Recognising the international nature of money laundering;
The Hague, 13 June 2001
Recognising the international nature of money laundering;
Realising that in order to counter money laundering an increasing number of governments around the world have both imposed disclosure obligations on financial institutions and designated financial intelligence units, or “FIUs,” to receive, analyse, and disseminate to competent authorities such disclosures of financial information;
Identifying terrorism financing as a distinct and growing problem that like money laundering crosses national borders and operates within the international financial system;
Finding that FIUs acting in their capacity to receive, analyse and disseminate sensitive financial disclosures increasingly have become valuable tools in the global fight against terrorism financing by supporting the work of traditional national government agencies;
Convinced that co-operation between and among FIUs across national borders both increases the effectiveness of individual FIUs and contributes to the success of the global fight against money laundering and terrorism financing;
Mindful of both the sensitive nature of disclosures of financial information and the value of the FIUs established to protect their confidentiality, analyse them, and refer them, as appropriate, to the competent authorities for investigation, prosecution, or trial;
Understanding that effective international co-operation between and among FIUs must be based on a foundation of mutual trust;
Acknowledging the important role of international organisations and the various traditional national government agencies - such as Finance and Justice ministries, the police, and financial institution supervisory agencies - as allies in the fight against money laundering and terrorism financing;
Having periodically convened plenary gatherings - known as Egmont Group Meetings1 - to discuss issues common to FIUs and to foster such international co-operation among established FIUs, to assist and advise FIUs under development, and to co-operate with representatives of other government agencies and international organisations interested in the international fight against money laundering and terrorism financing;
Having also agreed upon a definition of “Financial Intelligence Unit,” completed a survey on the possibilities and modalities of information exchange, prepared a model Memorandum of Understanding for the exchange of information, created a secure Internet Web-site to facilitate information exchanges, and embarked upon several specific initiatives to develop the expertise and skills of the FIUs’ staffs and to contribute to the successful investigation of matters within the FIUs’ jurisdiction;
Aware that obstacles continue to limit information exchange and effective co-operation between some FIUs, and that those obstacles may include legal restrictions and/or the very nature of the FIUs themselves (- as administrative, judicial, or police); and
Convinced that there exists both significant potential for broad-based international co-operation among the FIUs and a critical need to enhance such co-operation,
The FIUs participating in the Egmont Group hereby affirm their commitment to encourage the development of FIUs and co-operation among and between them in the interest of combating money laundering and in assisting with the global fight against terrorism financing.
To that end, we reaffirm our accession to the definition of Financial Intelligence Unit adopted at the plenary meeting of the Egmont Group in Rome in November 1996:
“A central, national agency responsible for receiving (and, as permitted, requesting), analysing and disseminating to the competent authorities, disclosures of financial information
(i) concerning suspected proceeds of crime, or
(ii) required by national legislation or regulation, in order to counter money laundering.”
We also adopt the findings of the legal working group concerning the identification of those agencies that meet the FIU definition at the present time.
Henceforth, we agree that Egmont Group plenary meetings shall be convened by and for FIUs and other invited persons or agencies who are in a position to contribute to the goals of the Egmont Group. Egmont Group Participants shall include FIUs and other agencies representing governments that do not presently have FIUs. All other invited persons, agencies or international organisations shall be considered “Observers.”
We believe it is crucial to develop a network of information exchange on the basis of the “Principles of Information Exchange Between Financial Intelligence Units” as set forth in the Annex and incorporated herein by this reference.
We recognise the right of every FIU to subject co-operation to additional conditions as required by its national legislation.
We further agree to pursue as a priority, through the appropriate working groups and otherwise:
Determination of appropriate consequences that attend to an Egmont Group Participant’s status with respect to the definition of FIU adopted in Rome;
Development of FIUs in governments around the world;
Further stimulation of information exchange on the basis of reciprocity or mutual agreement;
Access to the Egmont Secure Web-site for all FIUs;
Continued development of training opportunities, regional/operational workshops, and personnel exchanges;
Consideration of a formal structure to maintain continuity in the administration of the Egmont Group, as well as consideration of a regular frequency and location for plenary meetings;
Articulation of more formal procedures by which decisions as to particular agencies’ status vis-à-vis the FIU definition are to be taken;
Designation of additional working groups, as necessary;
Development of appropriate modalities for the exchange of information;
Creation of Egmont Group sanctioned materials for use in presentations and communication to public audiences and the press about Egmont Group matters.
As originally approved in Madrid on 24 June 1997, amended at The Hague on 13 June 2001 and in Sydney on 23 July 2003.
Appendix II Procedure for Being Recognized as an Egmont Group Financial Intelligence Unit (FIU)
The Statement of Purpose adopted at the Madrid Plenary meeting of the Egmont Group called for a formal articulation of the process by which a financial intelligence unit (FIU) is recognised as meeting the Egmont FIU definition in order to become an Egmont Group member.
The Outreach Working Group (OWG) has the task of spreading the Egmont idea worldwide. The role of OWG members with respect to non-Egmont member jurisdictions is to act as a support / monitor FIU towards any candidate unit with a view to obtaining all the necessary contact details, legislation and information concerning the prospective FIU and its operational status. The OWG members will provide as much assistance as possible to the candidates.
Any Egmont member who has information on potential candidates passes this on to the Chairman of the OWG, who organises a first screening of the unit by a member of the OWG.
This entails collecting at a minimum the following information:
- contact address and name;
- money laundering legislation in force;
- operational status of a FIU (off-site);
- willingness to join the Egmont Group;
- the possibility of exchanging information with other FIUs;
- operational status of a FIU (on-site).
In principle the assessment includes an on site visit. If the OWG member acting as supporting FIU is not able to do so, another Egmont member may fulfil this requirement.
Once the OWG has obtained all necessary information and is satisfied that the prospective candidate may meet the Egmont criteria, the OWG Chair makes a written recommendation to the Legal Working Group (LWG) Chair, with copy to the Egmont Permanent Administrative Support (PAS). The LWG then proceeds to an in-depth assessment in view of a final decision on the recommendation of the candidate to the Heads of FIU.
This procedure starts with the decision of the LWG Chair to continue with a follow up of the findings and recommendations of the OWG. The LWG Chairman then instructs the PAS to send the candidate FIU the following documents with a request to return the completed questionnaire together with any relevant supporting documentation to the PAS before a set deadline:
Statement of Purpose
Principles of Information Exchange between FIUs
Interpretative Note on the Egmont Group Definition
Model Memorandum of Understanding (MOU)
Following the timely receipt of all requested documentation the candidate’s submission is examined by the LWG at its next meeting, the meeting immediately preceding the Plenary excluded.
The LWG makes the final assessment so as to ensure that the candidate FIU does indeed fulfil the Egmont admission criteria, i.e. that the unit:
- is legally capable and willing to cooperate on the basis of the Egmont “Principles of Information Exchange”;
- has a sponsoring Egmont FIU.
The LWG Chairman may decide to invite the candidate to present its application in a personal interview. As a rule the LWG assessment takes place in the presence of the monitoring OWG member FIU.
The assessment also infers the designation of a sponsoring FIU by the LWG. Beside providing guidance to the candidate in the admission procedure and speaking on behalf of the candidate at working group meetings, the sponsor is expected to be able to confirm the operational status of the candidate unit as an FIU out of first hand experience, including an on-site visit. Where appropriate, the monitoring OWG member FIU may act as a sponsor. The LWG can take the following decisions:
- defer the discussion to its next meeting, pending additional clarification or documentation from the candidate;
- emit a negative opinion when it considers one or more Egmont criteria not being met completely or partially;
- recommend the candidate unit to be recognised and accepted as an Egmont FIU, to be endorsed by the Heads of FIU at the next Plenary.
The PAS informs the candidate in writing of the outcome of the LWG assessment and ensures the Egmont FIUs are kept posted through the minutes of the meeting and the Egmont Secure Web.
FIUs are officially recognised as an Egmont Group member by endorsement of the LWG recommendation by the Heads of FIU at their annual Plenary meeting.
Appendix III The Egmont Group: Financial Intelligence Units of the World
OPERATIONAL UNITS (Meeting the Egmont Definition)
Status as of 25 July 2003
Appendix IV Interpretive Note Concerning the Egmont Definition of a Financial Intelligence Unit
History of The Egmont Group
In June 1995, government agencies and international organizations gathered at the Egmont-Arenberg Palace in Brussels to discuss money laundering and ways to confront this global problem. Out of this first meeting was born the Egmont Group (“Egmont”), an informal body of government disclosure receiving agencies that share a common goal - to provide a forum to enhance mutual cooperation and to share information that has utility in detecting and combating money laundering. Over time, working groups have developed to carry out the tasks of Egmont. Today, Egmont has four working groups: Legal, Training and Communication, Outreach and Operational.
Early on, the participants in Egmont recognized the need for developing effective and practical means of cooperating, especially concerning information exchange and the sharing of anti-money laundering expertise. To meet those challenges, the Legal Working Group examined obstacles related to information exchange among government agencies that specifically combat money laundering through the processing of financial information. To identify financial disclosure receiving agencies around the world and to better understand how such government agencies function, jurisdictions completed questionnaires and submitted them for review by the Legal Working Group. On the basis of the answers provided from the questionnaires, the Legal Working Group devised a functional definition of government agencies, called Financial Intelligence Units (“FIUs”) that combat money laundering.
Although the focus of the Egmont FIU is money laundering, most recently, FIUs have begun to play an important role in the international effort to combat the financing of terrorism. The financial disclosures that FIUs currently receive, analyze and disseminate have proven to be invaluable sources of information for those national agencies that investigate terrorism financing. In addition, many countries have or are in the process of amending their domestic legislation to make terrorism financing a predicate offense for money laundering, thus expanding the scope of the FIU’s overall functions.
Based upon the work of the Legal Working Group, Egmont approved the following definition of an FIU in 1996:
A central, national agency responsible for receiving, (and as permitted, requesting), analysing and disseminating to the competent authorities, disclosures of financial information:
(i) concerning suspected proceeds of crime, or
(ii) required by national legislation or regulation, in order to combat money laundering.
The definition of an FIU can best be understood through a brief explanation of each of its component parts.
1. A central, national agency. Egmont’s focus on international co-operation requires that only one government agency per territory or self-autonomous jurisdiction, recognized by international boundaries, serve as the contact point for international exchanges. It must operate in a jurisdiction that is governed by the laws of that territory. To be clear, use of the phrase “central, national agency” carries with it no political designation or recognition of any kind.
An anti-money laundering government agency operating in a jurisdiction that in political terms constitutes a dependency of another nation, may be considered an FIU as long as it is the only government agency that carries out anti-money laundering efforts in that internationally recognized boundary. Recognition that such government agency meets the Egmont definition of an FIU does not necessarily equate to sovereignty.
In federal systems, the phrase “central, national agency” implies that only one government agency may be considered an FIU under Egmont. Even though federal systems have multiple subdivisions, only one centralized agency serves as contact point for information exchange for Egmont.
2. Responsible for. This word denotes that the legal framework, which establishes the FIU, authorizes, at a minimum, the functions outlined in the Egmont definition.
3. Receiving, (and as permitted, requesting) analysing and disseminating. This phrase designates the three principal activities of all Egmont FIUs, and the functions that make them unique.
Receiving. FIUs serve as the central reception point for receiving financial disclosures. This takes into account FIUs that have more than one office and FIUs that receive disclosures from different domestic agencies. This concept also distinguishes FIUs from law enforcement agencies with a general (overall) law enforcement mission.
(And as Permitted, Requesting). Some but not all FIUs have the ability to query specific financial information from certain financial institutions beyond the financial disclosures that FIUs normally receive from such institutions. For this reason, the language is in parentheses and is limited in scope.
Analysing. Analysis involves an initial evaluation of the utility or relevance of disclosures received from reporting entities at the pre-investigation stage. Analysis of information reported to FIUs may occur at different stages and take different forms. Some FIUs analyse every financial disclosure when it arrives at the FIU. For other FIUs, such a system is impossible due to the sheer volume of financial disclosures that they receive. Those FIUs make the financial disclosures immediately available to appropriate investigative authorities and the FIUs analyse financial disclosures in response to requests for information or on their own accord but not in response to each and every financial disclosure reported to it. In an increasing manner, many FIUs have incorporated analytical software that assists in determining money laundering trends and patterns for use by law enforcement, to provide feedback to the reporting institutions and in some cases for purposes of proactive targeting. In all cases, some de minimis level of analysis must occur in order to categorise a given piece of information and determine which agency, or group of agencies, should be entitled to receive it.
Disseminating. FIUs at a minimum must be able to share information from financial disclosures and the results of their analysis regarding money laundering and related crimes as determined by domestic legislation firstly with domestic competent authorities and, secondly, with other FIUs. A critical element in assessing dissemination capability involves assessing the extent to which a candidate FIU’s law permits the cooperation with other FIUs through the exchange of information.
4. Disclosures of financial information. These are the materials that FIUs use and share with each other to detect and combat money laundering. In this regard, FIUs may share publicly available and as well as [sic] sensitive information (whether financial disclosures or law enforcement information) with competent authorities under terms that protect the information against misuse.
5. Concerning suspected proceeds of crime. The first type of disclosure of financial information concerns the reporting of suspicious or unusual transactions or activities.
6. [Disclosures otherwise] required by national legislation, or regulation. This requirement encompasses all other mandated types of reporting requirements required by law, whether involving currency, checks, wires or other transactions.
7. In order to combat money laundering. This phrase reemphasizes the common purpose of every FIU.
Appendix V Egmont Group: Principles for Information Exchange Between Financial Intelligence Units for Money-Laundering Cases
The Hague, 13 June 2001
Annex To The Egmont Group “Statement Of Purpose”
1. The Egmont Group works to foster the development of Financial Intelligence Units (“FIUs”)1 and information exchange.
2. The Egmont Group agreed in its Statement of Purpose, adopted in Madrid on 24 June 1997, to pursue among its priorities the stimulation of information exchange and to overcome the obstacles preventing cross-border information sharing.
3. Information-sharing arrangements should have the aim of fostering the widest possible co-operation between FIUs.
4. The following principles for information exchange among FIUs are meant to outline generally-shared concepts, while allowing countries necessary flexibility.
B. General Framework
5. International co-operation between FIUs in cases involving money laundering should be encouraged and based upon a foundation of mutual trust.
6. FIUs should take steps to seek information that may be used by other, identified, domestic law enforcement or financial supervisory agencies engaged in enforcement and related regulatory activities related to money laundering.
7. FIUs should work to encourage that national legal standards and privacy laws are not conceived so as to inhibit the exchange of information, in accordance with these principles, between or among FIUs.
8. Information-sharing arrangements must recognize and allow room for case-by-case solutions to specific problems.
C. Conditions for the Exchange of Information
9. FIUs should be able to exchange information freely with other FIUs on the basis of reciprocity or mutual agreement and consistent with procedures understood by the requested and requesting party. Such exchange, either upon request or spontaneously, should produce any available information that may be relevant to an analysis or investigation of financial transactions and other relevant information related to money laundering and the persons or companies involved.
10. An FIU requesting information should disclose, to the FIU that will process the request, at a minimum the reason for the request, the purpose for which the information will be used and enough information to enable the receiving FIU to determine whether the request complies with its domestic law.
D. Permitted Uses of Information
11. Information exchanged between FIUs may be used only for the specific purpose for which the information was sought or provided.
12. The requesting FIU may not transfer information shared by a disclosing FIU to a third party, nor make use of the information in an administrative, investigative, prosecutorial, or judicial purpose without the prior consent of the FIU that disclosed the information.
E. Confidentiality - Protection of Privacy
13. All information exchanged by FIUs must be subjected to strict controls and safeguards to ensure that the information is used only in an authorized manner, consistent with national provisions on privacy and data protection. At a minimum, exchanged information must be treated as protected by the same confidentiality provisions as apply to similar information from domestic sources obtained by the receiving FIU.
Appendix VI Egmont Group: Best Practices for the Improvement of Exchange of Information Between Financial Intelligence Units
1. According to the Statement of Purpose of the Egmont Group, the Financial Intelligence Units (FIUs) participating in the Egmont Group resolve to encourage co-operation among and between them in the interest of combating money laundering and terrorism financing.
The members showed an awareness of the need to maximise information exchange and effective co-operation among FIUs and expressed their conviction that there exists both significant potential for broad-based international co-operation among the FIUs and a critical need to enhance such co-operation.
The Egmont Members agreed to pursue as a priority the further enhancement of information exchange on the basis of reciprocity or mutual agreement and the development of appropriate modalities to that end.
2. Consequently, a document on “Principles of Information Exchange Between Financial Intelligence Units” was agreed on and incorporated into the Statement of Purpose.
These principles reflect the intention of the Egmont Group to make their pursuit of the enhancement of information exchange a priority and to overcome the obstacles preventing cross-border information sharing. FIUs are therefore invited to do everything possible to ensure that national legal standards and privacy laws are not conceived so as to inhibit the exchange of information between or among FIUs. The principles relate to the conditions for the exchange of information, the permitted uses of information, as well as the confidentiality issue.
3. To address the practical issues that have been identified as impeding the efficiency of mutual assistance, this document aims to provide guidelines in terms of best practices for the exchange of information between FIUs. When dealing with international requests for information, FIUs should endeavour to take these best practices into account to the greatest possible extent. The obstacles of a legal nature will be addressed in a follow-up paper.
Best practices addressing practical impediments to information exchange
The following practices should be observed by the FIU intending to submit a request for information:
1.1 All FIUs should submit requests for information in compliance with the Principles for Information Exchange that have been set out by the Egmont Group. Where applicable the provisions of information sharing arrangements between FIUs should also be observed.
1.2 Requests for information should be submitted as soon as the precise assistance required is identified.
1.3 When an FIU has information that might be useful to another FIU, it should consider supplying it spontaneously as soon as the relevance of sharing this information is identified.
1.4 The exchange of information between Egmont FIUs should take place in a secure way. To this end the Egmont FIUs should use the Egmont Secure Web (ESW) where appropriate.
1.5 If necessary the requesting FIU should indicate the time by which it needs to receive an answer. Where a request is marked “urgent” or a deadline is indicated, the reasons for the urgency or deadline should be explained. All FIUs should refrain from arbitrary use of this terminology. When the requested information is only partially urgent, the request for information should use the ‘urgent’ mark only for the relevant sections. The requesting FIU should indicate if it desires an acknowledgment of receipt of the request. The requesting FIU may not require an acknowledgment (orally or in writing) unless the request is marked “urgent” by that FIU or, in its view, an acknowledgment is necessary in the light of the circumstances of the case. An urgent request should include the contact information for the individual responsible for sending the request.
1.6 Where appropriate, especially in the case of urgent requests, and in order to speed up proceedings, the requesting FIU may ask for prior consent for further use of the information to be granted directly together with the reply itself.
1.7 The Egmont Group has developed a request for information form. The use of this form should be encouraged, when exchanging information.
1.8 Requests should contain sufficient background information to enable the requested FIU to conduct proper analysis/investigation.
Requests shall be accompanied by a brief statement of the relevant facts known to the requesting FIU. Particular attention should be paid to:
the information identifying the persons or companies involved (at least name and date of birth for individuals and name and registered office for companies);
the reported suspicious or unusual transactions or activities, including the involved accounts;
the modus operandi or circumstances in which the transactions or activities took place;
whether the request for information is based on one or more disclosures or whether it has another base, such as a request from a national police authority, a list of suspected terrorists…;
the link with the country of the requested FIU.
1.9 Requests for information that are not related to a specific country and that are being sent to several FIUs at the same time should be justified as much as possible, providing an overview of the underlying facts. Also the request should be targeted as precisely as possible. The FIU should therefore refrain from using group mailings unnecessarily and should consider carrying out preliminary research into the transactions in order to identify a possible target cluster of FIUs that are more likely to have the relevant information at their disposal.
2) PROCESSING THE REQUEST
2.1 Except if indicated otherwise, all incoming requests for information originating from a counterpart FIU should be answered, also in case of a negative reply.
2.2 The request should be dealt with as soon as possible upon receipt.
2.3 FIUs should assign unique case reference numbers on both outgoing and incoming case requests to facilitate tracking of a particular case request or response.
2.4 Where a request is acknowledged, the requested FIU concerned should provide the requesting unit with the name and contact details, including telephone and fax numbers, of the contact person and the case or reference number assigned to the case by the responding FIU.
2.5 FIUs should give priority to urgent requests. If the receiving FIU has concerns about the classification of a request as urgent, it should contact the requesting FIU immediately in order to resolve the issue. Moreover each request, whether or not marked as “urgent”, should be processed in the same timely manner as domestic requests for information.
2.6.a As a general principle, the requested FIU should strive to reply to a request for information, including an interim response, within 1 week from receipt in the following circumstances:
if it can provide a positive/negative answer to a request regarding information it has direct access to;
if it is unable to provide an answer due to legal impediments.
2.6.b Whenever the requested FIU needs to have external databases searched or query third parties (such as financial institutions), an answer should be provided within 1 month after receipt of the request. The requested FIU may consider contacting the requesting unit within 1 week from receipt to state that it has no information directly available and that external sources are being consulted or that it is experiencing particular difficulties in answering the request. The latter may be done orally.
2.6.c If the results of the enquiries are still not all available after 1 month, the requested FIU should provide the information it already has in its possession or at least give an indication of when it will be in a position to provide a complete answer. This may be done orally.
2.7 FIUs should consider establishing mechanisms in order to monitor request-related information, enabling them to detect new information they receive regarding transactions, STRs, etc. that are involved in previously received requests. Such a monitoring system would enable FIUs to inform former requestors of new and relevant material related to their prior request.
3.1 Where the requested FIU desires feedback on how the information it provided was used, it should request this explicitly. When the requested FIU is not able to obtain this information, it should reply stating the reasons why the requested feedback cannot be provided.
3.2 If appropriate, especially in case of urgent requests, and in order to speed up proceedings, prior consent for further use of the information can be granted with the reply itself.
3.3 The exchange of information between FIUs should take place in a secure way. To this end the Egmont FIUs should use the Egmont Secure Web (ESW) where appropriate.
4.1 All FIUs should use the greatest caution when dealing with supplied information in order to prevent any unauthorized use resulting in a breach of confidentiality.
Appendix VII FATF 40 Recommendations (2003)
Note: Only those recommendations directly related to FIUs have been included. Recommendations marked with an asterisk should be read in conjunction with their Interpretative Notes.
Reporting of suspicious transactions and compliance
13.* If a financial institution suspects or has reasonable grounds to suspect that funds are the proceeds of a criminal activity, or are related to terrorist financing, it should be required, directly by law or regulation, to report promptly its suspicions to the financial intelligence unit (FIU).
14.* Financial institutions, their directors, officers and employees should be:
a) Protected by legal provisions from criminal and civil liability for breach of any restriction on disclosure of information imposed by contract or by any legislative, regulatory or administrative provision, if they report their suspicions in good faith to the FIU, even if they did not know precisely what the underlying criminal activity was, and regardless of whether illegal activity actually occurred.
b) Prohibited by law from disclosing the fact that a suspicious transaction report (STR) or related information is being reported to the FIU.
15.* Financial institutions should develop programmes against money laundering and terrorist financing. These programmes should include:
a) The development of internal policies, procedures and controls, including appropriate compliance management arrangements, and adequate screening procedures to ensure high standards when hiring employees.
b) An ongoing employee training programme.
c) An audit function to test the system.
16.* The requirements set out in Recommendations 13 to 15, and 21 apply to all designated nonfinancial businesses and professions, subject to the following qualifications:
a) Lawyers, notaries, other independent legal professionals and accountants should be required to report suspicious transactions when, on behalf of or for a client, they engage in a financial transaction in relation to the activities described in Recommendation 12(d). Countries are strongly encouraged to extend the reporting requirement to the rest of the professional activities of accountants, including auditing.
b) Dealers in precious metals and dealers in precious stones should be required to report suspicious transactions when they engage in any cash transaction with a customer equal to or above the applicable designated threshold.
c) Trust and company service providers should be required to report suspicious transactions for a client when, on behalf of or for a client, they engage in a transaction in relation to the activities referred to Recommendation 12(e).
Lawyers, notaries, other independent legal professionals, and accountants acting as independent legal professionals, are not required to report their suspicions if the relevant information was obtained in circumstances where they are subject to professional secrecy or legal professional privilege.
Other measures to deter money laundering and terrorist financing
17. Countries should ensure that effective, proportionate and dissuasive sanctions, whether criminal, civil or administrative, are available to deal with natural or legal persons covered by these Recommendations that fail to comply with anti-money laundering or terrorist financing requirements.
18. Countries should not approve the establishment or accept the continued operation of shell banks. Financial institutions should refuse to enter into, or continue, a correspondent banking relationship with shell banks. Financial institutions should also guard against establishing relations with respondent foreign financial institutions that permit their accounts to be used by shell banks.
19.* Countries should consider:
a) Implementing feasible measures to detect or monitor the physical cross-border transportation of currency and bearer negotiable instruments, subject to strict safeguards to ensure proper use of information and without impeding in any way the freedom of capital movements.
b) The feasibility and utility of a system where banks and other financial institutions and intermediaries would report all domestic and international currency transactions above a fixed amount, to a national central agency with a computerised data base, available to competent authorities for use in money laundering or terrorist financing cases, subject to strict safeguards to ensure proper use of the information.
20. Countries should consider applying the FATF Recommendations to businesses and professions, other than designated non-financial businesses and professions, that pose a money laundering or terrorist financing risk. Countries should further encourage the development of modern and secure techniques of money management that are less vulnerable to money laundering.
Measures to be taken with respect to countries that do not or insufficiently comply with the FATF Recommendations
21. Financial institutions should give special attention to business relationships and transactions with persons, including companies and financial institutions, from countries which do not or insufficiently apply the FATF Recommendations. Whenever these transactions have no apparent economic or visible lawful purpose, their background and purpose should, as far as possible, be examined, the findings established in writing, and be available to help competent authorities. Where such a country continues not to apply or insufficiently applies the FATF Recommendations, countries should be able to apply appropriate countermeasures.
22. Financial institutions should ensure that the principles applicable to financial institutions, which are mentioned above are also applied to branches and majority owned subsidiaries located abroad, especially in countries which do not or insufficiently apply the FATF Recommendations, to the extent that local applicable laws and regulations permit. When local applicable laws and regulations prohibit this implementation, competent authorities in the country of the parent institution should be informed by the financial institutions that they cannot apply the FATF Recommendations.
Competent authorities, their powers and resources
26.* Countries should establish a FIU that serves as a national centre for the receiving (and, as permitted, requesting), analysis and dissemination of STR and other information regarding potential money laundering or terrorist financing. 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.
27.* Countries should ensure that designated law enforcement authorities have responsibility for money laundering and terrorist financing investigations. Countries are encouraged to support and develop, as far as possible, special investigative techniques suitable for the investigation of money laundering, such as controlled delivery, undercover operations and other relevant techniques. Countries are also encouraged to use other effective mechanisms such as the use of permanent or temporary groups specialised in asset investigation, and co-operative investigations with appropriate competent authorities in other countries.
28. When conducting investigations of money laundering and underlying predicate offences, competent authorities should be able to obtain documents and information for use in those investigations, and in prosecutions and related actions. This should include powers to use compulsory measures for the production of records held by financial institutions and other persons, for the search of persons and premises, and for the seizure and obtaining of evidence.
29. Supervisors should have adequate powers to monitor and ensure compliance by financial institutions with requirements to combat money laundering and terrorist financing, including the authority to conduct inspections. They should be authorised to compel production of any information from financial institutions that is relevant to monitoring such compliance, and to impose adequate administrative sanctions for failure to comply with such requirements.
30. Countries should provide their competent authorities involved in combating money laundering and terrorist financing with adequate financial, human and technical resources. Countries should have in place processes to ensure that the staff of those authorities are of high integrity.
31. Countries should ensure that policy makers, the FIU, law enforcement and supervisors have effective mechanisms in place which enable them to cooperate, and where appropriate coordinate domestically with each other concerning the development and implementation of policies and activities to combat money laundering and terrorist financing.
32. Countries should ensure that their competent authorities can review the effectiveness of their systems to combat money laundering and terrorist financing systems by maintaining comprehensive statistics on matters relevant to the effectiveness and efficiency of such systems. This should include statistics on the STR received and disseminated; on money laundering and terrorist financing investigations, prosecutions and convictions; on property frozen, seized and confiscated; and on mutual legal assistance or other international requests for co-operation.
Other forms of co-operation
40.* Countries should ensure that their competent authorities provide the widest possible range of international co-operation to their foreign counterparts. There should be clear and effective gateways to facilitate the prompt and constructive exchange directly between counterparts, either spontaneously or upon request, of information relating to both money laundering and the underlying predicate offences. Exchanges should be permitted without unduly restrictive conditions. In particular:
a) Competent authorities should not refuse a request for assistance on the sole ground that the request is also considered to involve fiscal matters.
b) Countries should not invoke laws that require financial institutions to maintain secrecy or confidentiality as a ground for refusing to provide co-operation.
c) Competent authorities should be able to conduct inquiries; and where possible, investigations; on behalf of foreign counterparts.
Where the ability to obtain information sought by a foreign competent authority is not within the mandate of its counterpart, countries are also encouraged to permit a prompt and constructive exchange of information with non-counterparts. Co-operation with foreign authorities other than counterparts could occur directly or indirectly. When uncertain about the appropriate avenue to follow, competent authorities should first contact their foreign counterparts for assistance.
Countries should establish controls and safeguards to ensure that information exchanged by competent authorities is used only in an authorised manner, consistent with their obligations concerning privacy and data protection.
“Core Principles” refers to the Core Principles for Effective Banking Supervision issued by the Basel Committee on Banking Supervision, the Objectives and Principles for Securities Regulation issued by the International Organization of Securities Commissions, and the Insurance Supervisory Principles issued by the International Association of Insurance Supervisors.
“Designated categories of offences” means:
participation in an organised criminal group and racketeering;
terrorism, including terrorist financing;
trafficking in human beings and migrant smuggling;
sexual exploitation, including sexual exploitation of children;
illicit trafficking in narcotic drugs and psychotropic substances;
illicit arms trafficking;
illicit trafficking in stolen and other goods;
corruption and bribery;
counterfeiting and piracy of products;
murder, grievous bodily injury;
kidnapping, illegal restraint and hostage-taking;
robbery or theft;
insider trading and market manipulation.
When deciding on the range of offences to be covered as predicate offences under each of the categories listed above, each country may decide, in accordance with its domestic law, how it will define those offences and the nature of any particular elements of those offences that make them serious offences.
“Designated non-financial businesses and professions”means:
a) Casinos (which also includes internet casinos).
b) Real estate agents.
c) Dealers in precious metals.
d) Dealers in precious stones.
e) Lawyers, notaries, other independent legal professionals and accountants - this refers to sole practitioners, partners or employed professionals within professional firms. It is not meant to refer to ‘internal’ professionals that are employees of other types of businesses, nor to professionals working for government agencies, who may already be subject to measures that would combat money laundering.
f) Trust and Company Service Providers refers to all persons or businesses that are not covered elsewhere under these Recommendations, and which as a business, provide any of the following services to third parties:
acting as a formation agent of legal persons;
acting as (or arranging for another person to act as) a director or secretary of a company, a partner of a partnership, or a similar position in relation to other legal persons;
providing a registered office; business address or accommodation, correspondence or administrative address for a company, a partnership or any other legal person or arrangement;
acting as (or arranging for another person to act as) a trustee of an express trust;
acting as (or arranging for another person to act as) a nominee shareholder for another person.
“Designated threshold” refers to the amount set out in the Interpretative Notes.
“Financial institutions” means any person or entity who conducts as a business one or more of the following activities or operations for or on behalf of a customer:
When a financial activity is carried out by a person or entity on an occasional or very limited basis (having regard to quantitative and absolute criteria) such that there is little risk of money laundering activity occurring, a country may decide that the application of anti-money laundering measures is not necessary, either fully or partially.
In strictly limited and justified circumstances, and based on a proven low risk of money laundering, a country may decide not to apply some or all of the Forty Recommendations to some of the financial activities stated above.
“FIU” means financial intelligence unit.
1. The reference to criminal activity in Recommendation 13 refers to: a) all criminal acts that would constitute a predicate offence for money laundering in the jurisdiction; or b) at a minimum to those offences that would constitute a predicate offence as required by Recommendation 1. Countries are strongly encouraged to adopt alternative (a). All suspicious transactions, including attempted transactions, should be reported regardless of the amount of the transaction.
2. In implementing Recommendation 13, suspicious transactions should be reported by financial institutions regardless of whether they are also thought to involve tax matters. Countries should take into account that, in order to deter financial institutions from reporting a suspicious transaction, money launderers may seek to state inter alia that their transactions relate to tax matters.
Recommendation 14 (tipping off)
Where lawyers, notaries, other independent legal professionals and accountants acting as independent legal professionals seek to dissuade a client from engaging in illegal activity, this does not amount to tipping off.
The type and extent of measures to be taken for each of the requirements set out in the Recommendation should be appropriate having regard to the risk of money laundering and terrorist financing and the size of the business.
For financial institutions, compliance management arrangements should include the appointment of a compliance officer at the management level.
1. It is for each jurisdiction to determine the matters that would fall under legal professional privilege or professional secrecy. This would normally cover information lawyers, notaries or other independent legal professionals receive from or obtain through one of their clients: (a) in the course of ascertaining the legal position of their client, or (b) in performing their task of defending or representing that client in, or concerning judicial, administrative, arbitration or mediation proceedings. Where accountants are subject to the same obligations of secrecy or privilege, then they are also not required to report suspicious transactions.
2. Countries may allow lawyers, notaries, other independent legal professionals and accountants to send their STR to their appropriate self-regulatory organisations, provided that there are appropriate forms of co-operation between these organisations and the FIU.
1. To facilitate detection and monitoring of cash transactions, without impeding in any way the freedom of capital movements, countries could consider the feasibility of subjecting all cross-border transfers, above a given threshold, to verification, administrative monitoring, declaration or record keeping requirements.
2. If a country discovers an unusual international shipment of currency, monetary instruments, precious metals, or gems, etc., it should consider notifying, as appropriate, the Customs Service or other competent authorities of the countries from which the shipment originated and/or to which it is destined, and should co-operate with a view toward establishing the source, destination, and purpose of such shipment and toward the taking of appropriate action.
Where a country has created an FIU, it should consider applying for membership in the Egmont Group. 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[s].
Countries should consider taking measures, including legislative ones, at the national level, to allow their competent authorities investigating money laundering cases to postpone or waive the arrest of suspected persons and/or the seizure of the money for the purpose of identifying persons involved in such activities or for evidence gathering. Without such measures the use of procedures such as controlled deliveries and undercover operations are precluded.
1. For the purposes of this Recommendation:
“Counterparts” refers to authorities that exercise similar responsibilities and functions.
“Competent authority” refers to all administrative and law enforcement authorities concerned with combating money laundering and terrorist financing, including the FIU and supervisors.
2. Depending on the type of competent authority involved and the nature and purpose of the cooperation, different channels can be appropriate for the exchange of information. Examples of mechanisms or channels that are used to exchange information include: bilateral or multilateral agreements or arrangements, memoranda of understanding, exchanges on the basis of reciprocity, or through appropriate international or regional organisations. However, this Recommendation is not intended to cover co-operation in relation to mutual legal assistance or extradition.
3. The reference to indirect exchange of information with foreign authorities other than counterparts covers the situation where the requested information passes from the foreign authority through one or more domestic or foreign authorities before being received by the requesting authority. The competent authority that requests the information should always make it clear for what purpose and on whose behalf the request is made.
4. FIUs should be able to make inquiries on behalf of foreign counterparts where this could be relevant to an analysis of financial transactions. At a minimum, inquiries should include:
Searching its own databases, which would include information related to suspicious transaction reports.
Searching other databases to which it may have direct or indirect access, including law enforcement databases, public databases, administrative databases and commercially available databases.
Where permitted to do so, FIUs should also contact other competent authorities and financial institutions in order to obtain relevant information.
Appendix VIII FATF Special Recommendations on Terrorist Financing
IV. Reporting suspicious transactions related to terrorism
If financial institutions, or other businesses or entities subject to anti-money laundering obligations, suspect or have reasonable grounds to suspect that funds are linked or related to, or are to be used for terrorism, terrorist acts or by terrorist organisations, they should be required to report promptly their suspicions to the competent authorities.
V. International co-operation
Each country should afford another country, on the basis of a treaty, arrangement or other mechanism for mutual legal assistance or information exchange, the greatest possible measure of assistance in connection with criminal, civil enforcement, and administrative investigations, inquiries and proceedings relating to the financing of terrorism, terrorist acts and terrorist organisations.
Countries should also take all possible measures to ensure that they do not provide safe havens for individuals charged with the financing of terrorism, terrorist acts or terrorist organisations, and should have procedures in place to extradite, where possible, such individuals.
Appendix IX International Convention for the Suppression of the Financing of Terrorism
1. States Parties shall cooperate in the prevention of the offences set forth in article 2 by taking all practicable measures, inter alia, by adapting their domestic legislation, if necessary, to prevent and counter preparations in their respective territories for the commission of those offences within or outside their territories, including:
(a) Measures to prohibit in their territories illegal activities of persons and organizations that knowingly encourage, instigate, organize or engage in the commission of offences set forth in article 2;
(b) Measures requiring financial institutions and other professions involved in financial transactions to utilize the most efficient measures available for the identification of their usual or occasional customers, as well as customers in whose interest accounts are opened, and to pay special attention to unusual or suspicious transactions and report transactions suspected of stemming from a criminal activity. For this purpose, States Parties shall consider:
(i) Adopting regulations prohibiting the opening of accounts the holders or beneficiaries of which are unidentified or unidentifiable, and measures to ensure that such institutions verify the identity of the real owners of such transactions;
(ii) With respect to the identification of legal entities, requiring financial institutions, when necessary, to take measures to verify the legal existence and the structure of the customer by obtaining, either from a public register or from the customer or both, proof of incorporation, including information concerning the customer’s name, legal form, address, directors and provisions regulating the power to bind the entity;
(iii) Adopting regulations imposing on financial institutions the obligation to report promptly to the competent authorities all complex, unusual large transactions and unusual patterns of transactions, which have no apparent economic or obviously lawful purpose, without fear of assuming criminal or civil liability for breach of any restriction on disclosure of information if they report their suspicions in good faith;
(iv) Requiring financial institutions to maintain, for at least five years, all necessary records on transactions, both domestic or international.
2. States Parties shall further cooperate in the prevention of offences set forth in article 2 by considering:
(a) Measures for the supervision, including, for example, the licensing, of all money-transmission agencies;
(b) Feasible measures to detect or monitor the physical cross-border transportation of cash and bearer negotiable instruments, subject to strict safeguards to ensure proper use of information and without impeding in any way the freedom of capital movements.
3. States Parties shall further cooperate in the prevention of the offences set forth in article 2 by exchanging accurate and verified information in accordance with their domestic law and coordinating administrative and other measures taken, as appropriate, to prevent the commission of offences set forth in article 2, in particular by:
(a) Establishing and maintaining channels of communication between their competent agencies and services to facilitate the secure and rapid exchange of information concerning all aspects of offences set forth in article 2;
(b) Cooperating with one another in conducting inquiries, with respect to the offences set forth in article 2, concerning:
(i) The identity, whereabouts and activities of persons in respect of whom reasonable suspicion exists that they are involved in such offences;
(ii) The movement of funds relating to the commission of such offences.
4. States Parties may exchange information through the International Criminal Police Organization (Interpol).
Appendix X United Nations Convention Against Transnational Organized Crime
Article 7 Measures to combat money-laundering
1. Each State Party:
(a) Shall institute a comprehensive domestic regulatory and supervisory regime for banks and non-bank financial institutions and, where appropriate, other bodies particularly susceptible to money-laundering, within its competence, in order to deter and detect all forms of money-laundering, which regime shall emphasize requirements for customer identification, record-keeping and the reporting of suspicious transactions;
(b) Shall, without prejudice to articles 18 and 27 of this Convention, ensure that administrative, regulatory, law enforcement and other authorities dedicated to combating money-laundering (including, where appropriate under domestic law, judicial authorities) have the ability to cooperate and exchange information at the national and international levels within the conditions prescribed by its domestic law and, to that end, shall consider the establishment of a financial intelligence unit to serve as a national centre for the collection, analysis and dissemination of information regarding potential money-laundering.
2. States Parties shall consider implementing feasible measures to detect and monitor the movement of cash and appropriate negotiable instruments across their borders, subject to safeguards to ensure proper use of information and without impeding in any way the movement of legitimate capital. Such measures may include a requirement that individuals and businesses report the cross-border transfer of substantial quantities of cash and appropriate negotiable instruments.
3. In establishing a domestic regulatory and supervisory regime under the terms of this article, and without prejudice to any other article of this Convention, States Parties are called upon to use as a guideline the relevant initiatives of regional, interregional and multilateral organizations against money-laundering.
4. States Parties shall endeavour to develop and promote global, regional, subregional and bilateral cooperation among judicial, law enforcement and financial regulatory authorities in order to combat money-laundering.
Appendix XI United Nations Convention Against Corruption
Article 14 Measures to prevent money-laundering
1. Each State Party shall:
(a) Institute a comprehensive domestic regulatory and supervisory regime for banks and non-bank financial institutions, including natural or legal persons that provide formal or informal services for the transmission of money or value and, where appropriate, other bodies particularly susceptible to money-laundering, within its competence, in order to deter and detect all forms of money-laundering, which regime shall emphasize requirements for customer and, where appropriate, beneficial owner identification, record-keeping and the reporting of suspicious transactions;
(b) Without prejudice to article 46 of this Convention, ensure that administrative, regulatory, law enforcement and other authorities dedicated to combating money-laundering (including, where appropriate under domestic law, judicial authorities) have the ability to cooperate and exchange information at the national and international levels within the conditions prescribed by its domestic law and, to that end, shall consider the establishment of a financial intelligence unit to serve as a national centre for the collection, analysis and dissemination of information regarding potential money-laundering.
2. States Parties shall consider implementing feasible measures to detect and monitor the movement of cash and appropriate negotiable instruments across their borders, subject to safeguards to ensure proper use of information and without impeding in any way the movement of legitimate capital. Such measures may include a requirement that individuals and businesses report the cross-border transfer of substantial quantities of cash and appropriate negotiable instruments.
3. States Parties shall consider implementing appropriate and feasible measures to require financial institutions, including money remitters:
(a) To include on forms for the electronic transfer of funds and related messages accurate and meaningful information on the originator;
(b) To maintain such information throughout the payment chain; and
(c) To apply enhanced scrutiny to transfers of funds that do not contain complete information on the originator.
4. In establishing a domestic regulatory and supervisory regime under the terms of this article, and without prejudice to any other article of this Convention, States Parties are called upon to use as a guideline the relevant initiatives of regional, interregional and multilateral organizations against money-laundering.
5. States Parties shall endeavour to develop and promote global, regional, subregional and bilateral cooperation among judicial, law enforcement and financial regulatory authorities in order to combat money-laundering.
Basel Committee on Banking Supervision, 1997, Basel Core Principles for Effective Banking Supervision.
Basel Committee on Banking Supervision, 1997, Basel Core Principles for Effective Banking Supervision.)| false
Council of Europe, European Committee on Crime Problems, Select Committee of Experts on the Evaluation of Anti-Money Laundering Measures, A Review of the Anti-Money Laundering Systems in 22 Council of Europe Member States, 1998–2001.
Council of Europe, European Committee on Crime Problems, Select Committee of Experts on the Evaluation of Anti-Money Laundering Measures, A Review of the Anti-Money Laundering Systems in 22 Council of Europe Member States, 1998–2001.)| false
Sienczylo-Chlabicz, Joanna, and WojciechFilipkowski,2001, “The Polish Financial Intelligence Unit: A New Institution in the Polish Legal System,”Journal of Money Laundering Control, Vol. 5, No. 2, pp. 150–57.
Sienczylo-Chlabicz, Joanna, and WojciechFilipkowski,2001, “The Polish Financial Intelligence Unit: A New Institution in the Polish Legal System,”Journal of Money Laundering Control, Vol. 5, No. 2, pp. 150–57.)| false
Spreutels, Jean, ClaireScohier,1998, “La Prévention du blanchiment des capitaux, évolutions récentes,”Rev. Dr. ULB, 1997-1, pp. 165–87, available on the website of the Belgian FIU at http://www.ctifcfi.be/fr/index.htm.
Spreutels, Jean, ClaireScohier,1998, “La Prévention du blanchiment des capitaux, évolutions récentes,”Rev. Dr. ULB, 1997-1, pp. 165–87, available on the website of the Belgian FIU at http://www.ctifcfi.be/fr/index.htm.)| false
Thony, Jean-François,1996, “Processing Financial Information in Money Laundering Matters, The Financial Intelligence Units,”European Journal of Crime, Criminal Law and Criminal Justice (Brussels), p. 257.
Thony, Jean-François,1996, “Processing Financial Information in Money Laundering Matters, The Financial Intelligence Units,”European Journal of Crime, Criminal Law and Criminal Justice (Brussels), p. 257.)| false
van Duyne, Petrus C., MarcelPheijffer, Hans G.Kuijl, Arthur Th.H.van Dijk, and Gerard J.C.M.Bakker,2003, Financial Investigation of Crime: A Tool of the Integral Law Enforcement Approach (Nijmegen: Wolf Legal Publishers).
van Duyne, Petrus C., MarcelPheijffer, Hans G.Kuijl, Arthur Th.H.van Dijk, and Gerard J.C.M.Bakker,2003, Financial Investigation of Crime: A Tool of the Integral Law Enforcement Approach (Nijmegen: Wolf Legal Publishers).)| false
This applies to financial activity in both the formal or informal sector e.g. alternative remittance activity. See the Interpretative Note to Special Recommendation VI. It does not apply to any natural or legal person that provides financial institutions solely with message or other support systems for transmitting funds. See the Interpretative Note to Special Recommendation VII.