected criminal assets, make it easier to prosecute money laundering offences, and introduce surveillance warrants to monitor bank accounts in real time.
“Organised crime can move at the speed of the global finance system – enforcement agencies can only move at the speed of the law,” the advisory group told Cabinet Minister Casey Costello in April.
Jared Savage covers crime and justice issues, with a particular interest in organised crime. He joined the Herald in 2006 and has won a dozen journalism awards in that time, including twice being named Reporter of the Year. He is also the author of Gangland, Gangster’s Paradise and Underworld.