23 Apr 2024

'Not consulted': Cook Islands cryptocurrency bill 'reason for concern', justice minister says

10:48 am on 23 April 2024
Huge stack of cryptocurrencies in a circle with a golden bitcoin in the middle. Cryptocurrencies in blockchain concept. 3D illustration

The bill was tabled in Parliament by Justice Minister Vaine Mac Mokoroa, who said he too was kept out of the loop. Photo: 123RF

There is growing concern over the Cook Islands dealings on a cryptocurrency bill before parliament which allegedly could be used to hack into systems around the world.

Drumcliffe, a high-value debt collector specialising in international asset seizure, hired at least two Cook Islands-based lawyers to draft the Tainted Cryptocurrency Recovery Bill 2023.

Industry members say there was a lack of consultation as this bill was drafted, leaving them very concerned.

Stakeholders are urging a halt to the bill's progression, citing its potential far-reaching consequences.

The Cook Islands' own Crown Law says it was excluded from the drafting process.

The bill was tabled in Parliament by Justice Minister Vaine Mac Mokoroa, who said he too was kept out of the loop.

"Before this bill was tabled in Parliament, I was not consulted with at all, until about three or four days before the tabling," Mokoroa said.

"By then, what am I going to understand? I did not know anything about this bill at all."

Vaine Mac Mokoroa, the Minister of Justice.

Vaine Mac Mokoroa, the Minister of Justice. Photo: Supplied / Radio Cook Islands

Mokoroa said several industry members and experts have expressed concern that the bill could be used to hack into systems around the world and damage the countries reputation.

"There are a lot of parts in the bill that are reason for concern and debate.

"Our local companies in the offshore banking sector are very worried, they say their industry will be affected by this proposed bill."

Several trustees companies have submitted their concerns to the select committee.

RNZ Pacific has seen these documents in which the trustees point out the bill's cybersecurity implications and its potential impact on the country's reputation and offshore trust industry.

Ora Trust Partners founder and chief executive Puai Wichman is hoping the bill is withdrawn.

"There are constitutional issues like whether Cook Islanders are safeguarded from being hacked under this bill and losing rights to justice, Wichman said.

"The [risk] list just goes on, there is so much wrong with this bill, we do not see any benefits."

'Great deal of misinformation'

However, Tim Arnold, who drafted the Tainted Cryptocurrency Recovery Bill, said he would not have gotten involved if he did not believe it would benefit the Cook Islands.

"There has been a great deal of misinformation on what the bill is and is not. I certainly believe that the bill does very much have a future as one of the tools to deal with the global problem, transnational crime."

"The Cook Islands stands to benefit in a number of ways."

Arnold has been drafting legislation in the Cook Islands for 40 years and is defending the bill's necessity in combating transnational crime, particularly in the realm of cryptocurrencies, which he described as challenging to trace and link to illicit activities.

He said for every $100 seized off victims globally, only $1 is returned and better processes need to be made.

"This bill is aimed at...only cryptocurrencies that have been used for serious crime.

"The reason it has come to the Cook Islands is that there is a private sector actor that has the resources and capability to track and trace crypto and seize it."

Arnold emphasised the bill's potential benefits for the Cook Islands in contributing to global efforts against cybercrime, citing its role as an information hub and safe storage site for seized assets pending legal proceedings.

In response to the public outcry for this bill to be withdrawn, Prime Minister Mark Brown said he "is confident that whatever law we end up with will be in keeping with the constitution and laws and will be aligned with other international agencies and countries fighting cybercrime."

A spokesperson said the Cook Islands government is aware of the numerous concerns raised and solutions have also been posed.

New Zealands minister of foreign affairs Winston Peters is aware of the bill.

"MFAT officials in Rarotonga and Wellington are tracking the legislation and are in discussions with Cook Island officials," a spokesperson from his office said.