Business Activities – Gate Keepers protecting us all

26.MAR.10

By Financial Intelligence Unit

“We [are mandated] to help our private sector counterparts at home and abroad implement coordinated and targeted anti-money laundering and counter-terrorist financing programs that are consistent with international standards”. These words were uttered by Patrick O’Brien, the U.S Department of the Treasury’s Assistant Secretary for Terrorist Financing and Financial Crimes and are shared by the Financial Intelligence Unit as we continue our efforts to inform and educate our Vincentian society.{{more}}

Money laundering and terrorist financing threaten our economic and social stability and as such we must all play our part in decreasing and ultimately eradicating their incidents in St. Vincent and the Grenadines. Janet Reno, former Attorney General of the United States, once stated that, “Money laundering is a very sophisticated crime and we must be equally sophisticated….” Financial institutions and relevant business activities can play such a role as they are often used to carry out these acts and they can assist by adhering to a number of key regulations as set out in the Proceeds of Crime and Money Laundering (Prevention) Act, 2001 (POCMLPA) and Proceeds of Crime (Money Laundering) Regulations, 2002 (the Regulations).

Schedule 1 of the POCMLPA lists the entities which fall under the heading of financial institutions and relevant businesses. These include Domestic Banks, Offshore Banks, Building Societies, Insurance Companies, Credit Unions, Money Transmission Services, Investment Businesses, Trusts and other fiduciary services, Foreign Exchange, Car Dealerships, Jewelers, Real Estate Agents, Casinos, Internet Gambling, Lottery Agents, Barristers-at-Law and Solicitors, Accountants and Charities.

The POCMLPA outlines some of the obligations placed on financial institutions and relevant business activities to aid in combating Money Laundering and Terrorist Financing.

One such obligation is that of record keeping and reporting of suspicious transactions. Entities are required to keep and retain records relating to financial activities. Specific attention must be paid to complex, large or unusual transactions whether completed or not and those that have no apparent economic or lawful purpose. Additionally, suspicious transactions that could constitute money laundering, terrorist financing or the proceeds of criminal conduct must be reported to the FIU as soon as possible and within 14 days of the suspicious transaction. Failure to report a suspicious transaction IS AN OFFENCE carrying a penalty of 3 years imprisonment or a fine of $500,000 or both on summary conviction and on conviction on indictment, imprisonment for 10 years or an unlimited fine or both.

Entities may have reservations about making these reports, but when made in good faith, the financial institution or relevant business activity is exempt from criminal, civil or administrative liability.

With regard to record keeping procedures, the entity must keep evidence of the person’s identity for a minimum of 7 years after the day on which the account was closed or after the day on which the transaction recorded takes place and records or copies thereof of the details relating to the business that may assist in a money laundering or terrorist financing investigation. However, if the FIU has notified a regulated institution in writing that particular records are or may be relevant to an investigation that is being carried out, the records are to be retained pending the outcome of the investigation.

Entities must comply with the regulations made under the POCMLPA to assist them in combating money laundering and terrorist financing. To this end, a written Compliance Programme must be developed and implemented to ensure and monitor compliance with the Regulations. The Compliance Programme includes a system of internal controls to guarantee ongoing compliance, internal or external independent testing for compliance, training of personnel in the identification of suspicious transactions and the appointment of a senior staff member at management level to be responsible for continual compliance with the POCMLPA and Regulations made there under.

The Regulations highlight that an integral tool in the fight against money laundering and terrorist financing is Knowing Your Customer (KYC). The Regulations set out the identification procedures which require that measures be established and maintained that call for an applicant for business to provide satisfactory evidence of his identity and if satisfactory evidence is not obtained, the business in question must not proceed any further or if it is a case where money laundering or terrorist financing is known or suspected, only in accordance with any direction by the FIU.

Entities must not become complacent; the business relationship must be monitored to ensure that it is consistent with the stated account purposes and business. Where there has been no recent contact with the person within a period of 5 years, the identity of the account holder should be confirmed. On the issue of Continued Verification of accounts, once the entity has verified the identity of the applicant no further verification of identity is needed once the applicant maintains a business relationship on a regular basis.

The link to the FIU is facilitated by the identification of a “reporting officer” in each entity, to whom a report is to be made of any information or other matter that comes to the attention of the person handling relevant financial business that gives rise to a knowledge or suspicion of money laundering or terrorist financing and the reporting officer must consider the report in light of all relevant information so as to determine whether or not the information gives rise to a knowledge or suspicion. He/she must have access to all relevant information that would assist him/her in considering the report and if he/she agrees, disclose the report to the FIU.

In addition to the above, staff must remain current on issues relating to money laundering and terrorist financing. All employees should be made aware of the POCMLPA, the Regulations, the United Nations (Anti-Terrorism Measures) Act, 2002 and any other statutory provision relating to money laundering and of the procedures maintained by the institution in compliance with duties imposed under the regulations and employees must receive training relating to money laundering.

A person who carries on business without complying with the requirements of the Regulations commits an offence.

In law enforcement investigations into organised criminal activity, it is often the connections made through financial transaction records that allow hidden assets to be located and establish the identity of the criminal or criminal organisation responsible.

Sibel Edmonds, a former FBI translator and founder of the National Security Whistleblowers Coalition (NSWBC), once said, “…but I can tell you that the issue, on one side, boils down to money – a lot of money. And it boils down to people and their connections with this money…” Financial institutions and relevant business activities therefore play a very important role since their doors are the first step to the laundering process and they can therefore greatly aid in the fight against money laundering and terrorist financing by being vigilant in the detection, deterrence and reporting of suspicious transactions which may constitute or relate to money laundering or terrorist financing.

We urge all regulated entities to comply with the provisions of the POCMLPA, The Regulations and the UNATMA.