A terrible spectre haunts New Zealand. Cash transactions come with no guarantee that they are not part of a money-laundering scheme. While you might not think that a problem, New Zealand has obligations under international Anti-Money Laundering agreements. And it’s time we do something about it.

Last week, Associate Justice Minister Simon Bridges showed just how seriously he takes things. He accepted the Ministry of Justice’s advice that iPredict poses substantial money-laundering risk and refused iPredict’s request for an exemption from the Anti-Money Laundering regulations.

iPredict is New Zealand’s real-money prediction market. Traders buy and sell contracts that pay out based on who wins the next election, what the unemployment rate is, or on whether bits of legislation pass.

Now, I have loved iPredict. I have pointed to it as a perfect example of the kind of regulatory flexibility that makes New Zealand stand head and shoulders above other jurisdictions which have made it impossible to run prediction markets. The prices of contracts traded on iPredict’s markets are great predictors of future events and have real social value.

At first I thought this a perfect example of regulatory overkill. The typical trader’s account is under $50 and iPredict’s average annual withdrawals are just over $20,000. But terrorist-enabling money-launderers can be devious. And we can all imagine movie-plot-worthy scenarios in which they might launder up to hundreds of dollars through iPredict over a few weeks.

And remember that it was the free-market-ideologue Helen Clark’s Labour government whose regulations allowed iPredict to exist in the first place.

It is about time that National got around to tightening things up.

I, for one, hope this is just the start. People can launder money more easily at the pokies, by buying instant kiwi scratch tickets, or even just using cash – that worst of all possible anonymous and untraceable terrorist-supporting transaction technologies.

We need to learn from the government here: no cost is too high in the fight against terrorism and money laundering. If you can imagine a scenario, it’s worth banning.

Ultimately, we need to ban cash and require that all electronic transactions route through the Ministry of Justice for approval. Just in case.

Can you prove that money launderers don’t use cash, or that they don’t trade rare New World Little Shop pieces? I didn’t think so. There are risks. It’s time for many bans.