Government officials say they are taking steps to stop fraudsters using New Zealand shell companies for money laundering and has already removed hundreds of at-risk companies in the last two years.
UK based organisation Global Witness says shell companies in New Zealand have been linked to a $1.5 billion money laundering scandal in Kyrgyzstan involving the Asia Universal Bank, which is now insolvent.
It's believed some of the money may have embezzled by former President Kurmanbek Bakiyev and his family.
Global Witness says New Zealand is often at the heart of international crime scandals, because fraudsters find it easy to use shell companies here without being identified.
It says there should be rules against agents who are employed legally to act as proxy shareholders or directors in the shell companies.
Companies Office staff say that they have removed nearly 2600 at-risk companies from the register since 2010, including companies identified by Global Witness.
Commerce Minister Craig Foss says a bill before Parliament will strengthen the powers of the Registrar of Companies to investigate and remove companies and ban directors.
Commercial lawyer Stephen Franks says the rules will hurt honest people trying to set up their own companies.
He says that more regulation are not the way to stop fraudsters using New Zealand to launder money.
"It's highly unlikely to be best dealt with by making it more expensive and cumbersome and bureaucratic for New Zealanders to incorporate companies."
Mr Franks says the Government should spend the time and money on enforcing existing laws and chasing the fraudsters.
"The solution is, as usual, to enforce the law that you've got," he says. "Put the money into chasing crooks.
"Make sure that it is a very unprofitable experience to be operating as a crook from New Zealand. We're not doing that.
"If these agents sign false returns or don't comply with companies law, they should be hounded," Mr Franks says.
In May, the European Union said New Zealand does not have strong enough controls against money laundering.