The Financial Intelligence Unit

1. The Financial Intelligence Unit What should it do? And who should do it? Martin Comley

2. Overview of the 40 (+ 9) Recommendations A. LEGAL SYSTEMS Recommendation • Scope of the Criminal Offence of Money Laundering 1 - 2 • Provisional Measures and Confiscation 3 B. MEASURES TO BE TAKEN BY FINANCIAL INSTITUTIONS AND NON-FINANCIAL BUSINESSES AND PROFESSIONS TO PREVENT MONEY LAUNDERING AND TERRORIST FINANCING • Removal of ’banking’ secrecy 4 • Customer Due Diligence and Record-keeping 5 - 12 • Reporting of Suspicious Transactions and Compliance 13 - 16 • Other Measures to Deter Money Laundering and Terrorist Financing 17 - 25 C. INSTITUTIONAL AND OTHER MEASURES NECESSARY IN SYSTEMS FOR COMBATING MONEY LAUNDERING AND TERRORIST FINANCING • Competent Authorities, their Powers and Resources 26 - 34 D. INTERNATIONAL CO-OPERATION • International Co-operation 35 – 40 EIGHT SPECIAL RECOMMENDATIONS Special Recs • Ratification and implementation of UN instruments I • Criminalising the financing of terrorism & associated money laundering II • Freezing and confiscating terrorist assets III • Reporting suspicious transactions related to terrorism IV • International co-operation V • Alternative remittance VI • Wire transfers VII • Non-profit organisations VIII • Cash Couriers IX

3. Methodology for assessing compliance with FATF 40 (+ 8) Essential and Additional Criteria are measured…

4. 3.4 13.1, 13.2, 13.5 14.1, 14.2, 14.3 Footnote 22 16.2, 16.6 17.2 21.2 25.2 26.1, 26.2, 26.3, 26.4, 26.5, 26.6, 26.7, 26.8, 26.9, 26.10 27.6 30.1 Footnote 28 31.1, 31.1 a 32.2 a spot 1, 32.2 c spot 2, 32.2 c spot 3 40.2 40.4.1 40.11 IV.1 VII.7 IIIV.3 Methodology for assessing compliance with FATF 40 (+ 8), paragraphs where FIU / STR are directly referenced: Whilst FIU/STR are directly referenced in the above paragraphs these paragraphs should be read in context of the whole section/document and not read in isolation!

5. Legislators Regulations / Guidance Financial Sector Prosecutor &Judicial System Law Enforcement (in its broader sense) Financial Sector Regulators Rule 1: The FIU does not stand alone! It should be one component of the National AML/CFT strategy. Government Policy / Strategy FIU Always remember that M/L is the result of other criminality.

6. What should the FIU do? • Countries should establish an FIU that serves as a national centre for receiving (and if permitted, requesting), analysing, and disseminating disclosures of STR and other relevant information concerning suspected ML or FT activities. The FIU can be established either as an independent governmental authority or within an existing authority or authorities. • Receive: What and from whom? • What is it we are trying to collect? • Who and what is the collection dependent upon? • Analyse: What is it we are going to do with the received data once we’ve got it? • What are you going to compare at it / ‘analyse’ the data against? • Who and what is the analysis dependent upon? • Dissemination: What and to whom? • Is this decision separate from the two above or an integral part of the whole decision making process? • Do you potentially have more than one ‘customer’ for the output from the analysis?

7. Remember, the FIU is often the bridge across the differing aspects of the AML/CFT regime… Criminal and or Administrative Criminal Administrative Regulations And or Guidance Legislation FIU Prosecutor Financial Sector Law Enforcement Financial Sector Regulators

8. When you have looked at Receipt, Analysis and Dissemination the consider… • What skills are necessary to undertake the above functions. • What agency has most of these skills? [Ignoring whether funds or human resources are available at this stage] • What skills are NOT covered within the agency identified in ‘2’? • Can they be obtained from another agency? • Are there still skills gaps?

9. Ministry of Interior Central Bank FIU Ministry of Justice Financial Sector Regulator Ministry of Finance Law Enforcement Someone else? Or a NEW body? Having looked at function and skills where to place the FIU may now follow... The FIU should also be independent (Rec. 26.6 and 30.1)! The FIU should have sufficient operational independence and autonomy to ensure that it is free from undue influence or interference.

10. Financial Intelligence Unit (FIU)FIU Structure • Is the body (FIU) being inspected the single national unit • How is it organised Structure • Funding • Staffing • Technical resources to undertake its function • Is it an independent governmental authority or within an existing authority or authorities. • Does it have independence to perform its function • Does it: • Receive (and if permitted, requesting) • Analysis • and disseminating • STR and other related information concerning suspected ML or FT activities • How are these process undertaken

11. Financial Intelligence Unit (FIU)FIU Integrity / Accountability • What arrangements are there for dealing with Professional standards • Confidentiality • Staff Integrity • What arrangements are there for security / protection of information • Security of STR and other information • Access to the STR or information • Dissemination of the information • Does it publish • Periodic Reports • Statistics • Typologies / trends • How often is such information published • Who is the target audience

12. Financial Intelligence Unit (FIU)FIU Staff Skills • Staff should be provided with adequate and relevant training for combating ML and FT • Scope of predicate offences, ML and FT • Typologies, techniques to investigate and prosecute these offences, • Techniques for tracing property that is the proceeds of crime or is to be used to finance terrorism, • ensuring that such property is seized, frozen and confiscated, • the techniques to be used by supervisors to ensure that financial institutions are complying with their obligations; • the use of information technology and other resources relevant to the execution of their functions. • Special training and/or certification for financial investigators for, inter alia, investigations of ML, FT, and the predicate offences.

13. Financial Intelligence Unit (FIU)FIU Function • How many suspicious / currency transaction reports etc. • Received From whom • Disseminated To whom • How many reports received from other bodies: • Law enforcement • Foreign authorities • Re Mutual legal Assist/Extradition (include freeze seize confiscation and investigation of predicate offences. • How many resulted in • Investigation • Prosecution • Conviction • Property frozen (No cases & Value) • Seized (No cases & Value) • confiscated (No cases & Value)

14. Financial Intelligence Unit (FIU)FIU Function • How many Foreign requests have been dealt with • No. Sent To whom • No. Received From Whom • Were these requests proactive or reactive • How long did it take to deal with the requests • Does it regularly undertake trends analysis • Who does it consult • Who does it share the results of the analysis with • Does it (or another official body) issue guidelines re reporting • Who & what

15. Financial Intelligence Unit (FIU)FIU Function • Are reports analysed to ensure information provided is sufficient for the FIU to undertake its function • Can it obtain further information from reporting parties (directly/indirectly) • What and how • Is analysis undertaken to ensure reports are made in good faith • How and what is done with the information. • Does it have access to the following information: • Financial • Administrative • Law enforcement • How is it Able to deal with Politically Exposed Persons (PEP)

16. Financial Intelligence Unit (FIU)FIU Feedback • Does it provide Feedback • statistics on the number of disclosures, with appropriate breakdowns, and on the results of the disclosures; • information on current techniques, methods and trends (typologies); • sanitised examples of actual money laundering cases. • acknowledgement of the receipt of the report; • subject to domestic legal principles, if a case is closed or completed, whether because of a concluded prosecution, because the report was found to relate to a legitimate transaction or for other reasons, and if the information is available, then the institution should receive information on that decision or result.

17. Financial Intelligence Unit (FIU)FIU Coordination / Co-operation • Are there effective domestic mechanisms to enable effective co-ordination / co-operation between: • Policy makers • law enforcement • Supervisors • other competent authorities • Are all the above effective at operational level • Are all the above effective at policy level • What mechanisms are in place to deal with UN Security Council Resolutions • What liaison does it have with SRO’s and DNFBP • Does it have regard to: • the Egmont Statement of Purpose • The Egmont principals

18. Financial Intelligence Unit (FIU)International Co-operation • Does the FIU provide international co-operation • Is such assistance rapid, constructive and effective manner • Are there clear gateways for such exchanges • Are such exchanges both spontaneously and upon request and deal with both M/l and underlying predicate offences • Does it search its own STR databases, • Other databases (direct or indirect access), including • law enforcement databases, • public databases, • administrative databases • and commercially available databases. • Are there disproportionate or unduly restrictions on exchanges • Are requests refused solely on ground that the request fiscal matters • Are requests refused on the grounds secrecy or confidentiality (except where legal professional privilege or legal professional secrecy applies)

19. FIU Interaction & Timing with others… Research, Intelligence Reports Feedback Feedback Suspicious Transaction Reports Set by Law. As soon as suspicion aroused i) ‘z’ working days As required ‘x’ working days Financial Intelligence Unit Law Enforcement Financial Institution ‘z’ working days ‘x’ working hours/days b) ‘x’ working hours/days ‘x’ working hours/days a) As soon as possible a) Acknowledgements Intelligence Package b) Consent (or not) Enquiry Results Feedback ii) ‘y’ working days Research Research Update Files Update Files

20. Evaluation Criteria, what’s expected of an FIU? • Essential criteria • 30.1FIUs, law enforcement and prosecution agencies, supervisors and other competent authorities involved in combating money laundering and terrorist financing should be: • adequately structured, • funded, • Staffed, • and provided with sufficient technical and other resources to fully and effectively perform their functions. • Adequate structuring includes the need for sufficient operational independence and autonomy to ensure freedom from undue influence or interference28. • 28 If a country’s FIU does not comply with the requirement to have sufficient operational independence and autonomy (Criterion 26.6), the country should only be rated down in Recommendation 26.

21. Evaluation Criteria, what’s expected of an FIU? • Essential criteria • 26.1 Countries should establish an FIU that serves as a national centre for receiving (and if permitted, requesting), analysing, and disseminating disclosures of STR and other relevant information concerning suspected ML or FT activities. The FIU can be established either as an independent governmental authority or within an existing authority or authorities. • 26.2 The FIU or another competent authority should provide financial institutions and other reporting parties with guidance regarding the manner of reporting, including the specification of reporting forms, and the procedures that should be followed when reporting. • 26.3 The FIU should have access, directly or indirectly, on a timely basis to the financial, administrative and law enforcement information that it requires to properly undertake its functions, including the analysis of STR. • 26.4 The FIU, either directly or through another competent authority, should be authorised to obtain from reporting parties additional information needed to properly undertake its functions. • 26.5 The FIU should be authorised to disseminate financial information to domestic authorities for investigation or action when there are grounds to suspect ML or FT

22. Evaluation Criteria, what’s expected of an FIU? • Essential criteria • 26.6 The FIU should have sufficient operational independence and autonomy to ensure that it is free from undue influence or interference. • 26.7 Information held by the FIU should be securely protected and disseminated only in accordance with the law. • 26.8 The FIU should publicly release periodic reports, and such reports should include statistics, typologies and trends as well as information regarding its activities. • 26.9 Where a country has created an FIU, it should consider applying for membership in the Egmont Group. • 26.10 Countries should have regard to the Egmont Group Statement of Purpose and its Principles for Information Exchange Between Financial Intelligence Units for Money Laundering Cases (these documents set out important guidance concerning the role and functions of FIUs, and the mechanisms for exchanging information between FIU). • Additional elements • 27.6 Are ML and FT methods, techniques and trends reviewed by law enforcement authorities, the FIU and other competent authorities (as appropriate) on a regular, interagency basis? Are the resulting information, analyses or studies disseminated to law enforcement and FIU staff, as well as staff of other competent authorities?