WASHINGTON (WASHINGTON POST) - A flamboyant Malaysian financier linked to an international money-laundering probe has laid bare New Zealand's surprising appeal as a destination for the ultra-rich to park their wealth.

Family members of Low Taek Jho, who is suspected by US officials of diverting money from Malaysia's state investment fund 1Malaysia Development Bhd (1MDB), are beneficiaries of New Zealand trusts holding US$265 million in assets including a Bombardier jet, a luxury Beverley Hills hotel and a penthouse in the Time Warner Centre in Manhattan, according to court documents.

The family is fighting the US Justice Department's bid to seize the assets. Jho Low has said he provided consulting to 1MDB that didn't break any laws.

The case has shone a spotlight on a multi-billion dollar trust industry in New Zealand that allows foreigners to hold assets with minimal disclosure.

While Prime Minister Bill English's government has committed to tighten rules around trusts and legislation is before parliament, the opposition wants it to do more to safeguard the image of a nation that tops global transparency rankings.

The opposition Labour party is calling for a public register of assets and their beneficiaries, which could lead to an exodus from the industry as the mega wealthy seek to protect their privacy.

"The government's ongoing complacency risks seeing our reputation damaged," Grant Robertson, Labour's finance spokesman, said by email.

Such a register would "give the public increased confidence that New Zealand is protecting its reputation and joining other countries in cracking down" on the trust system.

The complex corner of New Zealand's tax system came under scrutiny last year following the "Panama Papers" leak, with local media reporting more than 60,000 references to the nation in the documents from law firm Mossack Fonseca.

New Zealand, which is regarded as the best nation along with Denmark on Transparency International's corruption perceptions index, and also tops the World Bank's ease of doing business ranking, allows non-residents to use trusts established in the country to hold assets and wealth, with no tax payable on offshore earnings.

There is also no stamp duty, gift duty or other such charges applied.

The legislation aims to tighten light reporting requirements. The name of the beneficiaries of the trust, their nationality, source or value of funds have not had to be declared to the New Zealand Inland Revenue.

A government-commissioned inquiry held in the wake of the Panama Papers leak concluded last year there was "a reasonable likelihood" the trust system "is facilitating the hiding of funds or evasion of tax in some instances."

Finance Minister Steven Joyce said it was important to tighten the rules."New Zealand is seen as a fair dealer and responsible player on the world stage," he said in an interview last week.

"You have to make changes to meet the market as things change."

Last August, the government introduced legislation to tighten up the system, including requiring trusts to publish annual financial statements and creating a register for police and regulators.

The Bill passed through a parliamentary committee before Christmas, and is now awaiting a second reading in parliament. It proposed a June 30 deadline for trusts to file an initial registration.

As well as pushing for a public register, Labour wants the government to expand reporting requirements aimed at curtailing money laundering to include lawyers, accountants and real estate agents.

There were 11,597 such trusts in operation at the end of 2016, according to the Inland Revenue. While there's no data on how much wealth they hold, Michael Littlewood, law professor and tax expert at Auckland University, estimates it's potentially "at least tens of billions of dollars and perhaps hundreds of billions."

"The fact that New Zealand could be used as a tax haven was well known among tax professionals," Littlewood said via e-mail.

"Until recently it attracted very little public interest."

The murky world of trusts is under assault globally from law enforcement agencies, amid a global game of investment hide and seek set off by the alleged disappearance of more than US$3.5 billion of the US$8 billion raised by Malaysian investment fund 1MDB.

The US is targeting real estate, investments and art works that were allegedly bought with money siphoned off from 1MDB. New Zealand's High Court last month ruled Jho Low's relatives can replace the Swiss trustees holding the assets. The family claimed the trustees were afraid to fight back against the US for fear of being prosecuted.

Lawyer's who represented the family in New Zealand didn't reply to an e-mailed request for comment. Jho Low wasn't available for comment, according to a person who answered the phone at his Hong Kong based private equity firm Jynwel Capital Ltd.

New Zealand is one of more than 100 countries implementing a Common Reporting Standard devised by the Organisation for Economic Cooperation and Development.

The new code aims to ensure automatic information sharing between tax authorities globally.

While the new trust register is not covered by CRS protocols, English's government has made clear, in notes accompanying its legislation, that it intends to share details to other jurisdictions "as a matter of course."

The combination of the new local and global rules will make it "very much harder" for foreigners to use New Zealand trusts to avoid or evade tax, according to Littlewood.

"I think it's likely that, faced with beefed up disclosure requirements, most of these trusts will leave New Zealand or be wound up."