What are Suspicious Activity Reports - SVG FIU

Section 46 of the Proceeds of Crime and Money Laundering (Prevention) Act, Cap 181 of the

Revised Laws of 2009 (PCMLPA) indicates that:

Every financial institution or Person Engaged in a Relevant Business Activity must:

Keep and retain records relating to financial activities,

Pay special attention to all complex, unusual or large transactions, whether completed or

not and to all unusual patterns of transactions and to insignificant but periodic patterns of

transactions which have no apparent economic or lawful purpose.

Upon suspicion that the transactions described above or any other transaction or financial

activity could constitute or be related to money laundering or the proceeds of criminal

conduct, shall report the suspicious transactions to the Financial Intelligence Unit as soon

as reasonably practicable and in any event within fourteen (14) days of the date of the

transaction was deemed to be suspicious as relating to money laundering or proceeds of

crime.

Section 10 A of the United Nations Anti-Terrorism (Measures) Act (UNATMA) further states

that:

Every financial institution or Person Engaged in a Relevant Business Activity in keeping

with the retention of records under the Section 46 of the PCMLPA must:

Report to the FIU any financial transaction or other activity could constitute or relate to the

commission of a terrorist act or the financing of a terrorist act.

What are Suspicious Activity Reports

Volume 3, Issue 2

May 2013

Reporting entities 2

AML/CFT compli-

ance program 3

Training 4

Independent Test-

ing 5

Identifying &

Reporting SARs

6

Confidentiality 7

Retention of re-

cords

8

Contact us 10

Inside this issue:

Special points of in-

terest:

Pillars of AML/

CFT Compliance

Regime

Requirements for

an effective com-

pliance program

How to get started

with your compli-

ance program

Institutions/

businesses that

are covered under

the PCMLPA.

QUESTION:

ARE YOU A FINANCIAL INSTITUTION OR RELEVANT BUSINESS ACTIVITY

AS SPECIFIED BY SECTION 46 OF THE PCMLPA!

AML/CFT PROGRAM & SUSPICIOUS ACTIVITY REPORTS

According to Section 46 (6) of the Proceeds of Crime and Money Laundering

(Prevention) Act every financial institution and person engaged in a relevant business

activity shall develop and implement a written compliance programme designed to en-

sure and monitor compliance with money laundering regulations.

Subsection (7) to the said Act outlines that the compliance programme should have a

system of internal controls to ensure ongoing compliance; internal and external inde-

pendent testing for compliance, training of personnel in the identification of suspicious

transactions; and appointment of a compliance officer responsible for ensuring that

their institution is honoring their obligations under the Act.

Every financial institution and relevant business activities is obligated to maintain re-

cords, report suspicious activity to the financial intelligence unit and ensure there is

proper system to verify and monitor their customer’s transactions. A financial institution

and or relevant business activity will be in breach if they fail to abide by the provisions

of the Act and Regulations thereto.

Financial Institutions and Relevant Business Activities are those set out in Schedule 1 of the PCMLPA. They

include:

Banks Offshore Banks Building Societies Insurance Companies Credit Unions

Money Transmission Services Investment Business Trust and other Fiduciary Services

Foreign Exchange Car Dealership Jewelers Real Estate Agents Casinos

Internet Gambling Lottery Agents Barrister-at-Law and Solicitors Accountants Charities

Investment Advisers Cash Remitting Services Postal Courier Services Mutual Funds Pool betting

Financial Intermediaries Securities broking and Underwriting Money broking Investment business

EFFICIENT AND EFFECTIVE COMPLIANCE PROGRAMME

Volume 3, Issue 2

The AML/CFT compliance Program is therefore built on four (4) pillars. The development of sufficient internal con-

trols to ensure ongoing compliance with the Legislations begins with a risk assessment which will determine some

of the content of your policy and procedures

PILLAR ONE-POLICIES & PROCEDURES

The AML/CFT program should include at minimum “the development of internal policies, proce-

dures and controls.

This means you MUST have WRITTEN Policies and Procedures in place!

Assessment to include risk unique to your institution/business:

1. Customer base

2. Products and Services

3. Geographic areas of operation and market area

4. Size

5. How applications are taken:

-Face to Face

-Telephone

-Internet

-Mail

PILLAR TWO-COMPLIANCE OFFICER

The AML/CFT Compliance Officer is responsible for:

1. Establishing and maintaining procedures designed to assure

compliance with AML/CFT laws and regulations;

2. Provide periodic updates on AML/CFT policy to all staff;

3. Ensure proper record retention;

4. Ensure proper training of all staff;

5. Ensure that SAR is filed with FIU when applicable;

6. Ensure proper reporting to Executive Management;

7. Act as liaison with Regulators, Law Enforcement Agencies and

FIU when applicable;

8. Effective implementation of AML/CFT policy.

PILLAR THREE-TRAINING

The AML/CFT Compliance program must include both initial and ongoing

AML/CFT training for all staff. This includes Executive Management and

Board of Directors. Ongoing training must be provided, (generally annu-

ally). In addition, new employees must be trained as soon as practical, usu-

ally within their first thirty (30) days of employment.

Training to include testing and information on high risk areas; red flags and

institution’s policy and procedures as well as how to report suspicious activ-

ity. It is imperative that records be maintained of all training done and must

include dates of training, attendees, test results.

The training program should include the following elements:

Sign in and Sign out of participants;

Level of Testing;

Should use a learning management system or central management system.

The AML/CFT Compliance Officer is to communicate/alert staff of new developments in:

Laws, Regulations, Government Guidance, Best Practices, Money Laundering and Terrorist Financing cases;

Policies and Procedure changes

Enforcement Actions

Copies of all communications/alerts should be retained along with:

Date distributed; and

Actions taken as a result.


TRAINING IS THE FOCUS!

NOT JUST ENOUGH TO SAY YOU DID IT! YOU NEED TO SHOW YOU’VE DONE IT!

PILLAR FOUR-INDEPENDENT TESTING OF YOUR POLICY

Testing will be dependent upon the organizations size and risk. It

must be completed at least annually or more frequently if war-

ranted. It can be done by an independent 3rd party or can be

done by company personnel provided they do not;

Work for the Compliance Officer; or

Perform any of the AML/CFT functions to be tested.

The PCMLPA and UNATMA imposes a mandatory obligation on institutions and businesses the requirement to report

all Suspicious Transaction to the Financial Intelligence Unit. As such, your AML/CFT Policy must have sufficient pro-

cedures in place to allow for SAR reporting.

All filings are done in prescribed forms and can be found electronically at http://www.svgfiu.com.

Volume 3, Issue 2

THE AML/CFT COMPLIANCE OFFICE WILL ENSURE THAT YOUR

INSTITUTION/BUSINESS IS ENROLLED WITH THE FIU; MANAGE ANY SAR FILING AND REPORT

ALL SUSPICIOUS TRANSACTIONS TO THE FIU.

QUESTIONS:

DID YOU REGISTER YOUR INSTITUTION/BUSINESS WITH THE FIU?

DO YOU GET CORRESPONDENCE FROM US CONCERNING YOUR OBLIGATIONS?

HAVE YOU EVER BEEN TRAINED BY THE FIU?

DOES THE FIU KNOWS YOUR INSTITUTION/BUSINESS IS IN OPERATION?

HAVE YOU COMPLETED YOUR ANNUAL COMPLIANCE REPORTS FOR 2011 & 2012?

IF NOT THEN YOU NEED TO CONTACT US IMMEDIATELY!

IDENTIFYING SUSPICIOUS TRANSACTIONS


Transactions may give rise to reasonable grounds to suspect that they are related to money laundering or terrorist

financing regardless of the sum of money involved. A suspicious transaction may involve several factors that may on

their own seem insignificant but together raise suspicion that the transaction is related to the commission of a money

laundering offence, a terrorist financing offence or both or any other serious offence.

The context in which the transaction occurs is a significant factor in assessing suspicion. This will vary from business

to business and from one client to another. As an entity, or an employee of an entity, you should:

evaluate transactions in terms of what seems appropriate and is within normal practices in your particular line of

business ;

and based on your knowledge of your client.

An assessment of suspicion should be based on a reasonable evaluation of relevant factors including:

The knowledge of the customer’s business,

Whether the transactions are in keeping with normal industry practices,

Financial history of your customer,

Geographical location of customer,

Background and behaviour of the customer.

Institutions should be constantly vigilant in deterring criminals from making use of any of their systems to launder

money or finance terrorism. As such it is imperative that institutions develop an effective compliance program that

will enable them to detect, deter and react to possible attempts of money laundering and terrorist financing.

The duty of vigilance consist of:

Verification;

Recognition of suspicious transactions;

Record keeping;

Reporting of suspicions; and

Training.

TO IDENTIFY SUSPICIOUS TRANSACTIONS VIGILANCE IS KEY!

In order to safeguard your institution vigilance begins with the start of a busi-

ness relationship or a significant one-off transaction and continues until the

relationship comes to an end. A such you must Know Your Customer (KYC)

Do you know your Customer’s:

Updated Identity Details

Geographical Location of your customer/his or her business

Customer source of income/wealth

Transactions pattern/Account Activity;

Ask yourself : Is this transaction customer with the customer’s profile?

All circumstances surrounding a transaction should be reviewed. As the transaction occurs; you have to assess

whether there are Reasonable Grounds to Suspect that a transaction is related to money laundering offence, terror-

ist financing activity or other serious offence.

Section 45 of the PCMLPA indicates that a person commits and offence if he knows or suspects or has reasonable

grounds to suspect that a police officer is acting or is proposing to act, in connection with an investigation which is

being, or is about to be, conducted into money laundering or the proceeds of criminal conduct; and he discloses to

any other person information or any other mater which is likely to prejudice the investigation or proposed investi-

gation. Confidentiality requires that a SAR or information therein cannot be revealed to any person other than per-

sons mandated by the PCMLPA namely compliance officer and the FIU.

Volume 3, Issue 2

SAR REPORTING IS SUBJECT TO STRICT CONFIDENTIALITY REQUIREMENTS

UNDER THE PCMPLA

Disclose only to those who

“NEED TO KNOW”

It’s a short list-don’t assume!

Copies of SARs and supporting documentation must be maintained from the date of filing.

Once a SAR is filed the FIU will promptly acknowledge receipt of the report then forward same to trained Financial

Investigators who alone will have access to it. The Financial Investigators may seek further information from the re-

porting institution and elsewhere. Discreet inquiries are made by the FIU to confirm the basis of the suspicion but

the customer is never approached.

The FIU will keep the reporting institution informed of the interim and final result of the investigation. It is important

to note that after a reporting institution makes an initial report in respect of a specific suspicious transaction, that

initial report does not relieve the institution of the need to report further suspicions in respect of the same customer

or account. As such, the institution should report any further suspicious transactions involving the customer. In the

event of a prosecution, the source of the information is protected, as far as the Law allows and Production Orders

will be used to produce such materials to court.

In order to use the information gathered from a SAR in a court matter the FIU must first apply for a Production Order

pursuant to Section 35 of the PCMLPA. An institution having been served with a Production Order must ensure that

they have the requisite information to satisfy the Production Order. As such institutions must ensure that all records

of customers are kept at least 7 years.


Kept in a secure location only assessable by those who “Need to Know”.

The Staff of the FIU is also bound by Confidentiality Codes and are liable to

penalties of fines or imprisonment for breach thereof!

If Records are not kept for the period of 7 years you are in

breach of the PCMLPA!

Create a Plan!

Perform your Risk Assessment

Write your Policies and Procedures

Designate a Compliance Officer

Properly train, test and track your staff

Adequately test your program’s effectiveness

Update your training as necessary

Conduct annual training

Do your KYC, record keeping and due diligence checks.

WE ARE HERE TO HELP YOU!

The FIU does training and is ready to assist your staff ensuring that you are in compliance with the provisions of

the PCMLPA and the UNATMA.

Let us know the products offered, your institution’s size and we can tailor our training to suit your needs.

Volume 3, Issue 2

Don’t Have a Compliance Program?

Don’t Stress! You can Do it!

FIND WHAT YOU NEED TO BE AML/CFT COMPLIANT!

CONTACT US

Contact us at:

P.O. Box 1826

Kingstown

St. Vincent and the Grenadines

Telephone: 784-451-2070

Facsimile: 784-457-2014

Email: [email protected]

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What are Suspicious Activity Reports - SVG FIU

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