A business owner says it was financially devastating when a payment he was owed got sent to a Whakatāne woman’s money laundering bank account instead of his own.

The money was stolen about a week shy of Christmas, when the Rotorua-based earthworks and landscaping company had only been operational for a few months, and its owner had a new baby at home.

Defendant Gaylene Pikihuia Edwards, 56, was sentenced to 60 hours of community work when she was sentenced for money laundering in Whakatāne District Court last week.

She must also pay more than $6000 in reparation.

Edwards’ bank account was used as a “mule” through which stolen money was laundered. Police found evidence of more than $17,000 being transferred into, then out of, an account she set up.

A portion of the money received by Edwards was meant to be paid to the Rotorua company, which had completed a large job for a customer.

The police summary of facts detailed how the company emailed an invoice to its customer using accounting software Xero, but the email was intercepted by a hacker three minutes before it was delivered to the customer’s inbox.

The company’s bank account number was substituted for Edwards’, resulting in the money being sent to her instead.

The scam was discovered when the legitimate invoice went unpaid, shorting the small business thousands of dollars.

Its director, who did not want to be named, said the offending caused a significant amount of stress.

“At the time it was financially devastating. It was the sum total of our trading funds, and we were only about three months into trading,” he said.

“It took a long and stressful and financially tough time to eek back enough money to trade somewhat regularly again.

“However, from what detectives told me, there were others that were equally, or even worse off, impacted by the same scammers.”

The stolen funds were meant to pay for labour, travel and a significant amount of the material outlaid for the large job.

But the director said the company was in a much better position a year later, and he was not interested in being on the receiving end of what he understood might be an unemployed woman’s last $20 each week – even if her  ignorance had caused him harm.

“Small weekly or monthly repayments would make little to no difference to us and would be an immense burden on somebody barely making ends meet, so I would rather see an alternative punishment from the court.”

Edwards is unemployed and her primary role is as a caregiver for her husband, but lawyer Natasha Hartigan told the court last week that she was willing to pay reparation.

She said Edwards was sorry for what happened and had been naive about the situation she was in.

Edwards became involved in the money laundering scheme after answering a job advertisement on Facebook.

The job involved opening a bank account in her own name, then transferring any or all funds to another bank account, according to the summary of facts.

“The defendant failed to make any enquiries into the advertisement and accepted it, motivated by financial gain,” it said.

Edwards opened the bank account on November 19 last year and supplied its number to the person behind the job ad. She never met the person.

Deposits began being made to the account on December 14 and continued until a bank fraud recovery team identified a $4750 deposit on December 23 as being fraudulently obtained.

The money was removed from Edwards’ bank account, which was closed two months later.

She was recorded in the summary of facts as making one comment in explanation.

“Oh, I knew this was coming, I knew it was a scam. I should have never clicked on the advertisement. I was hoping it would all just go away.”

Police Eastern Bay area prevention manager Senior Sergeant Cam MacKinnon, pictured above, spoke to the Beacon about scams in general, and how to keep safe.

He said if something seemed too good to be true, it most likely was. Some caution was needed before fully committing to any deal or before transferring any information.

“The person behind the scam can be quite hard to find. They are often using a mule or an intermediary, who might also be in a situation where they are doing something they probably should have put more thought into before starting.

“An example of this is if you’re ever asked to open a bank account by a person or organisation or asked to pass over your personal information by a person or organisation; well to do so without being certain on the facts would be naive.

“Another obvious example is where someone asks you to take a package through an airport for them, but this still does occur.”

Mr MacKinnon said it was important to check information if approached by a potential scammer, especially over the phone or when on the internet.

Scammers look to prey on the general goodwill of the public, whose first instinct might be to start answering the questions they’re being asked, he said.

Mr MacKinnon’s advice is to stop engaging with any potential scammer, and to seek advice from a friend, family member or colleague.

If you think you’ve been scammed, contact police.

“We’ve had numerous instances of people doing just that; coming in to double check. We’re quite happy to do some due diligence behind the scenes for members of the public to get clarity on a situation.”

Scam prevention has been a focus at the national level recently, with a ministerial exemption and updates to the Code of Banking Practice announced in the last fortnight.

A ministerial exemption by Associate Justice Minister Nicole McKee to the anti-money laundering (AML) legislation now allows several banks to share AML-related information with one another for the purpose of preventing fraud and scams.

“Anti–money laundering rules have made it too hard for banks to share information about known fraud or scam activity – including ‘mule’ accounts and associated details,” Mrs McKee said.

“This red tape relief means banks will be able to act faster, work together more effectively, and in many cases freeze scam transfers before the money disappears overseas for good.”

The exemption was included in an update to the New Zealand Banking Association’s Code of Banking Practice on Sunday.

The update brings in new customer scam protections and compensation, targeting authorised payment scams where people are tricked into making payments to criminals. It includes:

n Pre-transaction warnings to customers for certain payments

n A Confirmation of Payee service for customers to check that the name of the person they are paying matches the account number, which finished rolling out in April this year

n Identification of and response to high-risk transactions or unusual account transaction activity, and the ability to delay or block transactions in some cases

n Providing a 24/7 reporting channel for customers who think they’ve been scammed, and responding to protect accounts

n Sharing scammer account information with other banks to help prevent criminal activity, and freezing funds where appropriate, which was announced earlier this month.

Where a bank fails to meet the five new scam protection commitments, it will compensate all or part of the loss for eligible customers.

Banks will also continue to compensate losses for eligible customers where their banking was accessed without the customer’s authority.

New Zealand Banking Association chief executive Roger Beaumont said the new scam protection commitments showed that banks were serious about helping to keep their customers safe from increasingly sophisticated scams.

“We have adopted a prevention-led approach to fighting scams because global experience shows that’s the best way to help protect consumers from scam losses.”

He said the new compensation approach recognised the shared responsibilities for protecting New Zealanders from scams.

“Banks have stepped up their customer protections and will be accountable for those measures, but they cannot take on full liability for scam losses that are beyond their control and may start with a fake ad or chat on social media, or a fake search engine result.

“Industries such as social media companies, global tech platforms, and telcos also have a major role to play in preventing scams. Consumers are also encouraged to take reasonable care to protect their banking.”