THE WORLD BANK

1. THE WORLD BANK MENA Regional Conference Developping an Effective AML\CFT Regime Damascus, December 14-15, 2005 Isabelle Schoonwater

2. Establishing an efficient FIU • 1.International standards. • 2. Main attributions and powers. • 3. Local specificities and advices.

3. 1.International standards • Recommendation 26 gives a definition for an FIU: A unit that serves as a national center for the receiving, requesting, analysis and dissemination of STR and other information regarding potential money laundering or financing of terrorism. It should have access to the financial, administrative and law enforcement information to undertake its functions

4. suite • The interpretative note for Rec.26 states that the country should apply to the Egmont group, mainly for its role in the operational harmonization of the standards, particularly concerning the mechanisms for exchanging information between FIU’s. Egmont group’s documents should be considered,as guidance for FIU’s.

5. suite • The Egmont group key documents: • Statement of purpose • Best practices • Principles for Information Exchange • Interpretative note for the definition of a FIU • Information document

6. suite • Recommendation 13 is the basis for the activity of a FIU: Financial institutions and designated non-financial businesses (Rec. 5, 12, 16) should, if they have reasonable grounds to suspect that funds are the proceeds of a criminal activity, or are related to financing of terrorism,report promptly their suspicions to the FIU.

7. suite • The Fiu receives, analyses and disseminates financial information: it has per se an administrative nature, even if, depending on the country, it can be settled in different entities or ministries with an independant status ( ministry of Finance, Justice, Interior, or regulators like Central Banks)

8. 2. Main attributions and powers • Receiving: It is the unique Central unit in charge of receiving the STR’s from submitted professionals; As such it is supposed to be adequately organized and resourced to be able to archive these reports, to process and to protect them;

9. suite • Analysing: • It cross-checks the different STR’s, • Questions databases, general information databases for the context, databases for individual data ( mostly databases from the Judiciairy, administrative agencies, law enforcement related records: customs, police, intelligence services, tax administration, but also bases from any useful department ( identification records, patrimonial data, companies registers…) • Obtains information from correspondents within the law enforcement agencies and the regulators. • Questions foreign FIU’s

10. suite • A FIU is a central point and as such ought to have a « transversal » approach: its analysis function can only be efficient if the FIU can exchange data with the various partners involved in AML\CFT; - therefore it has to formalize, mostly through protocols or any other formal means, the exchanges with its partners ( what, with whom, and how)

11. suite • Dissemination: depending on the country, at the end of the process, the FIU will have to transmit its file or analysis ( without the STR’s) to the law enforcement,or to the prosecutors when in a Civil Law country ( prosecutors belongs to the Judiciary), or to the regulators. Then, further investigations will take place on other legal basis.

12. suite • Main legal powers of a FIU: -1. Right to obtain information or documents from submitted professionals, (Bank secrecy inapplicable), -2. Possibility to obtain from any administration , useful data, -3. Possibility to question protected databases, directly or indirectly, totally or with restrictions ( police, customs, secrete services records,…)

13. suite • 4.When necessary, the FIU should be able to suspend any transaction for a short predetermined period of time; usually this period can be extended by a Court order. • 5.Possiblilty to exchange data with supervisors and then to be associated to the regulation process.(rec.35) • 6. Possibility to exchange with foreign FIU’s, with some restrictives conditions: - same status and missions - same protective status regarding confidentiality and protection of data, - clearance to disseminate to specific authorities from the FIU sending information.

14. suite • 7.Analytical tools to maintain statistics, trends and indicators,(rec.31) • 8. Rec.27 and 28 are requiring specific investigation tools, for the FIU and law enforcemnt, such as controlled deliveries, undercovered operations, specialized units, or task forces. It improves the efficiency of a FIU in insuring the adequate investigations based on FIU’s work.

15. 3. Local specificities and advices • Even if a FIU has to comply with the previous rules and standards, taking into account local parameters remains necessary: • 1. Usual ML|FT typologies of the country must be known in order to draw targeted strategies. • 2. The most exposed professionals have to be identified, which is linked to the typologies diagnosis in 1.Besides an adequate operational strategy, the aim is to have a better follow up of the efficiency of the reporting process, therefore to build focused training and better supervise the activities.

16. suite • 3. The FIU should identify its institutional useful partners, to improve its analysis capacity through quality exchanges of information.(Rec.31) • 4. In doing so, it can proceed by protocols or any other formal means, in order to organize, clarify, and protect exchanges of information with partners.

17. suite • 5. It has to develop an efficient IT tool, including an ad hoc database, analytical tools, all according to the current and future volume of activity. • 6.Complementarity should be a priority particularly for the agents profiles ( analysts and managers) • 7. Independant and protective status have to be designed according to the risks in the country

18. suite • 8. It has to develop operational exchanges with foreign counterparts (CRF),settling harmonized, faster and secure procedures of exchange. • 9. In doing so, it can, even if the law authorizes spontaneous exchanges, negociate bilateral MOU with dedicated partners.( it creates closer and more efficient relationships ). • 10. Participating to the Egmont group’s events is recommended for this purpose.

19. suite • 11.It must develop and consolidate links with submitted professionals for awareness raising, follow up and surveillance but also to associate them as far as laws and international standards have included them in the AML/CFT strategy.(Rec.31) • 12. Specific and continuous relationships have to be built with prosecutors and with the Judicary in general, for information sharing, training, and moreover because the Judiciary is the last stage of the system.

20. suite • 12. The FIU has a key role in the implementation of a strategic tool for public safety, therefore it must secure its work and protect sensitive data. This is essential to legitimate its function and to make professionals accept the framework. At an oparational level, FIU should have clear and strict procedures and clear methods of investigation ( flexible modules for main typologies)

21. conclusion • Implementation of international standards is necessary to harmonize the international network and improve the efficiency of the AML/CFT strategy. • A FIU should have safe procedures and a strict organization. • Complementarity is a key for efficiency and is the principle of the all AML/CFTsystem: 1. it should be applied in the day to day work of the FIU , 2. with the institutional partners ( exchange of information), 3. with professionals for synergy.

22. suite

24. suite

25. suite • Analyse: - the FIU cross-checks the different STR’s, - questions databases, general information databases for the context and specific ones for individual data ( its own base, agencies or administrative departments records (law enforcement mostly, customs, police, tax administration, but also national registers for companies, identification databases, patrimonial databases,…) - obtains information through correspondants within law enforcement agencies and regulators

26. suite

27. suite