A law passed three years ago to hit counterfeiters with huge fines and prison sentences is still not in effect because of red tape.

Instead of being able to impose jail terms of up to ten years and dole out penalties of $250,000 courts can only fine the fakers $240 under laws dating back to the early part of the last century.

The Copyrights and Designs Act 2004, which is actually featured on the Government's laws website, was signed off by the Governor in March of that year.

But it is still not operational as the regulations which go with it have yet to be drafted by Government.

The only pieces of legislation Police and Consumer Affairs have to work off are the Patents and Designs Act 1930 which has a maximum fine of $240 and The Merchandise Marks Act 1889 which is even softer.

Last October Police raided a Hamilton shop and netted $1,000 of fake DVDs while they warned supermarkets were in contravention of the Act for selling fake designer handbags, clothing and perfume but no prosecution was launched.

The law delay was raised in the Consumer Affairs Report of 2006.

And this week Inspector Charlene Thompson, of the Fraud Squad, said: "Our only hope is that it is gazetted soon because the legislation which has been passed would give us, the Police, the power to go on and do what we have to do in terms of enforcing the law.

"But we want to put out the warning to people doing this that once the legislation is in place they run the risks of complaints."

Pirating operations have been linked to gangsters and even al Qaeda say authorities.

"We want to let people know who are purchasing these counterfeit goods that ever since 9/11 you are looking at possibly helping fund terrorism," said Inspector Thompson.

The old Act lacks punch on punishment, seizure and search powers but the new act legislates the Consumer Affairs department to be the investigative body for such offences.

Labour and Immigration Permanent Secretary Robert Horton said: "The delay in bringing the Copyright and Design Act 2004 into operation is regrettable, but has been caused by the unanticipated amount of time that it has taken to draft the 21 copyright Regulations that will supplement the Act.

"However, I am pleased to advise that most of the work on the Regulations has been completed and we very much hope that the Act and the Regulations will be brought into force by the end of the year."