Criminalization of Money Laundering (c. 1.1—Physical and Material Elements of the Offence):

112. ML is criminalized in Sections 41 – 43 of POCA which criminalize a broad range of offenses generally consistent with the Vienna and Palermo Conventions, including concealing or disguising proceeds of criminal conduct (Section 41(a)), converting or transferring such property (Section 41(b)), retention or control of such property by or on behalf of another person (Section 42(1)), and acquiring, using or possessing such property (Section 43(1)). However, the offenses set forth in Section 41 are not consistent with Article 3(1)(b)(i) and (ii) of the Vienna Convention, nor with Article 6(1)(a) of the Palermo Convention, which state that the criminal conduct must be “for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in the commission of such an offence or offences to evade the legal consequences of his actions.” (emphasis added). The POCA offenses in Section 41 simply contain one leg of the required purposes, as follows: “for the purpose of avoiding prosecution for a drug trafficking or relevant offence or the making or enforcement in his case of a confiscation order.”

The Laundered Property (c. 1.2):

113. Under the definition of ‘property’ in Section 2(1) of POCA, all types of property are covered in a manner consistent with the Vienna and Palermo Conventions, including “real or personal property, whether inside or outside St. Vincent and the Grenadines and includes money and all other property, moveable or immovable . . . .” However, the definition does not include “legal documents or instruments evidencing title to, or interest in, such assets” as required by Article 1(q) of the Vienna Convention and Article 2(d) of the Palermo Convention.

Proving Property is the Proceeds of Crime (c. 1.2.1):

114. Under POCA, when proving that property is the proceeds of crime, there is no requirement that the accused be convicted of a predicate offense. According to the authorities, courts in SVG have required a linkage of the proceeds to a criminal offense, but not proof of or conviction for the predicate offense. See LGQM [2004] EWCA Crim 1579. The Scope of the Predicate Offenses (c. 1.3): SVG uses an “all crimes” approach to predicate crimes. Under Sections 41–43 of POCA, the money laundering offenses are based on proceeds of criminal conduct. The definition of criminal conduct under Section 2(1) means any “drug trafficking or any relevant offense.” The term “any relevant offense” is defined as: any indictable or summary offence; any offence triable both summarily or on indictment in SVG from which a person has benefited, other than a drug trafficking offence; an offence under the Acts listed in Schedule 2; and any act or omission which, had it occurred in St. Vincent and the Grenadines, would have constituted any of the aforementioned offenses. The offenses listed in Schedule 2 include non-criminal or administrative violations of regulatory or other laws. However, with respect to designated categories of offenses, the offenses of racketeering, human trafficking and migrant smuggling are not covered as predicate offenses since they are not found in domestic legislation.

Threshold Approach for Predicate Offenses (c. 1.4):

115. N/A

Extraterritorially Committed Predicate Offenses (c. 1.5):

116. Predicate offenses extend to offenses committed extraterritorially, based on the definition of ‘relevant offence’ as set out in Section 2(1) of the POCA which includes “any act or omission which, had it occurred in St. Vincent and the Grenadines, would have constituted an offence [in SVG] . . . .”

Laundering One’s Own Illicit Funds (c. 1.6):

117. Pursuant to Section 41(1) of POCA, a person commits an offence if he conceals or disguises any property which represents his proceeds of criminal conduct or converts or transfers that property, brings it into or removes it from SVG. Possession of the criminal’s own proceeds is not currently covered; according to the authorities, a proposed amendment to POCA will be considered.

Ancillary Offenses (c. 1.7):

118. Section 42 of POCA provides that the arrangement with another to retain the proceeds of criminal conduct is an offence. While there are no statutory provisions in POCA, the CC provides for conspiracy, attempt, aiding and abetting, facilitating and counseling the commission of any crime, including money laundering. CC, CAP 124 (1990), Section 20(b) aiding, (c) aids or abets, (d) counsels; Section 315, attempt; and Section 310, conspiracy.

Additional Element—If an overseas act which does not constitute an offence overseas, but would be a predicate offence if occurred domestically, lead to an offence of ML (c. 1.8):

119. Yes, based on the definition of ‘relevant offence’ in Section 2(1) of the POCA which includes “any act or omission which, had it occurred in St. Vincent and the Grenadines, would have constituted an offence [in SVG] . . . .”

Liability of Natural Persons (c. 2.1):

120. The ML offence extends to natural persons who knowingly engage in money laundering activity as set forth in Sections 41–43 of POCA.

The Mental Element of the ML Offence (c. 2.2):

121. Under Sections 42–44 of POCA (as amended by the 2005 Amendments), a person must “know, suspect or have reasonable grounds to suspect …” and therefore the intentional element of the offense may be inferred from objective factual circumstances. The authorities have also cited relevant English case law such as Regina v. Montila, [2004] 1 WLR 3141, at 10, para. 43, which states that “…the evidence which goes to prove knowledge or reasonable grounds to suspect … will often be sufficient to justify the inference that the origin of the property was coincident with that state of mind.”

Liability of Legal Persons (c. 2.3):

122. Criminal liability extends to legal persons under Section 57 of POCA, which states; “Where a body corporate commits an offence under this Act and the offence is proved to have been committed with the consent or connivance of any director, manager, secretary or other similar officer of the body corporate or any person who was purporting to act in any such capacity, he, as well as the body corporate, commits that offence and is liable to be proceeded against and punished accordingly.” In addition, under Section 3(1) of the Interpretation and General Provisions Act, CAP. 10, the definition of ‘person’ includes any company, association, or body, corporate or unincorporated.

Liability of Legal Persons should not preclude possible parallel criminal, civil or administrative proceedings (c. 2.4):

123. According to the authorities, parallel proceedings are implicitly provided for in POCA and therefore two or more civil, criminal or administrative procedures may be brought against a corporation at the same time although this has never occurred in SVG. According to the authorities, parallel proceedings may be brought against a corporation or natural person, where simultaneously a criminal, administrative and civil proceeding may proceed from the same facts or incident. To date, this has not occurred in SVG.

Sanctions for ML (c. 2.5):

124. Section 47 of POCA sets out the penalties for the money laundering offenses set out in Sections 41–43 of the Act. A person committing an offence under any of these Sections faces imprisonment for 5 years or a fine of up to EC$500,000 on summary conviction, and imprisonment for 20 years or an unlimited fine or both.

Table 11:

ML Prosecutions and Convictions, 2005 – 2008

Table 11:

ML Prosecutions and Convictions, 2005 – 2008

Year	Prosecutions	Convictions	Sentence	Predicate offense
2005	0	0	N/A	N/A
2006	3	3	Three convictions:3½ years, 9 months imprisonment and EC$10,000 (fine)	Drug Trafficking
2007	1	1	4½ years imprisonment	Drug Trafficking
2008	2	Pending	Pending	Drug Trafficking

View Table

Table 11:

ML Prosecutions and Convictions, 2005 – 2008

Year	Prosecutions	Convictions	Sentence	Predicate offense
2005	0	0	N/A	N/A
2006	3	3	Three convictions:3½ years, 9 months imprisonment and EC$10,000 (fine)	Drug Trafficking
2007	1	1	4½ years imprisonment	Drug Trafficking
2008	2	Pending	Pending	Drug Trafficking

Effectiveness of Implementation

125. While the SVG legal framework is generally compliant with relevant Conventions and FATF Recommendations 1 and 2, the low number of prosecutions and convictions in the last four years, six and four, respectively, raise questions about the effective implementation of the criminalization provisions. While it is not possible to reach any definitive conclusions about the pattern of prosecutions and convictions in the last four years, the overall numbers appear to be low given the extent of drug trafficking believed to be taking place in or through SVG (e.g. the authorities acknowledged that the identities of the largest traffickers were known to them) and the inherent ML and FT risks in the cross-border international (offshore) business sectors.

Legal Framework:

127. The United Nations (Anti-Terrorism Measures) Act, No. 34 of 2002, as amended in 2006 by Act No. 13 of 2006 (UNATMA) was enacted to implement the International Convention for the Suppression of the FT, 1999 and to provide measures to combat terrorism. The criminalization of FT under UNATMA is generally compliant with the SFT Convention except as noted below.

Criminalization of FT (c. II.1):

128. FT is criminalized by Sections 3–6 of UNATMA, which covers terrorist acts, terrorist groups, and, in most instances, individual terrorists and is generally consistent with the relevant offenses set forth in the SFT Convention. However, Schedule II to UNATMA, which lists the relevant terrorism conventions, omits two conventions that are listed in the annex to the SFT Convention, as follows: The Convention on the Physical Protection of Nuclear Material (1980) and the International Convention for the Suppression of Terrorist Bombings (1997). One of the conventions listed in UNATMA, on the safety of maritime navigation, has not been signed and ratified. In addition, one convention not listed in UNATMA, the convention on terrorist bombings, has been acceded to but not ratified, and one not listed, on nuclear materials, has not been signed or ratified. Conduct covered by the listed conventions is criminalised by UNATMA. Finally, under UNATMA, terrorist financing offenses extend to any funds as defined in the SFT Convention.

Predicate Offence for Money Laundering (c. II.2):

129. Offenses under UNATMA are captured by the definition of ‘relevant offence’ in Section (2)(1) of POCA in two ways: First, under Section 7 of UNATMA, offenses are both summary and indictable, therefore covered under the first part of the definition, and second, under an amendment to UNATMA, Act No. 8 of 2005, Schedule 2, amending Schedule 2 of POCA, offenses under UNATMA are listed, thereby establishing such offenses as predicate offenses for money laundering.

Jurisdiction for Terrorist Financing Offence (c. II.3):

130. Under Section 9 of UNATMA, terrorist acts committed outside SVG by citizens of SVG and “stateless persons” resident in SVG (e.g. resident aliens) constitute offenses under UNATMA.

The Mental Element of the TF Offence (applying c. 2.2 in R.2 for c. II.4):

131. See discussion at c. 2.2.

Liability of Legal Persons (applying c. 2.3 & c. 2.4 in R.2 for c. II.4):

132. Under Section 3(1) of the Interpretation and General Provisions Act, CAP. 10, the definition of ‘person’ includes any company, association, or body, corporate or unincorporated. The possibility of parallel criminal or civil liability is not prohibited.

Sanctions for FT (applying c. 2.5 in R.2 for c. II.4):

133. Sanctions, as set forth under Section 7 of UNATMA, provide that: “A person guilty of an offence under sections 3, 4, 5 or 6 of [UNATMA] shall be liable- (a) on conviction on indictment, to imprisonment for a term not exceeding twenty years, to an unlimited fine or both; or (b) on summary conviction, to imprisonment for a term not exceeding five years, to a fine not exceeding EC$500,000 or both.”

Effectiveness of Implementation

134. There are no known instances of FT in SVG, no SARs for FT have been filed nor have there been any investigations, prosecutions or convictions under UNATMA since its implementation. Hence effectiveness is difficult to gauge. However, the authorities maintain that SVG is a jurisdiction which is low risk for FT and has had no instances of FT being identified in or passing through the jurisdiction and that this is borne out by the fact that there are no domestic or international matters which involve FT which have been brought to light by foreign or international authorities.

Legal Framework

135. Part II, Sections 6–22 of POCA relate to confiscation orders which may be made during the sentencing of the defendant if the Court is satisfied that a defendant has benefited from either drug trafficking or relevant offenses and is based on the Court’s assessment of the value of the defendant’s proceeds of criminal conduct under Section 13 of POCA. Section 26 of POCA provides for the making of restraint orders which prohibit any person from dealing with any realizable property. Further, Sections 49 and 50 of POCA provide for the seizing, detaining and forfeiture of cash which is reasonably suspected of directly or indirectly representing any person’s proceeds of criminal conduct or of being intended by any person for use in criminal conduct.

Confiscation of Property related to ML, FT or other predicate offenses including property of corresponding value (c. 3.1):

136. Sections 6-8 of POCA provide for the confiscation of the proceeds from the commission of any crime, including drug trafficking, money laundering, terrorist financing and other predicate offenses, as well as property of corresponding value if the proceeds themselves are not available. The confiscation order can be applied for at the time of conviction but before sentencing once the Court is satisfied that the defendant has benefited from the offence and has or may have ‘realisable property’ as defined by POCA. The value of such proceeds is determined by the Court and is not limited to the actual amount of proceeds seized from or relating to the defendant.

137. Under Section 51A of POCA, instrumentalities used or intended to be used to commit any offence may also be forfeited, including property under the defendant’s possession or control which has been used for the purpose of committing or facilitating the criminal conduct, or was intended to be used to commit the criminal conduct. In addition, the Drugs (Prevention of Misuse) Act, CAP 219, Section 28, includes all conveyances for drugs and drug trafficking, subjecting those to forfeiture as well.

138. Questions of fact to be decided by a Court in proceedings under POCA including seizures or forfeitures are subject to a civil standard of proof, i.e. “the balance of probabilities,” under Section 63 of POCA.

Confiscation of Property Derived from Proceeds of Crime (c. 3.1.1 applying c. 3.1):

139. (a) Indirect proceeds of crime: Although there is no explicit provision that applies to indirect proceeds of crime, including income, profits or other benefits, the authorities are of the view that the confiscation provisions of POCA would apply to such indirect proceeds, since, under Section 7(3)(a) “a person benefits from an offence if he obtains property as a result of or in connection with its commission and his benefit is the value of any property so obtained; and (b) if he derives a pecuniary advantage as a result of or in connection with the commission of an offence, he is to be treated as if he obtained instead a sum of money equal to the value of his pecuniary advantage.” Further, they cite the English Court of Appeal case of Regina v. Causey (18 October 1999, at 6, which stated that “if one penny or one penny’s worth of the property dealt with is the proceeds of criminal conduct” then the property is obtained partly in connection with the commission of an offence. This interpretation appears to be a reasonable one in light of the statutory reference to the defendant having derived a “pecuniary advantage.”

c.3.1.1 Property held by third parties:

140. With respect to confiscation of property held by a third party, subject to Section 14 of POCA, which provides for protection of the property rights of third parties (see c. 3.5 below), the definition in Section 2 of ‘realisable property’ applies to “any property held by the defendant” and “any property held by a person to whom the defendant has, directly or indirectly, made a gift caught by this Act.” Under Section 3(4)(a), which covers gifts caught under POCA, “the circumstances in which the defendant is to be treated as making a gift include those where he transfers property to another person, directly or indirectly, for a consideration the value of which is significantly less than the value of the consideration provided by the defendant.” Such property is subject to confiscation only if the consideration for the gift is “significantly less” than the value of the property. Finally, POCA applies to all property, whether in the hands of the defendant or of a third party, and including proceeds of criminal conduct as well as instrumentalities. See also c. 3.1(b) above.

Provisional Measures to Prevent Dealing in Property subject to Confiscation (c. 3.2):

Two provisions of POCA relate to provisional measures:

141. Section 26 authorizes the court to make restraint orders to prohibit persons from dealing with, transferring or disposing of any realizable property that is or may become subject to confiscation. According to the authorities, this typically occurs during the investigation of a ML case as well as prior to or during the prosecution but prior to the completion of the case. The evidentiary standard is the same civil standard as applies generally under POCA. In addition, Section 49 permits the seizure of cash and monetary instruments anywhere in the country “if the [police or customs] officer has reasonable grounds for suspecting that it directly or indirectly represents any person’s proceeds of criminal conduct or is intended by any person for use in any criminal conduct”

Ex Parte Application for Provisional Measures (c. 3.3):

142. Under Section 26(4)(b) of POCA, a restraint order may be made on an ex parte application to a Judge in chambers. Prior notice is therefore not necessary According to the authorities, once an ex parte application has been granted by the court, notice is subsequently provided to the affected parties within a reasonable time. This is usually from immediately up to seven days. Notice is given to all affected parties; affected parties are usually listed in the Order and may include FIs, corporate bodies or individuals.

Identification and Tracing of Property subject to Confiscation (c. 3.4):

143. The laws of SVG provide for a number of legal powers to identify and trace property that is or may become subject to confiscation or is suspected of being the proceeds of crime, including the following:

• Under Section 4(2)(b) of the FIU Act, the Director of the FIU “…may require the production of such information (excluding information subject to legal professional privilege) from FIs or a person engaged in a relevant business activity that the FIU considers necessary for the purpose of investigating the relevant offence” where it appears to the Director that there are reasonable grounds to suspect that a relevant offence has been committed;

• Under Section 35(1) of POCA, the DPP as well as a police officer may apply to the Court for a production order for the purpose of an investigation in or outside SVG into (i) any offence, (ii) ascertaining whether any person has benefited from criminal conduct or (iii) ascertaining the whereabouts of any proceeds of criminal conduct, if there are reasonable grounds for suspecting that a specified person has carried on drug trafficking or has benefited from criminal conduct (Section 35(4)). According to the authorities, the term “specified person” is wide enough to include any person who has possession or control of such proceeds;

• Under Section 37 of POCA, a police officer may apply for a search warrant for the purpose of an investigation into any offence if the Court is satisfied, inter alia, that a production order has not been complied with and that there are reasonable grounds for suspecting that material pertaining to a specified person who is suspected to have benefited from criminal conduct is located on the premises;

• Section 38 of POCA also provides for the making of an order to compel disclosure of information held by Government Departments;

• Section 39 of POCA provides for the making of monitoring orders directing a financial institution to give to a police officer information obtained by the institution about transactions conducted by a particular person with that institution.

Protection of Bona Fide Third Parties (c. 3.5):

144. Section 14 of POCA provides for the protection of bona fide third party rights in a manner consistent with the Palermo Convention. This section provides that a person asserting interest in property subject to confiscation the opportunity to apply to the court and prove that he was not in any way involved in the defendant’s criminal conduct, that he acquired the interest in the property for sufficient consideration, without knowing of the criminal conduct and in circumstances that he would not have formed a reasonable suspicion, that the property was, at the time he acquired it, property that was involved in or was the proceeds of criminal conduct.

Power to Void Actions (c. 3.6):

145. There is no explicit power in the laws of SVG to void contracts, and no legal basis for doing so otherwise. The authorities have cited three cases that contracts against public policy will not be enforced, as follows:

“Contractual freedom must be fostered but any contract that tends to prejudice the social or economic interest of the community must be forbidden. The contract is not unlawful in the sense that it is criminal or would give any cause of action to a third person injured by its operation, but it is unlawful in the sense that the law will not enforce it. North-Western Salt Co v. Electrolytic Alkali Co (1912) 107 LT 439. A contract is illegal and void if its object, direct or indirect, is the commission of a crime or tort, is an agreement made with the object of defrauding or deceiving a third party, or one which amounts to a criminal conspiracy. No person is allowed to benefit from his own crime, Cleaver v. Mutual Reserve Fund Life Association [1892] 1 QB 147. The rule that the court will not assist a person to recover the fruits of his crime applies equally to his representatives, Beresford v. Royal Insurance Co Ltd [1937] 2 KB 197.”

Additional Elements (Rec. 3)—Provision for:

Effectiveness of Implementation

149. While it is not possible to reach any definitive conclusions about the pattern of confiscations and forfeitures in the last four years, the overall numbers appear to be low given the extent of drug trafficking believed to be taking place in or through SVG (e.g. the authorities acknowledged that the identities of the largest traffickers were known to them) and the inherent ML and FT risks in the cross-border international (offshore) business sectors.

Table 12:

Cash Forfeitures under POCA, 2004 – 2008¹⁰

Note: No cash forfeitures occurred in 2005. EC$: Eastern Caribbean Dollar; BD$: Barbadian Dollar; £: Pound Sterling; €: Euro

Table 12:

Cash Forfeitures under POCA, 2004 – 2008¹⁰

Year	Amount Seized	Equivalent (EC$)	Equivalent (US$)
2004	EC$8,104.64	8,104.64	2,990.64
	EC$12,953.32	12,953.32	4,779.82
Total		21,057.96	7,770.46
2006	EC$18,700.00 & US$3,000	26,710.00	9,856.08
	BD$ 8,100.00 & US$300	11,574.00	4,270.84
	EC$1,520.00 & US$20	1,573.40	580.59
	£3,020.00	10,570.00	3,900.37
	EC$1,452.15 & US$1.00	1,454.82	536.83
	BD$6,600.00 & US$667.00	10,690.89	3,944.98
	EC$3,200.00	3,200.00	1,180.81
	€3,280.00	11,480.00	4,236.16
Total		77,253.11	28,506.66
2007	BD$49,845.00	67,290.75	24,830.54
	EC$31,895.00	31,895.00	11,769.37
	EC$6,750.00, US$210 & BD$14,300	26,615.70	9,821.29
	BD$ 9,900.00	13,365.00	4,931.73
	BD$72,600.00	98,010.00	36,166.05
	EC$9,170.00	9,170.00	3,383.76
	BD$10,542.00	14,231.70	5,251.54
	€6,890 & US$249	22,457.13	8,286.76
	BD$7,392 & US$50	10,062.43	3,713.07
Total		293,097.71	108,154.11
2008	EC$11,590.00 & US$200	12,124.00	4,473.80
	US$7,371, BD$5,022 & £7,380	47,897,49	17,674.35
Total		60,021.49	22,184.15
Total	Forfeited 2004 -2008	EC$451,430.27	US$166,615.38

Note: No cash forfeitures occurred in 2005. EC$: Eastern Caribbean Dollar; BD$: Barbadian Dollar; £: Pound Sterling; €: Euro

View Table

Table 12:

Cash Forfeitures under POCA, 2004 – 2008¹⁰

Year	Amount Seized	Equivalent (EC$)	Equivalent (US$)
2004	EC$8,104.64	8,104.64	2,990.64
	EC$12,953.32	12,953.32	4,779.82
Total		21,057.96	7,770.46
2006	EC$18,700.00 & US$3,000	26,710.00	9,856.08
	BD$ 8,100.00 & US$300	11,574.00	4,270.84
	EC$1,520.00 & US$20	1,573.40	580.59
	£3,020.00	10,570.00	3,900.37
	EC$1,452.15 & US$1.00	1,454.82	536.83
	BD$6,600.00 & US$667.00	10,690.89	3,944.98
	EC$3,200.00	3,200.00	1,180.81
	€3,280.00	11,480.00	4,236.16
Total		77,253.11	28,506.66
2007	BD$49,845.00	67,290.75	24,830.54
	EC$31,895.00	31,895.00	11,769.37
	EC$6,750.00, US$210 & BD$14,300	26,615.70	9,821.29
	BD$ 9,900.00	13,365.00	4,931.73
	BD$72,600.00	98,010.00	36,166.05
	EC$9,170.00	9,170.00	3,383.76
	BD$10,542.00	14,231.70	5,251.54
	€6,890 & US$249	22,457.13	8,286.76
	BD$7,392 & US$50	10,062.43	3,713.07
Total		293,097.71	108,154.11
2008	EC$11,590.00 & US$200	12,124.00	4,473.80
	US$7,371, BD$5,022 & £7,380	47,897,49	17,674.35
Total		60,021.49	22,184.15
Total	Forfeited 2004 -2008	EC$451,430.27	US$166,615.38

Note: No cash forfeitures occurred in 2005. EC$: Eastern Caribbean Dollar; BD$: Barbadian Dollar; £: Pound Sterling; €: Euro

Table 13:

Confiscation of Property, 2004 – 2008

NB: There is currently one confiscation hearing involving twelve motor vehicles pending in the High Court of SVG.

^*/The catamaran confiscated in 2005 was done in conjunction with the US and the proceeds were shared.

Table 13:

Confiscation of Property, 2004 – 2008

Year	Cash (EC$)	Equivalent (US$)	Property (EC$)	Equivalent (US$)
2005	Nil	Nil	* One Catamaran yacht, asset- sharing with US (207,110.17)	76,424.41
2006			Land valued at EC$55,000, one Go Fast boat valued at EC$40,000	Land valued at $21,000 and a boat valued at $15.000
2007	147,895	54,573.80
2008	Nil

NB: There is currently one confiscation hearing involving twelve motor vehicles pending in the High Court of SVG.

^*/The catamaran confiscated in 2005 was done in conjunction with the US and the proceeds were shared.

View Table

Table 13:

Confiscation of Property, 2004 – 2008

Year	Cash (EC$)	Equivalent (US$)	Property (EC$)	Equivalent (US$)
2005	Nil	Nil	* One Catamaran yacht, asset- sharing with US (207,110.17)	76,424.41
2006			Land valued at EC$55,000, one Go Fast boat valued at EC$40,000	Land valued at $21,000 and a boat valued at $15.000
2007	147,895	54,573.80
2008	Nil

NB: There is currently one confiscation hearing involving twelve motor vehicles pending in the High Court of SVG.

^*/The catamaran confiscated in 2005 was done in conjunction with the US and the proceeds were shared.

Legal Framework:

150. Although UNATMA implements the SFT Convention, there is no explicit statutory authority in SVG to implement UNSCRs relating to FT. Hence, the designation by relevant UNSCRs or committees established pursuant to such UNSCRs of terrorists or terrorist organizations would not have the effect of permitting the authorities to take certain actions to freeze the assets of such terrorists and terrorist organizations.

Freezing Assets under S/Res/1267 (c. III.1):

151. While there is no explicit authority under the laws of SVG to implement the UNSCRs, Section 17 of UNATMA provides in relevant part as follows:

• 17. (1) The High Court may make a restraint order to prohibit persons from dealing with funds and other financial assets or economic resources of:

  • (a) persons who commit, or attempt to commit, a terrorist act or participate in or facilitate the commission of a terrorist act;

  • (b) entities owned or controlled directly or indirectly by persons referred to at (a) above;

  • (c) persons and entities acting on behalf of, or at the direction of persons referred to at (a) above or entities referred to at (b) above.

• (2) The High Court may also make a restraint order to prohibit persons from dealing with funds derived or generated from property owned or controlled directly or indirectly by persons referred to in sub-Section (1)(a) above or their associated persons and entities.

• (3) A restraint order:

  • (a) may be made only on an application by the AG or the Director of Public Prosecutions;

  • (b) may be made on an ex parte application to a Judge in chambers; and

  • (c) shall provide for notice to be given to persons affected by the order.

152. In addition, with respect to cash only, Section 13(2) of UNATMA provides that any police, customs or immigration officer “may seize and detain any cash to which this section applies if he has reasonable grounds for suspecting that-it is intended to be used for the purposes of a terrorist act, or (b) it is terrorist property …”

Freezing Assets under S/Res/1373 (c. III.2):

153. See c. III.1 above.

Freezing Actions Taken by Other Countries (c. III.3):

154. See c. III.1 above.

Extension of c. III.1-III.3 to funds or assets controlled by designated persons (c. III.4):

155. See c. III.1 above.

Communication to the Financial Sector (c. III.5):

156. No such communications systems are in place.

Guidance to Financial Institutions (c. III.6):

157. No such guidance has been issued.

De-Listing Requests and Unfreezing Funds of De-Listed Persons (c. III.7):

158. There are no publicly-known procedures for considering delisting requests.

Unfreezing Procedures of Funds of Persons Inadvertently Affected by Freezing Mechanism (c. III.8):

159. There are no procedures for unfreezing funds.

Access to frozen funds for expenses and other purposes (c. III.9):

160. There are no procedures for authorizing access to funds frozen pursuant to relevant UNSCRs.

Review of Freezing Decisions (c. III.10):

161. There are no procedures to allow those with funds frozen pursuant to relevant UNSCRs to challenge those measures.

Freezing, Seizing and Confiscation in Other Circumstances (applying c. 3.1-3.4 and 3.6 in R.3, c. III.11):

162. Sections 7 and 8 of POCA apply to all relevant offenses, including FT. See responses to c. 3.1 and c. 3.1.1 above.

Protection of Rights of Third Parties (c. III.12):

While there are no provisions explicitly relating to the UNSCRs, Section 8(2) of UNATMA provides for the protection of the rights of bona fide third parties as follows:

163. “Where a person other than a convicted person claims to be the owner of or otherwise interested in any money or property which can be forfeited by an order under this section, the court shall give him an opportunity to be heard before making an order.” See also the response to c. 3.5 above, since POCA covers all predicate crimes, including FT.

Enforcing the Obligations under SR.III (c. III.13):

164. No such measures or sanctions relating to the implementation of the relevant UNSCRs are in place.

Additional Element (SR.III)—Implementation of Measures in Best Practices Paper for SR.III (c. III.14):

165. No such measures have been implemented.

Additional Element (SR.III)—Implementation of Procedures to Access Frozen Funds (c. III.15):

166. No such procedures have been implemented.

Legal Framework:

167. The FIU Act 2001, Act No. 38 of 2002, was signed into law on December 18, 2001. In addition to the organizational provisions and authority in the FIU Act, the FIU exercises specified functions pursuant to POCA and UNATMA, both as are conferred directly upon the FIU as an institution. It also engages in law enforcement functions though the legal authority of police and customs officers assigned to it. The FIU Act establishes the FIU, and mandates the composition of its personnel that include the director, an attorney, and a public accountant, all appointed by the Minister, as well as assigned police officers and customs officers, who are appointed by the Minister on the recommendation, respectively, of the Police and Customs Commissioners. The FIU Act authorizes the FIU to receive all STRs required to be reported under POCA. The FIU is legally an administrative FIU, insofar as it is not under the direct authority of either the police, prosecutor or bank supervisory body. The FIU reports directly to the Minister of Finance. Nevertheless, in its operations the FIU is a hybrid-administrative FIU because of the regular use of the investigative powers of police and customs officers. It also prosecutes specified cases in collaboration with the DPP. . Information gathering activities under authority conferred on the DPP, under Section35 of POCA, is carried out by FIU personnel, on the basis of specific delegations by the DPP rather than through any institutional authority conferred on the FIU itself. Similarly, authority conferred by POCA to police officers to obtain search warrants is carried out by police officers assigned to the FIU. Hence, the FIU personnel directly conducts poliece investigatory functions under POCA Sections 25-27, 35, 37, and 49.

Establishment of FIU as National Centre (c. 26.1):

168. The FIU was established in May 2002 in accordance with the FIU Act 2001. The FIU is the agency responsible for receiving, analyzing, obtaining and disseminating information which relates to or may relate to the proceeds of offenses created by POCA and UNATMA. The FIU reports to the Minister of Finance. The FIU’s dissemination authority includes competent authorities, the Royal St. Vincent and the Grenadines Police Force and the DPP. The FIU in addition to serving as the national centralized agency responsible for receiving SARs, also carries out proactive ML and predicate offense investigations and intelligence gathering to develop ML cases. The explicit source of authority to conduct such proactive investigations is not clear within the FIU Act. Rather, the powers of the police personnel transferred to the FIU are the basis for the FIU’s conducting such proactive investigations. This arrangement is not uncommon in the Caribbean region.

FIU structure and functions.

169. Pursuant to the FIU Act, Section3, the FIU is comprised of:

• a Director appointed by the Minister of Finance;

• an attorney appointed by the Minister of Finance;

• public accountant appointed in writing by the Minister of Finance;

• such number of police officers assigned from the RSVG Police Force (recommended by the Commissioner of Police and appointed by the Minister of Finance);

• such number of customs officers assigned from the Customs Service (recommended by the Comptroller of Customs and appointed by the Minister of Finance);

• such other personnel as the Minister of Finance considers necessary.

170. There are currently 16 employees in the FIU, including a Director, 2 Lawyers, the Chief Investigator and 3 Financial Investigators who are police officers and 2 Customs Officers. Currently, there is one customs vacancy and at least one police vacancy. In addition, the FIU has requested the NAMLC and Commissioner of Police 4-5 additional police officers. The request is expected to be granted.

171. The FIU’s hybrid function provides some distinct advantages but also poses some challenges. On the one hand, the direct capacity of the FIU to undertake investigations and conduct prosecutions under the authority of the DPP allows for great consistency and potential efficiencies in these functions. The FIU’s core staff includes experienced police officers and qualified lawyers to manage the AML/CFT. The output in terms of the number of production orders issued, cash detentions and seizures indicate a reasonable level of effectiveness in its operations. On the other hand, the FIU’s core function to analyze financial intelligence, in particular information obtained through SARs, has apparently not been given operational priority. In practice, the FIU does not draw a distinction between its analysis and investigatory functions, which may not facilitate prioritization of cases for investigation. This negatively impacts on operational effectiveness and reduces the value added of the FIU’s statutory role to analyze information originating from SARs.

Guidelines to Financial Institutions on Reporting STR (c. 26.2):

172. Pursuant to POCA, the NAMLC has issued guidance (the GNs) in 2002, which were last updated in December 2004, for FIs that includes, inter alia, specific guidance for the detection and reporting of suspicious transactions in SARs. [The FIU Director is a member of the NAMLC.] The GNs also contain the SAR form that is expected to be filed along with brief instructions. The FIU does not have separate, legal authority to issue guidance to reporting entities on SAR filings. Nevertheless, the FIU has taken a leading role in informing reporting entities of their obligations in other forms in order to elaborate on the guidelines issued by the NAMLC. Under the FIU Act, Section 4(2)(g), the FIU shall inform financial and business institutions of their obligations under measures that have been or might have been taken to detect, prevent and deter the commission of offenses under POCA. The FIU has used this broad authority to issue letters and newsletters to reporting entities concerning their obligations. In addition, the FIU has also relied on this section of the FIU Act to conduct extensive training of FIs and other businesses engaged in relevant financial activities that would be required to report, as well as to provide AML/CFT specific training to judges, magistrates, and law enforcement officials within SVG.

173. There is a need for updating of guidance on the content for SAR filing; the last update was in 2004 and new typologies and risks should be addressed in the specific, written guidance issued directly to reporting entities. In addition, the SAR form itself should be updated and tailored. In addition, consideration should be given to updating the MLR to authorize the FIU to issue specific, enforceable guidance on SAR filings, including with respect to new typologies. This should be supplemented by detailed instructions to reporting entities on how to complete SARs to help improve their quality, accuracy and consistency, which is issued to the reporting entities and available on the FIU website when it becomes live. (Post mission in February 2010, the authorities provided updated SAR forms with respect to banks, insurance companies and money services businesses.)

Access to Information on Timely Basis by FIU (c. 26.3):

174. Under the FIU Act, Section 4(1) the FIU is the agency responsible for “obtaining” information that relates to or may relate to the proceeds of the offenses created by POCA and UNATMA. The FIU, AG and DPP assert that this general language of itself suffices to obtain, directly and indirectly and on a timely basis, the financial, administrative, and law enforcement information that it requires to properly undertake its functions. For this purpose, the FIU mainly relies on information that is available from police and customs databases, which are accessible by the police and customs officers who are assigned to the FIU. Additional specific legal authority of the FIU as an organ is required to obtain necessary is warranted to ensure that the FIU’s general access to information for both intelligence (FIU) purposes and investigations is not compromised. Specifically, it should also have explicit legal access, directly or indirectly, to other sources of information such as administrative databases e.g. corporate, property and trust registries, tax, supervisory information databases, etc.

175. The FIU has concluded bilateral MOUs with the Police and Customs authorities. These memoranda are needed to ensure that the FIU has timely access to information through these bodies. The law does not vest the FIU with its own specific right to obtain information, and does not define the types of information or its scope for fulfilling its core functions. A specific MOU with Inland Revenue to obtain non-public tax information would be helpful to clarify the scope of tax information required for the FIU to properly analyze and investigate matters.

Additional Information from Reporting Parties (c. 26.4):

176. Pursuant to the FIU Act Sec.(4)(2)(b), where there are reasonable grounds to suspect that a relevant offense (as defined in the FIU Act to include POCA and UNATMA offenses) has been committed, the FIU may require the production of such information (excluding information subjected to legal professional privilege) from FIs or persons engaged in a relevant business activity that the FIU considers necessary for the purpose of investigating the relevant offense. While this authority is sufficiently broad to allow the FIU to obtain information from other reporting entities from the one that filed the SAR, the legislation contains a two-part requirement to exercise this authority. First, the FIU needs reasonable grounds to suspect that a relevant offense has been committed, and second, the information that is sought must be necessary for the purpose of investigating the relevant offense. It is the mission’s view that, at most, only one threshold should apply as a basis for the FIU to obtain information from other reporting parties. Of the two, only the first requirement should apply as the latter requires the FIU to move entirely to investigating an offense rather than conducting intelligence analysis of the information obtained. However, even this lesser threshold may be too high to obtain information relevant to carrying out the statutory function to support the analysis of financial intelligence information obtained from SARs. In addition, the FIU should have specific legal authority to go back to the reporting party filing the SAR for any reason connected to that filing without qualification. It should be noted that in practice, the FIU finds that approximately 25 percent of SARs filed require additional information to complete the filing in accordance with the SAR filing requirements and reports that in all requests information has been provided to the FIU.

Dissemination of Information (c. 26.5):

177. The FIU is required to provide information subject to any conditions specified by the Minister of Finance, to the Commissioner of Police where the information may relate to the commission of an offense. In practice, there is less need to disseminate information outside the FIU to other police officers and the DPP is because the FIU houses police and customs officers who conduct investigatory functions. The expected finalization of MOUs with the Commissioner of Police, Customs, and Immigration will clarify the basis for dissemination from the FIU to these agencies. (Post mission, the authorities informed that MOUs have been signed by the FIU with the Police and Immigration Departments but that the MOU with the Customs Department was still pending.) In addition, the specific authorizations granted by the DPP to conduct functions under POCA and UNATMA reduce the use of and need for formal dissemination processes.

Operational Independence (c. 26.6):

178. The FIU reports to the Minister of Finance, who is also the Prime Minister, the Minister of Legal Affairs, and Minister of National Security. This raises an issue of whether the FIU can operate independently without undue influence. The Director General of the Ministry of Finance, who is the second in command of the ministry, is the Chair of the NAMLC, and also reports to the Minister of Finance. The NAMLC itself also reports to the Minister of Finance.. In practice, FIU officials indicate that their work at the operational level is conducted in accordance with the strategic plan developed by the FIU’s director in consultation with specific members of the NAMLC (including the DPP and Commissioner of Police). In addition, the Director of the FIU appears to exercise independent authority to hire and fire FIU staff, with what is described by the FIU personnel as perfunctory approval of the Minister upon the recommendation of the Director of the FIU. The mission was not aware of instances of undue influence or interference from other persons or parties.

Protection of Information Held by FIU (c. 26.7):

179. The FIU has a secure computer database system and informs that SARs themselves are not disseminated beyond the FIU premises. The premises of the FIU are protected by electronic entry locking systems and surveillance cameras, and remote monitoring by a security firm 24 hours per day. The reception desk at the FIU entrance is staffed by two administrative officers, who may be assisted by an office attendant, with the objective that during operational hours that one person is constantly monitoring visitor entry. Persons entering the FIU premises, they are required to identify themselves via intercom to administrative staff before access is granted.

180. Despite these measures, additional security measures to protect the physical access to the FIU could be implemented. At the initial entry, the wall separating the FIU from the rest of the building premises is wooden, which could be vulnerable. In addition, the premises are frequently accessed by messengers and reporting entities’ employees or agents that deliver SARs to the FIU which should call for stricter confidentiality/security safeguards in the receipt of SARs and other confidential information. SARs are delivered in hard copies rather than electronically, and the number of persons entering the FIU premises can be quite high. So long as SARs are delivered manually in hard copy, and FIU’s acknowledgements of receipt are delivered in a similar manner, there will be a risk of potential in transit loss or interception of confidential information. In this respect, an electronic SAR filing and acknowledgment system should be considered as a more secure alternative.

Publication of Annual Reports (c. 26.8):

181. Section 8(1)(b) FIU Act requires filing of an annual report with the Minister of Finance for purposes of reviewing the work of the FIU. This report is not published but the FIU Act Section 8(2) requires that the annual report be submitted to the House of Assembly for its review, but this report itself is not published or disseminated in the public domain. While there are quarterly and other periodic disclosures through newsletters and to the media, the issuance of annual reports on the FIU’s activities would be useful to raising the FIU’s profile and engaging public awareness. Nevertheless, the FIU has sent out to reporting entities and other stakeholders (including law enforcement) some sanitized information on typologies and trends, through its periodic newsletters.

Membership of Egmont Group (c. 26.9):

182. The FIU became a member of the Egmont Group in July 2003.

Egmont Principles of Exchange of Information Among FIUs (c. 26.10):

183. The FIU has adopted Egmont’s Principles of Exchange of Information Among FIUs. Moreover, the FIU Act Section 4(2)(f) allows it to enter into any agreement or arrangement in writing with a foreign FIU, which the Minister considers necessary for the discharge of its functions. To date, 9MOUs have been executed. Furthermore, through the Egmont secure website, the FIU regularly responds to requests from other FIUs. The FIU has adopted a specific and clearly-defined standard operating procedure for the provision of assistance to foreign FIUs and foreign law enforcement agencies. Further consideration should be given to providing a specific legal basis for direct FIU to foreign law enforcement assistance. The authorities inform that nearly all law enforcement requests, in practice, are channeled through their FIUs.

Effectiveness of Implementation

184. The FIU is at the forefront of AML/CFT efforts in SVG, and is the single most developed AML/CFT institution in the country. It leads operational implementation of the authority under POCA and UNATMA and is the primary contact for reporting entities and the public on AML/CFT issues. In this regard, the quality and professionalism of its staff is considered to be high, as has shown concrete operational results through its competency in a number of legal actions, such as the number of cash detention and forfeiture orders, production orders and search warrants, in the context of ML and predicate offense investigations and prosecutions. Their participation in investigations has resulted in successful prosecutions, convictions and forfeitures. As noted by the authorities, the FIU is one of few in the region to have fully developed successful ML prosecutions. The FIU’s level of cooperation and assistance with foreign counterparts also supports the effectiveness of its operations. In this connection, however, it should seek to enter into MOUs with other countries where SVG registered FIs and entities operate or are managed, e.g. with Liechtenstein.

185. However, weakness in effectiveness was noted in a few key areas. First, the FIU seems to emphasize its law enforcement and prosecutorial activities more than its analytical function. This has the effect of limiting its analysis and financial intelligence outputs for the law enforcement purposes. The composition of the FIU staff, which is predominantly law enforcement and prosecutorial in nature, (at the time of the mission its core professional staff consisted of only two analysts as compared to five police and customs investigators, and three lawyers out of 14 professionals) may partly explain this tendency. There has also been a decline in the analysis of SARs in the last four years: in 2005 and 2006, 100 percent of the 108 and 118 SARs received were analyzed, respectively; in 2007, 150 out of 190; and in 2008, 101 out of 489 (see box, Analysis, para. 424). Second, in over six years of operation, the FIU has not developed a single prosecution domestically of an ML or predicate offense arising directly from the intelligence analysis of SARs originated information. The centerpiece of the FIU’s key outputs – i.e., the number of investigations and prosecutions of ML and predicate offenses – are not a product of its primary statutory function but arise more from the ancillary authority of police and investigators who are assigned to and housed in the FIU. Thus, its statutory role as the national central authority to receive, analyze and disseminate financial intelligence submitted in SARs is not yet operationally its centerpiece function, and is not fully effective. This statutory analytical role needs to be strengthened and prioritized both to provide value added to the efforts of reporting entities and to complement preventive measures, and to provide a more useful input to the investigation function of the FIU. The FIU’s effectiveness in receiving useful SAR information analyzing its contents is at risk of becoming entirely subsumed within the investigative function, as it currently so operates. In this regard, the FIU should revise its operational procedures to ensure that it provides adequate weight and attention to the analysis of the financial intelligence obtained from SARs, even if law enforcement personnel are primarily responsible for this analysis. Moreover, the authority of the FIU to obtain information from other governmental bodies needs to be strengthened through more formal means, including finalizing MOUs. Greater consideration should be given to including other staff, e.g. legal and accounting/forensic accounting, at the analytical level. Second, the structure, composition of its personnel and its reporting lines could compromise the independence of the FIU operationally. Clarifying the FIU’s independence would also serve to strengthen the control mechanisms for dissemination of confidential SAR information; while the FIU states that the SARs remain within the FIU premises, as required under penalty of law, the existing reporting structure does not legally ensure that dissemination of actionable intelligence is controlled.

Legal Framework:

186. Both POCA and UNATMA specify authority of law enforcement, prosecution and other competent authorities for investigation, prosecution and for confiscation and freezing. Under POCA Section 35, either the police or DPP may apply to the Court for a production order related to a relevant offense. In addition to the powers specified for ML and FT offenses, similar designations of powers are provided in the DTOA No. 45 of 1993. The CC Cap. 124 authorizes the police officers to search persons and premises for information.

Designation of Authorities ML/FT Investigations (c. 27.1):

187. (See Rec. 26 above.) The FIU is the principal body undertaking ML investigations and prosecutions, as well as seizure and forfeiture of cash and property related to ML (none with respect to FT so far). Both POCA and UNATMA vest specific investigation and prosecution powers for ML and FT with the Police and DPP respectively, with a clear division of responsibility between the two functions. However, operationally, the FIU conducts most of the front-line law enforcement activities de facto through the assignment of police and customs officers to the FIU and specific designations by the DPP of FIU lawyers to undertake prosecutorial mandates. The presence of these law enforcement officials makes the FIU, for all practical purposes, a self-contained AML/CFT competent authority. The investigative powers of the FIU, however, derives solely from the authority vested in the law enforcement officers assigned to it. This is not uncommon in some commonwealth countries in the Caribbean and it has worked reasonably well in practice. Nevertheless, there should be additional definition and separation of the respective responsibilities of the FIU per se and the Police/Customs authorities in ML and FT investigations; to this end, MOUs between the FIU and the Police and Customs authorities should be finalized to define the scope of information sharing and separation of functions. (Post mission, the authorities informed that MOUs have been signed by the FIU with the Police and Immigration Departments but that the MOU with the Customs Department was still pending.)

188. The DPP is constitutionally responsible for all criminal prosecutions in SVG but, due to inadequate staff, on a case by case basis, the FIU prosecutes cases on its behalf. To allow the FIU to conduct these activities directly, the DPP is required to sign off on each of the FIU’s court filings, essentially deputizing FIU lawyers as assistant DPPs. The Customs Service has a limited but related law enforcement authority regarding cash seizures. However, there have been some coordination issues as described in Section 6.1 below.

189. In addition to the authority in POCA and UNATMA, there are specialized units within the Police that complement the functions of the FIU. The major crimes and drug squad units of the RSVG Police Force conduct ML and predicate offense investigations in coordination with the FIU. In particular, the increase in drug transshipment operations in SVG have required enhanced coordination between the FIU and the Police. To facilitate this arrangement, a MOU has been agreed in principle between the Police and FIU to memorialize and clarify their respective roles. The Customs Service has some related authority to pursue customs law violations, however, some unevenness in coordination with the FIU has raised concerns. These concerns may be mitigated by the adoption of a Customs-FIU MOU, which has been agreed in principle between the FIU and the Customs. (Post mission, the authorities informed that MOUs have been signed by the FIU with the Police and Immigration Departments but that the MOU with the Customs Department was still pending.)

Ability to Postpone/Waive Arrest of Suspects or Seizure of Property (c. 27.2):

190. Neither POCA, UNATMA, nor the CC provide specifically for the waiver or postponement of arrest for the purpose of identifying suspected persons or seizing of money. Section 49(2) of POCA authorizes court-approved continuation of the detention of cash, “while its origin or derivation is further investigated; this allows for the postponement of the arrest of the suspected person and the seizure of the cash so as to identify other persons involved or for evidence gathering persons”. Furthermore, the authorities inform that both waiving and postponement of the seizure of property, either by the customs or police, have been used in specific ML investigations targeting drug traffickers, which ultimately resulted in arrests for ML and predicate offense prosecution. The DTOA, provides specific authority for postponing of seizures, in Sections 6, 13 and 18.

Additional Element—Ability to Use Special Investigative Techniques (c. 27.3):

191. In practice, specific investigative techniques such as controlled delivery are used on a case by case basis. The DPP has suggested that implementing wire tapping authority may be of benefit to ML and FT investigations in SVG. However, implementing such wire tapping and related authority within the Eastern Caribbean region has been considered from time to time but without much political success.

Additional Element—Use of Special Investigative Techniques for ML/FT Techniques (c. 27.4):

192. The authorities cite two major joint controlled delivery operations with the Bermuda FIU leading to the seizure of $103,000 and $1.7 million (both USD) in 2007-2008, respectively. The latter case has led to charges against two persons for ML that are awaiting prosecution. No other special investigative techniques are regularly used; wire-tapping is not legally authorized for ML/FT.

Additional Element—Specialized Investigation Groups & Conducting Multi-National Cooperative Investigations (c. 27.5):

193. As stated above, because of the structure and composition of the FIU, it in effect operates as a specialized unit responsible for nearly all aspects of investigating and prosecuting ML and FT offenses. However, the FIU is not designated by statute as the specialized investigation entity but so operates de facto due to the composition of its personnel. Authorities cite the three successful confiscation orders and numerous restraint and detention orders as evidence of the benefit of the FIU’s consolidated operations. In addition, there are discussions between the domestic law enforcement authorities and foreign counterparts for cooperative investigations. The recent detention of US $1.7 million and property and the ML charges are cited as successful outputs.

Additional Elements—Review of ML & FT Trends by Law Enforcement Authorities (c. 27.6):

194. The FIU is the primary authority monitoring for trends used by suspected criminals and money launderers. The FIU documents these trends, including typologies, in quarterly and annual reports that are submitted to the Minister of Finance and the NAMLC. The annual report is also presented to the House of Assembly.

Ability to Compel Production of and Searches for Documents and Information (c. 28.1):

195. Chapter V of POCA provide specific authority for production orders, search warrants of persons and property, and monitoring orders for FIs in connection with ML and predicate offenses. While UNATMA does not contain similar specific language in relation to FT offenses, the authorities cite the Sections 11 and 12 of the Police Act, Cap. 280 that allows them to compel production and conduct searches of property and persons. In addition, because FT offenses are predicate offenses for ML that may generate proceeds of crime, the authorities are of the view that the specific authority under the POCA is sufficient to cover FT. However, the POCA provisions have not been used in relation to FT-related investigations mainly because there have been no such FT investigations. Moreover, the extension of POCA authority to compel production or and searches for documents and information directly to FT offense may be subject to challenge, so the general provisions in the Police Act would be the sole basis upon which to compel production of and searches for documents and information related to FT.

Power to Take Witnesses’ Statement (c. 28.2):

196. Section 12 of the Police Act Cap. 280 authorizes police officers to take witness statements, which are admissible in court or any other trial. The authorities inform that such witness statements are regularly procured in ML and predicate offense investigations. In addition, to the authority of the police, the courts may compel witnesses to provide testimony.

Effectiveness of Implementation

197. The legal framework is sufficient for the designation of law enforcement authorities for ensuring that ML and FT offenses are properly investigated. The execution of ML and FT offenses falls almost entirely to the personnel at the FIU, by virtue of its composition of police and customs officers, and lawyers that receive specific delegations from the DPP. The FIU has therefore been transformed into the agency that takes the lead role for a broad range of law enforcement actions related to ML and FT. Competent authorities may compel production of, search persons and premises for and seize and obtain records, information or other evidence and may compel witness testimony for ML offenses; the authority in for FT is less clearly defined in the law.

198. The FIU, in consultation with the DPP, (and with specific delegation from the DPP) has obtained production orders as follows:

Table 14:

Table 14:

Year	Number of Production Orders
2004	21
2005	34
2006	13
2007	13
2008	28
Total	109

View Table

Table 14:

Year	Number of Production Orders
2004	21
2005	34
2006	13
2007	13
2008	28
Total	109

199. [See Rec.10 on effectiveness of record keeping.] Notwithstanding the above, the authorities should review the efficiency and effectiveness of their ability to compel production of records etc., to conduct searches, and to seize and obtain records etc., in cases where the records and persons that would be the subject of such action are located in other countries. In this regard, the mission noted that a number of the international (offshore) FIs and persons that hold manage entities and records are physically domiciled outside of SVG.

Legal Framework:

200. Customs (Control and Management) Act No. 14 of 1999, as amended by the Customs (Control and Management)(Amendment) Act No. 43 of 2002, the Customs (Control and Management)(Amendment) Act No. 4 of 2007, and the Customs (Control and Management)(Amendment) Act No. 33 of 2007 (collectively the CCMA) and Statutory Rule and Order No. 33 of 2001, the Prescribed Amount (Foreign Currency) Order 2001 (SR&O No. 33).

Mechanisms to Monitor Cross-border Physical Transportation of Currency (c. IX.1):

201. Pursuant to Section 81(1) of the CCMA, SVG uses a dual declaration and disclosure system requiring all persons making a physical cross-border transportation of currency or bearer negotiable instruments in an amount exceeding EC$10,000 (pursuant to Part I, item 20 of the Third Schedule to the CCMA). It requires persons to submit a truthful written or oral declaration at the request of a customs officer. According to the authorities, the written declaration requirement applies only to passengers arriving by air. A targeted disclosure system is used for those passengers departing by air as well as passengers arriving or departing by sea, based on intelligence developed by the Customs Department. The written declaration is required to be made on the official customs declaration form in accordance with SR&O No. 33. Under Section 26(1)(b), false declarations to customs officers relating to incoming packages may result in forfeiture. In addition, according to the authorities, containerized cargo is also covered by Section 81(1) of the CCMA.

Request Information on Origin and Use of Currency (c. IX.2):

202. Pursuant to Section 81(2) of the CCMA, all persons entering or leaving SVG are required to answer questions of customs and police officers.

Restraint of Currency (c. IX.3):

203. (a) Where there is a suspicion that currency is related to money laundering or terrorist financing, customs or police officers may seize and detain the cash for up to 48 hours in accordance with Section 49(1) of POCA with respect to ML and Section 13(2) of UNATMA with respect to FT. Any additional detention must be authorized by a magistrate under Section 49(2) of POCA or Section 14 of UNATMA for ML and FT, respectively. (b) In respect to a false written or oral declaration, currency may forfeited under Section 81(3) of CCMA if not declared, and, under Section 81(4) any person failing to declare may be fined for so doing. Under Section 108 of the CCMA, any person who knowingly or recklessly makes or signs a declaration that is materially false commits an offense and currency may be forfeited. In addition, Section 125 of the CCMA gives the authority to a customs or police officer to seize or detain anything (including currency) that is liable for detention and forfeiture under any customs enactment. Section 29(1)(f) allows detention where currency is concealed in a manner intended to deceive.

204. Retention of Information of Currency and Identification Data by Authorities when appropriate (c. IX.4): Information relating to currency or bearer negotiable instruments that are declared or otherwise detected, including the amount and the identification of the bearer(s), are retained by Customs forming part of the statistics and available for use by the Customs Intelligence Unit and where appropriate, can be shared with other key law enforcement agencies including the FIU and various units of the Police Department. Please see chart at c. 30.2 below.

Access of Information to FIU (c. IX.5):

205. The Customs Department uses an internal procedure which requires reporting of suspicious transportation incidents to the Customs Intelligence Unit by customs officials at the ports. According to the authorities, the Customs Intelligence Unit is responsible for providing the information directly to the FIU in a timely manner. This process is facilitated by the assignment of two members of the Customs Intelligence Unit to the FIU and through an informal procedure that is being used by Customs and the Police which will be formalized through a MOU between the two agencies. A simplified form is used by customs officials at cash collecting centers (designated points at seaports and airport) to report certain types of suspicious payments; such information may, if necessary, be transferred to a SAR-type form to be submitted by Customs to the FIU. The form also includes a list of red flags relating to payments of customs duties, such as a single transaction paid for with more than one checking account, payment of a single transaction by significant amount of cash and the payment of a significant amount of duties by both cash and check. Hence, the information about suspicious payments and movements of cash appears to be provided to the FIU on a timely basis.

Domestic Cooperation between Customs, Immigration and Related Authorities (c. IX.6):

206. While no formal cooperation arrangements (e.g. MOUs) have been established with other departments, according to the authorities, the Customs Department, the immigration authorities, the Special Service Unit of the police and the FIU have established a good working relationship. There is an Intelligence Office established at the E.T Joshua Airport, the main Airport where international passengers are processed, that is occupied jointly by the Customs Intelligence Unit and the Police Special Service Unit. Information relative to passengers entering or leaving SVG is collected from the offices of the Immigration and Customs on a daily basis by officials assigned to this office. Where there is intelligence relating to any special monitoring of passengers, that information is shared with the Intelligence Office where dissemination will take place by customs and police officers to their respective departments.

207. International Cooperation between Competent Authorities relating to Cross-border Physical Transportation of Currency (c. IX.7): The Customs Department is a member of the Caribbean Customs Law Enforcement Council (CCLEC). According to the authorities, cooperation, information sharing and mutual assistance is facilitated in respect of key issues including ML and FT through a MOU in 1989 established between and among the membership, currently 36 signatories. The Membership comprises customs departments from the Caribbean and Latin America as well as Canada, France, the Netherlands, Spain, the United Kingdom and the US. According to the authorities, CCLEC has also entered into MOUs with key enforcement agencies such as Interpol and World Customs Organization thereby widening the information network.

Sanctions for Making False Declarations / Disclosures (applying c. 17.1-17.4 in R.17, c. IX.8):

Sanctions for Cross-border Physical Transportation of Currency for Purposes of ML or TF (applying c. 17.1-17.4 in R.17, c. IX.9):

c. 17.1: The offenses in Sections 41–43 of POCA would apply in relation to ML, and Sections 3–6 of UNATMA relating to FT, and the criminal penalties for those offenses are found in Section 47 of POCA and Section 7 of UNATMA, and in each case are the same: On summary conviction, a fine of up to EC$500,000 or imprisonment for five years or both, and on conviction on indictment, an unlimited fine or imprisonment of up to twenty years or both. In addition, under Section 29(1)(f) of the CCMA, conviction of an offence is subject to a fine not exceeding $5,000 or three times the value of the currency, whichever is greater.

c. 17.2: The DPP is the sole authority in SVG to prosecute criminal cases, which, in practice, is accomplished with the assistance of the FIU lawyers and police prosecutors. The Customs Department has the power to impose administrative fines.

c. 17.3: See the responses to c. 2.3 and c. II.4 above.

c. 17.4: See response to c. 17.4 under c. IX.8, above.

Table 15:

Sanctions for customs offenses (all references are to CCMA)

Table 15:

Sanctions for customs offenses (all references are to CCMA)

Customs Offenses	Legislative Reference	Penalty
Disclosure of confidential information or records (tipping-off offence covering customs and police officers).	Section 6	A fine not exceeding EC$5000 or imprisonment not exceeding twelve months or both.
Importing goods, including currency, concealed or packed in manner appearing to be intended to deceive.	Section 29	A fine not exceeding EC$5000 or three times the value of goods involved and goods forfeited.
Failure to declare anything contained in baggage.	Section 81	A fine not exceeding EC$5000 or three times the value of goods involved.
False declaration. a. Makes, signs, caused to be signed, delivers any declaration, notice, certificate or other document b. Makes a statement in answer to any question put to him by an officer which is materially false.	Sections 108(a) & (b)	A fine not exceeding EC$5000, currency liable for forfeiture .
a. Fraudulent Evasion: Fraudulent intent in relation to any goods, in any way concerned in an evasion of any prohibition or restriction.	Sections 111(2)(b)	A fine not exceeding EC$10,000 or five years imprisonment or both.

View Table

Table 15:

Sanctions for customs offenses (all references are to CCMA)

Customs Offenses	Legislative Reference	Penalty
Disclosure of confidential information or records (tipping-off offence covering customs and police officers).	Section 6	A fine not exceeding EC$5000 or imprisonment not exceeding twelve months or both.
Importing goods, including currency, concealed or packed in manner appearing to be intended to deceive.	Section 29	A fine not exceeding EC$5000 or three times the value of goods involved and goods forfeited.
Failure to declare anything contained in baggage.	Section 81	A fine not exceeding EC$5000 or three times the value of goods involved.
False declaration. a. Makes, signs, caused to be signed, delivers any declaration, notice, certificate or other document b. Makes a statement in answer to any question put to him by an officer which is materially false.	Sections 108(a) & (b)	A fine not exceeding EC$5000, currency liable for forfeiture .
a. Fraudulent Evasion: Fraudulent intent in relation to any goods, in any way concerned in an evasion of any prohibition or restriction.	Sections 111(2)(b)	A fine not exceeding EC$10,000 or five years imprisonment or both.

Confiscation of Currency Related to ML/FT (applying c. 3.1-3.6 in R.3, c. IX.10):

212. See the responses to c. 3.1–c. 3.6. In particular, Section 50 of POCA provides for the forfeiture of cash seized under Section 49 of that Act, and Section 16 of UNATMA provides for forfeiture of cash seized under Section 13 of that Act. In addition, currency is subject to forfeiture under the CCMA, Sections 29(1)(f), which deals with concealment of cash with intent to deceive a customs officer; 81(3), concealed or undisclosed currency; 83(4), currency concealed on board a vessel at the port or an aircraft at the airport; and 89(1) currency concealed in any building or place.

Confiscation of Currency Pursuant to UN SCRs (applying c. III.1-III.10 in SR.III, c. IX.11):

213. See the responses to c. III.1 – III.10.

Notification of Foreign Agency of Unusual Movement of Precious Metal and Stones (c. IX.12):

214. According to the authorities, since SVG is a member of the CCLEC, notification of such transaction would be made in a manner consistent with principles relating to cooperation and information-sharing provided in the MOU. As a copy of the MOU was not made available, the mission was not able to verify whether the MOU covers unusual movements or precious metal and stones.

Safeguards for Proper Use of Information (c. IX.13):

215. According to the authorities, information that is passed to the FIU is accomplished only through the Customs Intelligence Unit, a small specialized group. There are three data systems that are relevant, the first relating to the movement of vessels, the RCS (Regional Clearance System), which is controlled by CCLEC, the second is the RSS, (Regional Security System), and the third is the APIS (Advanced Passenger Information System); in each case information is entered into these systems by units of the Customs Department, and, with respect to the RSS and APIS, the Police Department. RSS and APIS are linked to INTERPOL Access to these systems is controlled by a password requiring authorization; only certain units of Customs and the Police have such access. According to the authorities, all three data systems cover information on cross-border transactions. As a result, there appear to be sufficiently strict safeguards in place to ensure proper use of information in the three databases.

Additional Element—Implementation of SR.IX Best Practices (c. IX.15):

216. According to the authorities, the Customs Department has adopted most of the best practices stated in the paper, including targeting of couriers, risk management and intelligence techniques, behavior analysis, domestic coordination with units of customs, police, coast guard, immigration and the FIU, and the use of RSS and APIS to alert other customs units regionally about high risk targets. One major area not covered is that the Customs Department does not routinely use scanners, x-ray equipment, and canine units in its work nor is such equipment and capabilities available to it.

Additional Element—Computerization of Database and Accessible to Competent Authorities (c. IX.15):

217. RCS, RSS and APIS are all computer-based systems. In addition, according to the authorities, a range of information is available on the internal database maintained by Customs, including profiling, prior actions of suspects, and personal data on suspects such as photographs. According to the authorities, all three data systems cover information on cross-border transactions.

Effectiveness of Implementation

218. Given the potential for ML or FT-related offenses that should be prosecuted in a court of law, it is not clear why the Customs Department continued until 2008 to use its administrative powers over those detected with undisclosed, suspicious or concealed currency to impose fines, accept an admission of guilt and discharge of liability, and then release the offender, who, if a foreign national or resident, would then be free to leave SVG. While the authorities have indicated that this administrative procedure is not routinely used and that there has been an unwritten policy in place since 2004 for the Customs Department to refer all such matters to the FIU, the ability of the DPP, the FIU and the Police Department to develop ML or FT cases could be inhibited given that such administrative procedures were being used as recently as 2008 as discussed immediately below. Finally, the range of administrative and criminal sanctions in the CCMA is not sufficient dissuasive given the amounts of money being forfeited.

219. Statistics provided by the Customs Department indicate that there were three administrative cases in 2005 (US$10,000 in forfeitures, US$2,100 in fines); 20 in 2006 (US$133,00 in forfeitures, US$6,300 in fines); seven in 2007 (US$115,00 in forfeitures, US$1600 in fines); three in 2008 (US$14,000 in forfeitures, US$2,700 in fines); and none in 2009 to date. In addition, the following statistics reflect cases referred to the FIU for forfeiture under Section 50 of POCA: four cases in 2005 (totaling US$40,000); three cases in 2006 (totaling US$15,000); no cases in 2007; one case in 2008 (US$15,000), and three cases in 2009 to date (totaling US$178,000). Hence, since 2006, more money has been forfeited by the Customs Department through the administrative process (US$262,000, exclusive of fines) than by the FIU through forfeiture cases (US$208,000). These numbers suggest at the very least that the administrative procedures are, if anything, more effective than the criminal forfeiture process.

Legal Framework:

225. The POCA 2001, as amended in 2002 and 2005, provides the basic AML/CFT requirements for FIs. These requirements are further elaborated in the 2002 POCA Regulations issued under the POCA. Prevention of Money Laundering Guidance Notes (GNs) have also been issued by the NAMLC. New Anti-Money Laundering Guidance Notes for the insurance sector have been prepared by the Ministry of Finance but as of mission date had not yet been issued to the industry and implemented, and are not used for purposes of this assessment. The mission advised that the procedure for issuing these guidelines should be consistent with the requirements of the POCA and the POCA Regulations which do not provide for the issuance of guidelines by the Ministry. In addition, the provision in the POCA Regulations that guidance are to be appended to the POCA Regulations should also be reviewed for consistency with the POCA provisions.

226. The NAMLC GNs represent non-mandatory good practice recommendations for covered institutions and are not Other Enforceable Means for purposes of this assessment. (See e.g. GN 60 stating that they are not mandatory). They are described and used in this report only for purposes of assessing the effectiveness of implementation to the extent that they are adhered to and can influence the nature of compliance with the Recommendations. However, the mission considered whether they meet the conditions as “drivers” for assessing effectiveness based on the following two FATF criteria:

• The first condition is only partially met. The GNs have been issued by the NAMLC which is an official body established by law under the POCA. These GNs are intended to have directional effect, that is, represent recommended good practice. They address some but not all of the issues in the essential criteria. In some cases, the GNs go beyond the law and POCA Regulations both by expanding or clarifying on the provisions contained in the POCA Regulations (positive) while in others they go against the POCA Regulations by purporting to limit its application (negative) such as the inclusion of exemption from identification requirements not contemplated in the POCA Regulations. For instance, GNs 49-51 provide exemptions from identification requirements for certain postal, telephonic, electronic, mail shots, off-the-page, and coupon business. These are not exempted in the POCA Regulations;

• The second condition is also only partially met. Some of the supervisory authorities have used the GNs as a guide for monitoring adherence to the POCA and POCA Regulations but some supervisors have only recently commenced onsite inspections for AML/CFT in some sectors, or only partially assessed for compliance, e.g. the insurance, credit unions. Some have not been assessed at all e.g. money remitters, the building and loan society, international insurance and mutual fund sectors. For these sectors in particular, there is no evidence that enforcement powers have been used in a general or specific case for non-compliance with the GNs.

227. Based on the above, use of the GNs as drivers for assessing implementation is limited and in most cases maybe insufficient to justify an upgrade in rating based on effectiveness of implementation. They will be analyzed, however, to reflect the general guidance such GNs provide for industry practice and considered in assessing implementation where relevant.

228. Schedule 1 of the POCA lists the FIs, DNFBPs and other businesses to which the applicable provisions of the Act apply. These cover all of the financial activities, most of the DNFBPs (not clear if Jewelers covers dealers in precious metals and stones but the authorities believe that it does and that barristers and solicitors cover attorneys. See Rec. 12 and 16 below) and other businesses (See Rec. 20 below), as listed in the Schedule (bolded words are those of the assessors):

Financial Institutions

• 1. A bank licensed under the Banking Act

• 2. A bank licensed under the International Banks Act 1996

• 3. A building society registered under the Building Societies Act

• 4. An insurance company registered under the Insurance Act

• 5. International Insurance business licensed under the International Insurance Act 1996

• 6. Registered agents and trustees licensed under the Registered Agent and Trustee Licensing Act 1996 (DNFBPs)

• 7. A Trust licensed under the International Trusts Act 1996

• 8. A person licensed to operate an exchange bureau

• 9. A person licensed as a dealer or investment adviser

• 10. A person who carries or cash remitting services

• 11. A person who carries on postal courier services (other business)

• 12. Mutual Funds licensed under the Mutual Funds Act 997

• 13. Credit Unions

Other relevant business activities

• 14. Lending (including personal credits, factoring with or without recourse, financial or commercial transactions including forfeiting check cashing services)

• 15. Finance leasing

• 16. Venture risk capital

• 17. Money transmission services

• 18. Issuing and administering means of payment (e.g. credit cards, travelers’ checks and bankers’ drafts)

• 19. Guarantees and commitments

• 20. Trading for own account customers in:

  • a. money market instruments (checks, bills, certificates of deposit etc.)

  • b. foreign exchange

  • c. financial futures and options

  • d. exchange and interest rate instruments; and

  • e. transferable instruments

• 21. Underwriting share issues and the participation in such issues

• 22. Money broking

• 23. Investment business

• 24. Deposit taking

• 25. Bullion dealing

• 26. Financial intermediaries

• 27. Custody services

• 28. Securities broking and underwriting

• 29. Investment and merchant banking

• 30. Asset management services

• 31. Trusts and other fiduciary services (includes Trust settlement per POCA Regulations)

• 32. Company formation and management services

• 33. Collective investment schemes and mutual funds

• 34. Car dealerships

• 35. Jewelers

• 36. Real estate agents

• 37. Casinos

• 38. Internet gambling

• 39. Pool betting

• 40. Lottery agents

• 41. Barristers-at-law and solicitors

• 42. Accountants

• 43. Charities

229. Insurance companies are explicitly covered under the POCA and POCA Regulations per Schedule 1 of the POCA. However brokers and agents are not so explicitly covered, except under the general category of as ‘financial intermediaries’ under Relevant Business Activities. The interpretation of this with respect to the coverage of brokers and agents (and sales representatives) varies across the industry and the authorities and should be clarified in the law.

230. In addition, mutual fund underwriters are not regulated entities in the mutual funds law but the authorities maintain that they are not aware of any in operation and that these entities will be deleted from the Mutual Funds Act. In addition, there are two known lending operations that are not subject to regulation and supervision. Until an investigation is conducted to ascertain the extent and nature of their operations, they would effectively fall outside the scope of the POCA, POCA Regulations and Guidance Notes. As noted above, post mission the authorities indicated that they have conducted an investigation of these entities and that a determination is to be made on whether they should be regulated.

231. In addition to the above entities and activities, the POCA Reg. 3 provides that any person or entity not falling within the definition of a “regulated institutions” (these are those listed in Schedule 1 of the POCA above) may apply to the Minister of Finance (Minister) to become a “voluntary regulated institution”. Reg. 3(4) requires the Minister to issue a list of such institutions and to-date no such list has been issued by the Minister since no application has been made to/approved by the Minister.

232. For purposes of this report, the following FIs are in operation in SVG and assessment of compliance will be based on these entities. Where there are FIs that are not covered by a supervisory regime that should or are covered under the AML/CFT legislation, these are discussed above under Section 3.1 above, and in the other applicable sections of the report.

Table 16:

Table 16:

Domestic FIs	No.	Regulator
Banks (includes securities broking by banks)11	6	ECCB
Insurance companies (9 life)	23	Ministry of Finance12
Brokers for insurance company	6	Ministry of Finance
Agents for insurance	10	Ministry of Finance
Sales representatives for insurance	85	Ministry of Finance
Pension fund plans	14	Ministry of Finance
Money transfer services	4	Ministry of Finance
Credit unions (active)	9	Registrar Credit Unions
Building society	1	None
Sub-total Domestic	158
International (Offshore) Financial Entities	No.	Regulator
Offshore banks	6	IFSA
International insurance companies	9	IFSA
International insurance managers/brokers	3	IFSA
Mutual funds	45	IFSA
Mutual fund managers/administrators	30	IFSA
Sub-total Offshore	93
Total	251

View Table

Table 16:

Domestic FIs	No.	Regulator
Banks (includes securities broking by banks)11	6	ECCB
Insurance companies (9 life)	23	Ministry of Finance12
Brokers for insurance company	6	Ministry of Finance
Agents for insurance	10	Ministry of Finance
Sales representatives for insurance	85	Ministry of Finance
Pension fund plans	14	Ministry of Finance
Money transfer services	4	Ministry of Finance
Credit unions (active)	9	Registrar Credit Unions
Building society	1	None
Sub-total Domestic	158
International (Offshore) Financial Entities	No.	Regulator
Offshore banks	6	IFSA
International insurance companies	9	IFSA
International insurance managers/brokers	3	IFSA
Mutual funds	45	IFSA
Mutual fund managers/administrators	30	IFSA
Sub-total Offshore	93
Total	251

233. There is a systemically important building and loan society with about 25,000-30,000 clients and assets of approximately EC$252 million in assets. This entity is not subject to a supervisory or regulatory regime for prudential or AML/CFT purposes but is covered by the AML/CFT legislation. The intention is for the Ministry of Finance-SRD to assume supervisory responsibility along with credit unions later in 2009. Post mission, the authorities indicated that an onsite inspection of this building society has been conducted in August 2009. No indication was given as to whether it included an AML/CFT component.

234. Section 46 of the POCA requires FIs that carry on business listed in Schedule 1 of POCA to keep and retain records relating to their financial activities in accordance with the POCA Regulations issued under Section 67 of the Act. These will be further discussed below and in Rec. 10. Sections 42-45 also make provisions for reporting of suspicious activities, tipping-off, etc. for FIs. These are elaborated under Rec. 12, 13, 14 and SRIV in this report. Furthermore, Section 46 requires/provides under subsections (2) FIs to pay special attention to complex and other transactions (See Rec. 11); (3) and (4) reporting of suspicious activities to the FIU (Recs.13 and 14); (5) exemption of liability for reporting suspicion (Recs. 14 and 16); (6) and (7) duty to develop and implement a written training and compliance program to ensure and monitor compliance with the POCA Regulations issued under the Act. (Rec. 15). The POCA also established the FIU and the NAMLC.

235. The Drugs Trafficking Offenses Act also contains provisions under Sections 30-33 with respect to FIs listed in that Act. Section 30 requires FIs to retain for a minimum prescribed period, the original or other retrievable form of copies of documents, inter alia, with respect to transactions, accounts, deposit box facilities, wire transfers and transmission of funds, and loans (Rec. 10). Transactions of EC$5,000 or less are excluded. For this purpose FIs are domestic banks, any other licensed financial institution under any Act, trust companies, finance companies or any other deposit-taking company.

236. The UN (Anti-Terrorism Measures) Act, 2002, as amended, also contains provisions for FIs. In particular, Section 10 imposes a duty on persons or citizens to provide information with respect to terrorist property; Section 10A(1) for reporting of suspicious transactions relating to terrorist acts; and Section 10(B) and (C) penalty for failure to report suspicions. (See Rec. 13, 14, 17 and SRIV.)

237. The POCA POCA Regulations establish mandatory customer identification and other AML/CFT requirements for FIs. In particular, it makes provision for:

• Identification verification;

• Recordkeeping;

• Monitoring and verification;

• Internal reporting procedures and compliance officer (ML reporting officer or MLRO);

• Training;

• Offenses and penalties;

• Accounts in anonymous and fictitious names at time the POCA Regulations were issued;

• Schedule: Procedures for verification of identity of customers.

238. In summary, many of the legal requirements in the POCA Regulations are to establish/institute and maintain procedures that require FIs and persons involved in relevant business activity as defined, to take certain action. The following analysis will primarily focus on technical compliance with the FATF Recs. based on the requirements established under the POCA and the POCA Regulations. Therefore, reference in the analysis below to the lack of requirements, refers to the lack of legal, regulatory or other mandatory and enforceable requirements, and not to the GNs.

Note:

239. In this report, international banks licensed in SVG under the International Banks Act will be referred to as either international (offshore) banks or simply offshore banks simply to distinguish from other non-“offshore” foreign banks operating in or outside of SVG, and is not intended to cast any adverse connotation on any particular bank or sector.

Prohibition of Anonymous Accounts (c. 5.1*):

240. There are no provisions in the POCA or the POCA Regulations that explicitly prohibit the keeping of anonymous or fictitious name accounts. However, the customer identity verification requirements in the POCA Regulations (esp. POCA Regulations 4, 5, 6 and its Schedule) if strictly applied, would effectively avoid opening accounts under anonymous or fictitious names. In addition, Section 19(8) of the International Banks Act (for offshore banks) states that any account established by a licensee on behalf of a customer shall state the name and address of the customer and/or the beneficiary of the account.

241. Notwithstanding the above, Reg. 10 contains a lacuna with respect to anonymous and fictitious name accounts. The transitional provisions require FIs to establish the beneficial ownership of all “anonymous” accounts and accounts in obviously “fictitious” names within one year of the POCA Regulations coming into force. Where the beneficial owner cannot be established within one year, FIs are required to report these to the FIU. There is no explicit requirement to close such accounts which leaves the possibility of maintaining anonymous and fictitious name accounts that existed prior to the POCA Regulations. Guidance should be given in this regard, e.g. for closing them, or maintaining accounts on instructions from the competent authorities.

242. There are no regulatory provisions with respect to the treatment of numbered accounts which are permitted and treated differently from anonymous and fictitious name accounts in c.5.1.

Non-mandatory Guidance Notes:

243. There are no provisions with respect to this issue in the GNs.

When is CDD required (c. 5.2*):

Non-mandatory Guidance Notes:

248. The GNs elaborate on the above requirements, including with respect to the need for identification of joint applicants for business. In particular, it expands on the computation of one-off transactions recommending that for purposes of linking transactions, only those that take place within a period of less than three months should be linked. In addition, GN 80 states that FIs should conduct CDD when doubts arise as to the identity of clients, and GN 82 states that a report should be made the MLRO (compliance officer) if failure to complete verification raises suspicion.

Identification measures and verification sources (c. 5.3*):

249. Reg. 4 (1) (a) requires FIs to implement procedures that require their customers to produce satisfactory evidence of identity as soon as practical after first making contact with the FI, in accordance with the particulars set out in the Schedule to the POCA Regulations. If satisfactory evidence is not obtained, the business shall not proceed any further. One exception to this requirement is when there is suspicion of ML in which case the business can proceed but only in accordance with directions issued by the FIU, and only when they involve one-off transactions. This seems to be a reasonable exception requirement but should extend to business relationships as well. With regards to the identification verification procedures, the Schedule sets out the following key requirements:

Individuals (no distinction between residents and non-residents):

250. Name, address, date and place of birth, nationality, contact details, occupation, copy of passport or identity card and signature. In addition, information on the purpose and potential activity of the account (not of the business whole relationship) is required as well as information on the source of income and wealth, written authority to obtain independent verification of the information provided, and written confirmation that all credits to the account are and will be beneficially owned by the “regulated institution holder”. The terms “regulated institution holder” should be defined to remove any doubt as to which regulated institution it refers. There is also a general requirement to obtain any other document or evidence to establish the identity of the client. This requirement also applies to verification of identity of the beneficial owners of the regulated institutions themselves.

Corporate Entities (no distinction between local and foreign):

251. copy of certificate of incorporation, memorandum and articles, location of the registered office or RA of the corporate entity; resolution of the Board of Directors authorizing the opening of the account and conferring authority on the person who will operate the account, confirmation that the corporate entity has not been struck off the register or is not in the process of being wound up, names and address of all officers and directors of the corporate entity, names and addresses of the beneficial owners of the corporate entity except a publicly traded company, description and nature of the business including date of commencement of business products or services provided and location of principal business, purpose of the account and the potential “parameters” of the account (including size in the case of investment and custody accounts, balance ranges in the case of deposit accounts, and expected transaction volume of the account), written authority to obtain independent verification of any information provided, written confirmation that all credits to the account are and will be beneficially owned by the “regulated institution holder”, and any other official document and other information reasonably capable of establishing the structure of the corporate entity.

Partnerships or Unincorporated Businesses:

252. FIs are required to verify all partners or beneficial owners in accordance with the procedure for the verification of individuals and in particular: copy of partnership agreement (if any) or other agreement establishing the unincorporated business, description and nature of the business (including date of commencement of business, products or services provided, location of principal place of business), purpose of the account and the potential “parameters” of the account (including size in the case of investment and client accounts, balance ranges, in the case of deposit and client accounts and the expected transaction volume of the account), mandate from the partnership or beneficial owner authorizing the opening of the account and conferring authority on those who will operate the account, written confirmation that all credits to the account are and will be beneficially owned by the “regulated institution holder”, and any documentary or other evidence reasonably capable of establishing the identity of the partners or beneficial owners.

253. Reg. 6 states that once a FI has verified the identity of an “applicant for business”, no further verification is necessary so long as the “applicant for business” maintains a business relationship on a regular basis. In addition, where there has not been contact with the customer or there has not been a transaction in five years, the FI shall confirm the identity of the account holder.

254. There are no laws, regulations or other enforceable means that allow the application of identification requirements on a risk sensitive basis.

Non-mandatory Guidance Notes:

255. (See Rec. 9 for a more comprehensive discussion of introduced business and exemptions from customer identification.) Reg. 4 (9) sates that for purposes of establishing satisfactory evidence of identity or reasonable measure of identity, regard “may” be had to the guidance notes appended to the POCA Regulations. However, to date no such guidance notes have been appended but the NAMLC has issued industry wide non-mandatory Guidance Notes that elaborate on the above verification requirements.

256. While the GNs do not constitute laws, regulations or other enforceable means that allow the application of CDD requirements on a risk sensitive basis, the GNs 45-51 state that FIs are exempted from verification of identity requirements in certain cases. This is distinct from and broader than the simplified or reduced CDD that may be allowed under c. 5.9 below. Those clients exempted from verification fall into three broad categories as follows:

Licensed FIs:

257. Seven categories of “eligible institutions” licensed in SVG, or their equivalents in other jurisdictions, including: (i) domestic banks; (ii) international banks; (iii) building societies; (iv) domestic insurance companies; (v) international insurance companies; (vi) RAs and trustees; and (vii) mutual funds. [Note that GN 46 refers to seven “eligible” institutions listed in the Schedule to the POCA. However, the POCA has a much larger number of categories of institutions.]

258. For purposes of establishing whether exemption from identification of a customer is a foreign regulated institution, or is introduced by a foreign financial institution subject to AML laws equivalent to SVG, regard should be had to GN 53 and GN 162 which set out a list of 83 countries that may be used for such purpose. It is noted that for purposes of a customer that is a regulated financial institution (not the full range of relevant business activities contained in Schedule 1 of the POCA which includes non-financial entities), c. 5.9 allows for simplified or reduced CDD, not a complete exemption. And even in the case of Rec. 9 for introduced business (See Rec. 9 below), there is a need for an FI to immediately obtain information on the customer from the introducer, and be able to obtain the underlying documentation (which would allow for verification of identity) promptly on request. Therefore, these exemptions seem to go beyond the FATF requirements.

Small one-off transactions:

259. These are consistent with the requirement to verify identity (but not conduct full CDD) of customers above the established threshold of EC$10,000. In addition, please note the comment under c. 5.2 with respect to the threshold exceeding the wire transfer requirements of US/Euro $1,000.

Introduced business:

260. GNs 53 and 162 relate to introduced/intermediary business covered under Rec. 9 which may also allow FIs the discretion not to verify identity in some cases. (See Rec. 9 below.)

261. GNs provide further details on verification methods that may be used by FIs, including for legal arrangements such as trusts which are not covered in the POCA Regulations (e.g. GNs 60-79). GN 65 also recommends obtaining bank and professional references directly from the issuers, which should be verified.

262. Part IV of the GNs also contain further sector-specific guidelines that would generally apply the exemptions from the verification to Banking, Investment Business, Fiduciary Services and Insurance business. But as discussed above, these would go beyond what is required under the FATF Recs.

Identification of Legal Persons or Other Arrangements (c. 5.4):

263. Corporate Entities (See c. 5.3 above.) c. 5.4 (a)*. The Schedule to the POCA Regulations requires that a FI obtains the resolution of the Board of Directors authorizing the opening of the account and conferring authority on the person who will operate the account. It does not explicitly require verification of the identity of the person so authorized.

264. The Schedule of the POCA Regulations require FIs to obtain certified copies of incorporation documents, address, directors and officers and beneficial owners of the entity, except for publicly traded companies. As indicate in the previous paragraph, the resolution authorizing the opening and operating of the account is required but not identity of the person so authorized, and this may be a narrow power to bind the legal entity.

Partnerships or Unincorporated Businesses (See c. 5.3 above):

265. Verification of all partners and beneficial owners of incorporated businesses is required under the Schedule to the POCA Regulations. This includes a copy of the partnership or other agreement establishing the unincorporated business, location of principal place of business, mandate from the partnership or beneficial owner authorizing the opening of the account and authority to operate it. The FIs can also require any other document or evidence to assist in establishing the identity of partners or beneficial owners.

266. There are no other requirements in the POCA or POCA Regulations for FIs to identify other legal arrangements such as trusts/trustees. There is a requirement to identify corporate entities, which would cover corporate trustees, but no specific identification requirements for FIs to identify the various parties to a trust relationship, that is in addition to the trustees, the settlors and beneficiaries, as provided for in the GNs for the trustees. The provisions for identifying unincorporated businesses is also not appropriate for trust relationships as the “agreement” establishing the business may not consistent with the concept and structure of a trust which may constitute a different type of instrument (e.g. deed, declaration, etc.) and which may be an oral trust relationship.

Non-mandatory Guidance Notes:

267. GN 39 states that for purposes of identifying corporate entities, FIs should include corporate trustees. While this would help meet the requirements of c. 5.4 if it were in the POCA Regulations, it would still be insufficient as non-corporate trustees are not covered. GN 38 also states that FIs should verify the identity of partners/directors of a firm who have authority to operate an account or “otherwise to give relevant instructions” as if they were directors or shareholders of a non-quoted corporate entity. In addition, it states that for a limited partnership, only the general partner needs to be identified unless limited partners are “significant investors” but these terms are not defined in the GNs.

268. The GNs (44) also state that for other legal arrangements such as associations, institutes, foundations, charities, etc. that are not firms or companies, all signatories “who customarily operate the account” should be identified. It is noted that GN 78 refers to the identification of parties to a trust by the trustees (as DNFBPs), and not to the identification of the trustee (corporate or non-corporate) by FIs.

Identification of Beneficial Owners (c. 5.5*; 5.5.1* & 5.5.2):

269. There is no explicit requirement in the POCA Regulations to identify beneficial owners except in the Schedule with respect to corporate and incorporated businesses. Reg. 4(5) requires FIs to establish and maintain procedures to identify persons on whose behalf an applicant for business appears to be acting for, that is, where the applicant is not acting as principal. This is not necessarily the same as identification of beneficial owners or beneficiaries. The Schedule to the POCA Regulations for individuals does not address this issue except for a rather unclear provision that requires FIs to obtain “written confirmation that all credits to the account are and will be beneficially owned by the regulated institution holder”. It is unclear what a “regulated institution holder” is but would also not be a sufficient requirement to identify beneficial owners or beneficiaries such as those of a trust. Para. 2 of this part of the schedule for individual customers also require identification of the beneficial owners of all “regulated institutions” which is confusing. Similar provisions are included for corporate entities, partnerships and incorporated businesses in the Schedule.

270. The Schedule to the POCA Regulations requires that for corporate entities, FIs are required to obtain information that includes the “names and addresses of beneficial owners of the corporate entity, except for a publicly traded company”.

271. For partnerships and incorporated businesses, the Schedule requires FIs to obtain verification of identify for all partners or beneficial owners, using procedures applicable to individuals under the Schedule.

272. For corporate entities, the Schedule to the POCA Regulations requires FIs to obtain information or official documentation that is “reasonably capable of establishing the structural information” of the entity. This may be interpreted as to include ownership and control structure information but is not explicit enough. There is a requirement in the Schedule to obtain the names and addresses of the beneficial owners of non-publicly traded companies as described above.

273. For partnerships and unincorporated businesses, there is no specific requirement to obtain information as to the ownership and control structure, only verification of identity of partners and beneficial owners.

274. Reg. 4(6) provides that, where an applicant for business (customer): (i) is being introduced to the FI by another regulated institution (both FIs and non-FIs as listed in Schedule 1 of the POCA); (ii) is acting for another (principal); and (iii) the applicant is another regulated institution (domestic or foreign), then it shall be reasonable for the FI to accept a written assurance from the applicant for business (the regulated institution) to the effect that evidence of the identity of the principal has been obtained and recorded under procedures maintained by the applicant. This requirement is very confusing and seems to go beyond the requirements for introduced business under Rec. 9 below. It seems to describe a situation where a SVG FI can rely on the identification of an underlying client conducted by a second tier regulated institution, that is, one that is itself introduced by another regulated institution. This issue is further discussed under Rec. 9.

275. While there are sufficient requirements to establish beneficial ownership of legal entities and arrangements covered by the POCA Regulations and the Schedule, a requirement as to the identity and information on natural persons that ultimately “control” a legal person or arrangement is not explicitly required, particularly with respect to trusts/trustees as clients of FIs. There is a need for provisions in the POCA Regulations, similar to those for trustees under para. 78 of the GNs, for FIs to identify settlors, beneficiaries, protectors in addition to the identification of trustees. (See c. 5.4 above.)

Non-mandatory Guidance Notes:

276. The GNs provide additional identification guidance for clubs, societies and clubs, and for those procedures that Trustees should take with respect to identification and information on their clients and businesses. GN 33 states that “principals” should be understood in the widest sense to include beneficial owners, settlors, controlling shareholders, directors, major beneficiaries, etc. GN 32 further states that where there are a large number of verification subjects, it may be sufficient to carry verification on a limited group only such as the principal shareholders and main directors of a company which is reasonable. GN 39 also states that for non-publicly traded companies, the underlying beneficial owners who ultimately own or control the company should be identified. For public companies quoted in recognized stock exchanges, subsidiaries thereof, and ‘private company with substantial premises and payroll of its own”, no identification verification is required. This latter exemption, if put into practice, is not consistent with the requirements under Rec. 5, and would also be ultra vires the POCA and POCA Regulations.

277. The GNs further define “underlying beneficial owner/s” as any person/s on whose instructions the signatories of an account, or any intermediaries instructing such signatories, are for the time being accustomed to act”. This provision is insufficient and would not, e.g. cover beneficiaries under a trust arrangement where beneficiaries would not be expected to provide such instructions to e.g. to the trustee.

Information on Purpose and Nature of Business Relationship (c. 5.6):

278. The Schedule of the POCA Regulations. requires FIs to obtain information on the purpose and potential activity of the account for individuals and legal entities. For individuals, it requires the purpose of the account and potential activity. For corporate entities, partnerships and unincorporated businesses, the purpose of the account and the potential parameters of the account (including size in case of investment and custody accounts, balance ranges in case of deposit accounts and expected transaction volume of the account). These requirements limit the information to account activity and do not extend to information on potentially broader “business relationships”.

Non-mandatory Guidance Notes:

279. Unlike the requirements under the Schedule of the POCA Regulations, there are no requirements to obtain information on the purpose and nature of the account, nor business relationship, except for corporate entities that require a statement of purpose of the account, including expected turnover and volume of activity (GN75).

Ongoing Due Diligence on Business Relationship (c. 5.7*; 5.7.1 & 5.7.2):

280. The general rule under Reg. 6 is that once an FI has verified the identity of a client, no further verification is required so long as the customer maintains a business relationship on a regular basis. There is a limited requirement to verify customer identity when, in the course of business, there are concerns regarding the identity of the client or beneficial owner. Where there has been no contact with a client or no transaction within a period of five years, the FI shall confirm the identity of the account holder. In addition, Reg. 6(2) requires FIs to monitor the relationship for consistency with the stated account purpose, business and the expected account activity. These requirements are consistent with c. 5.7 but it falls short of c. 5.7.2 which should extend the obligation to update documents, data or information through periodic reviews of existing client records, particularly with respect to higher risk business relationships.

Non-mandatory Guidance Notes:

281. The GNs reflect the requirements in the POCA Regulations and do not address the issue of updating CDD documentation especially with respect to high risk business, and focuses mainly on re-verification of identity.

Risk—Enhanced Due Diligence for Higher Risk Customers (c. 5.8):

282. There are no requirements in POCA or the POCA Regulations to perform enhanced CDD for higher risk customers and transactions.

Non-mandatory Guidance Notes:

283. The GNs do not provide for enhanced CDD for higher risk customers and transactions.

Risk—Application of Simplified/Reduced CDD Measures when appropriate (c. 5.9):

284. There are no legal or regulatory requirement that allow FIs to apply reduced or simplified CDD where it has been proven that ML/FT risks are lower, where information on identity can be obtain publicly or where other controls exist in the national regime. On the contrary, the POCA Regulations and GNs exempt certain categories of customers from verification of identity as discussed under c. 5.3 above. (See Rec. 9 below.)

Non-mandatory Guidance Notes:

285. The GNs reflect the requirements under the POCA Regulations and further exempts FIs from verification requirements for certain categories of customers, including other FIs (both domestic and foreign), particularly GN 46, 49, 50 and 50. As indicated above, these exemptions go beyond the simplified/reduced CDD procedures allowed in c. 5.9.

Risk—Simplification / Reduction of CDD Measures relating to overseas residents (c. 5.10):

286. There are no requirements that when simplified or reduced CDD. There is a requirement for introduced business under Reg. 4(6) that exempts FIs from identification verification, where an applicant for business is another domestic regulated institution (those listed in the Schedule to the POCA) or a foreign regulated institution (those subject to POCA Regulations similar to the SVG POCA Regulations.). In such cases, the FIs only need to obtain a written assurance from the applicant that it has obtained and recorded evidence of identity of the principal/beneficiary of such institution. This provision, however, is more relevant to Rec. 9, but in principle goes beyond the simplified CDD regime allowed under c. 5.9.

Non-mandatory Guidance Notes:

287. See discussions above on exemptions from identification requirements in the POCA Regulations and GNs.

Risk—Simplified/Reduced CDD Measures Not to Apply when Suspicions of ML/TF or other high risk scenarios exist (c. 5.11):

288. There are no requirements in POCA or the POCA Regulations that would prohibit simplified/reduced CDD when there is suspicion of ML/FT, or where higher risk scenarios apply. There are no exceptions to the exempted cases for customer identification described above, when there is suspicion of ML or FT. Only the GNs have these provisions as described in the following paragraphs.

Non-mandatory Guidance Notes:

289. GN 45 states that where “a transaction” is suspicious, the exempted cases discussed above with respect to verification of identity would not apply.

Risk Based Application of CDD to be Consistent with Guidelines (c. 5.12):

290. As mentioned above, the POCA and POCA Regulations do not allow for simplified/reduced CDD, and the exempted cases covered in the GNs (Guidance Notes) go beyond what is allowed under the legislation in some cases, e.g. for example, business conducted by post, telephone, electronic means, coupons, etc. (See GNs 49-51).

Timing of Verification of Identity—General Rule (c. 5.13):

291. As a general rule, Reg. 4(2) states that if satisfactory evidence of identity is not obtained, the business in question must not proceed any further except under directions of the FIU when there is suspicion of ML. It does not cover suspicion of FT. This is a reasonable requirement, but should consider the benefits of extending this provision beyond one-off transactions, e.g. under circumstances described under GN 137.

Non-mandatory Guidance Notes:

292. The GNs contain provisions similar to those of the POCA Regulations.

Timing of Verification of Identity—Treatment of Exceptional Circumstances (c. 5.14 & 5.14.1):

293. There are no provisions in the POCA or POCA Regulations that allow for delaying of verification of identity of customers and beneficial owners.

Non-mandatory Guidance Notes:

294. The GNs do not contain provisions for delaying verification of identification except for Investment Business under GN 137 that allow delays when an investor has cancellation or cooling off rights. In such cases, the repayment of investment funds during this cooling off period is not to be considered as proceeding further with business under Reg. 4(2). When this occurs, repayment of investment funds should not be made to a third party to avoid the risk of ML.

Failure to Complete CDD before commencing the Business Relationship (c. 5.15):

295. Reg. 4(2) states that where satisfactory evidence of identity (as opposed to full CDD) is not obtained, the business relationship or one-off transaction shall not proceed any further, except under directions from the FIU when there is suspicion of ML. It is implicit, therefore, that the FIU will be informed of the suspicion. However, the circumstances under which an FI can proceed under directions from the FIU are limited to one-off transactions, and do not extent to business relations. Nonetheless, this seems to be a reasonable provision in that it would provide the opportunity for the FIU and/or other authorities to inquire/investigate the person should there be an interest and avoid tipping off the subject of a SAR.

Non-mandatory Guidance Notes:

296. The GNs contain broadly similar provisions for dealing with an applicant for business when verification is unsatisfactory. In particular, the second GN 82 (note that there are two GN 82s) states that where failure to complete verification and there are no reasonable grounds for suspicion of ML, any business with or one-off transaction for, the applicant for business should be suspended and any funds held to the applicant’s order should be returned in the form it was received, until verification is subsequently completed, if at all. Funds should never be returned to a third party and an internal report to the MLRO (compliance officer) should be made on how to proceed. This provision should be reconsidered to require that where there is suspicion, a SAR should be filed with the FIU.

297. The GNs are vague in that they do not prohibit the establishment of a business relationship or carrying out of a one-off transaction when CDD cannot be completed. It mainly requires the suspension of such business or transaction. In addition, it does not deal with situations involving existing customers as discussed under c. 5.16 below.

Failure to Complete CDD after commencing the Business Relationship (c. 5.16):

298. There are no requirements to terminate an existing business relationship in the circumstances covered by c. 5.16. There is only a requirement under Reg. 10 to report to the FIU anonymous or fictitious name accounts when the beneficial owner of such accounts cannot be established within one year of the POCA Regulations coming into effect (22 January 2002). Part IV of the GNs contains broadly similar provisions for the sectoral guidelines esp. for Investment Business. See c. 5.17 below.

299. Non-mandatory Guidance Notes: See c. 5.15 above.

Existing Customers—CDD Requirements (c. 5.17):

300. There is no requirement to apply CDD requirements to existing customers at the date the POCA Regulations came into effect, except for those anonymous or fictitious name accounts discussed under c. 5.16. The provisions of Reg. 6 apply to customers after the POCA Regulations came into effect and do not address the issue of materiality and risk. Under Reg. 10, when customer identification cannot be established on anonymous or fictitious name accounts existing at the time the POCA Regulations came into effect, they shall be reported to the FIU but there is no requirement to close the accounts.

Non-mandatory Guidance Notes:

301. There are no provision in the GNs with respect to this requirement.

Existing Anonymous-account Customers – CDD Requirements (c. 5.18):

302. See c. 5.16 above. There is only a requirement under Reg. 10 to establish the beneficial ownership of anonymous or fictitious name accounts within one year of the POCA Regulations coming into effect (22 January 2002), and to report to the FIU when the beneficial owner cannot be established within one year. This is insufficient.

303. Non-mandatory Guidance Notes: The GNs do not address issues under c. 5.18.

Foreign PEPs—Requirement to Identify (c. 6.1):

304. There are no requirements to conduct additional CDD measures on PEP including risk management systems to determine whether a potential customer, customer or beneficial owner is a PEP.

Foreign PEPs—Risk Management (c. 6.2; 6.2.1):

305. No requirement for senior management approval for establishing business relationships with PEPs.

Foreign PEPs—Requirement to Determine Source of Wealth and Funds (c. 6.3):

306. While there is no explicit requirement in the POCA Regulations to obtain source of funds and wealth of PEPs, the Schedule to the POCA Regulations for individuals and beneficial owners requires FIs to obtain source of income and wealth for purposes of identity verification which would satisfy this obligation.

Foreign PEPs—Ongoing Monitoring (c. 6.4):

307. There is no requirement to conduct enhanced CDD on PEP relationships.

Domestic PEPs—Requirements (Additional Element c. 6.5):

308. No requirements on domestic PEPs.

Domestic PEPs—Ratification of the Merida Convention (Additional Element c. 6.6):

309. SVG has signed but not ratified the UN (Merida) Convention against Corruption.

Non-mandatory Guidance Notes:

310. The GN 168 asks FIs to apply enhanced CDD on PEPs and to identify sources of information for establishing their position as PEPs. It describes the categories of persons that should be considered as PEPs, implicitly from other countries. Part of the CDD should include identifying related persons and companies, and identifying their source of funds, but not source of wealth. It also includes applying ongoing due diligence on the account. The decision to establish a PEP account/relationship should be taken at senior management level, but there is no similar requirement to obtain senior management approval for the continuation of an existing PEP or beneficial owner who is a PEP, or who subsequently become PEPs.

311. The GNs do not provide for domestic PEPs.

Cross Border Correspondent Accounts and Similar Relationships – introduction

312. It does not seem to be a general practice for domestic and international banks to provide cross-border correspondent account facilities to other banks. However, for purposes of this Rec., the provision of correspondent account facilities to some of the six international (offshore) banks in SVG would be analogous and are assessed under this Rec. In SVG, the domestic bank sector does provide correspondent/ nested correspondent accounts to offshore banks licensed in SVG. The provision of such correspondent accounts in SVG appears to be generally related to difficulties or the inability to open correspondent accounts directly with other institutions abroad. In some cases, it did not appear to the mission that the offshore banks had significant mind and management presence in SVG. Most of the top officials the mission met that had operational duties and knowledge of the banks business were residing overseas. To the extent that the domestic banking sector provides correspondent facilities to these offshore banks, they would be assuming the risks inherent in such business. It is noted that soon after the mission, two of the offshore banks were intervened by the government and may be wound up. (See Rec. 18 for a further discussion of this issue.)

International/Offshore Banks:

Misuse of New Technology for ML/FT (c. 8.1):

322. There are no requirements to have policies or measures in place specifically to prevent misuse of technological developments for ML or FT.

Risk of Non-Face to Face Business Relationships (c. 8.2 & 8.2.1):

323. There are no specific requirements to have policies and procedures in place to address risks associated with non-face to face business relationships or transactions. There are provisions in Reg. 4 (and GNs) that allow FIs to completely rely on customer identification conducted by another regulated institution. In such cases, the Reg. completely exempts the FIs from verification of identity of the customer subject to certain conditions. This would be contrary to the requirements of c. 8.2.1 that include measures, by way of example, reliance on third party introduction as one among other possible measures that can be taken. The general principle should be to obtain “additional documentation to complement those which are required for face-to-face customers.” See box under c. 8.2.1.

Non-mandatory Guidance Notes:

324. GN 44A deals with customers who may not be available for an interview at the time an account or relationship is to be established, such as non-resident clients. (Note, under c. 5.8 non-resident clients are an example of a high risk category of customer.) The GN states that in such cases, FIs should apply the same identification and monitoring procedures as applied to customers that are personally interviewed, and should have specific and adequate measures to mitigate the higher risk of non-face to face business. This would be contrary to the provisions of Reg. 4 which provides for possible exemption from identification verification provisions in cases where a customer is introduced by another regulated entity, and which can involve non-face to face and non-resident clients. Nonetheless, GN 44A states that risk mitigation measures should be applied in line with the examples given under c. 8.2.1 which should include, inter alia, certification of documents and independent verification of documents by contacting a “third party”.

325. In addition to the preceding paragraphs, GNs 49-51 go beyond the POCA Regulations, and are contrary to Rec. 8 in that they exempt from identification verification requirements certain transactions such as postal, telephone and electronic business, “mail shots, off-the page and coupon business. The mission did not ascertain the extent to which such business was actually being conducted in or from within SVG.

Effectiveness of Implementation

326. The authorities have not conducted a formal ML/FT risk assessment of the financial sector to better inform and support the development of more effective CDD, monitoring and reporting policies and procedures by FIs. In this regard, the authorities should consider e.g. the relative ML/FT risks inherent in the mutual funds industry as there is a perception of lower risk in private/accredited funds. These are investment vehicles for high value/net worth investments, broadly akin to private banking, which inherently is of higher risk. A reevaluation of the supervisory thinking on this issue is advisable.

327. In particular, no AML/CFT supervision of building and loan societies has been conducted, and limited or no CDD supervision has been undertaken with respect to the offshore financial sector, credit unions, insurance companies and intermediaries, and money remitters.

328. In addition, there are two known money lending operations that are subject to the AML/CFT laws and which openly advertise their activities. However, the authorities have not conducted a review of their operations with a view to determining the need for an authorization and oversight regime. Their beneficial ownership and control, and sources of their funding are unknown.

329. From discussions with the FIs and regulators, it appeared that most FIs were conducting reasonable CDD measures to comply with the SVG AML/CFT requirements, and in the case of foreign banks, with their head office policies and procedures. There were however, some areas that indicated lack of effective implementation as discussed in the following that relate to Recs. 5-8:

• FIs are mainly focused on ML risk, especially cash transactions and possible linkages with drug trafficking. Little attention seems to be made on FT risks and some FIs were unaware of the official UN terrorist lists;

• During the conduct of CDD for new clients, it seems that FIs do not report to the FIU all cases where they are suspicious of ML/FT. The FIU on average only gives directions to FIs on how to proceed with suspicious transactions about 3 times a year;

• With respect to on wire transfers, banks appear to be conducting CDD for amounts lower than the regulatory EC$10,000 equivalent for one-off transactions which is positive but there is a need for enhanced scrutiny of wire transfer activity. In addition, a mitigating factor is that some banks are required by the SWIFT system to include full originator information in all wire transfers. (See SRVII);

• Senior management approval generally required for opening correspondent accounts, but enhanced CDD including for offshore bank respondents is weak, including for establishment of nested correspondent accounts;

• CDD on beneficial owners/beneficiaries is weak in some FIs, including the identification of all main parties to a trust, and lack of controls in some banks with respect to opening accounts for bearer share companies. Weaknesses in account opening documentation were evident in some FIs;

• Ongoing CDD monitoring seems to be less effective for some FIs, particularly offshore entities that deal with customers in many jurisdictions where they do not have a physical presence or representation and may involve non-face to face business relationships. Such review would be particularly important for certain types of business transactions, e.g. back-to-back loans by banks, and loans backed by insurance policies. These loans appear to be common practice by some institutions and inherently carry a higher level of ML risk, and should be subject to more enhanced CDD. In addition, insurance companies, which generally conduct business through intermediaries, also do not require their agents/brokers to have or to provide them with copies of their AML/CFT policies and procedures. Consideration should be given to including this in their agency and broker agreements;

• Supervisory findings indicate that FIs may not be adequately updating customer documentation which would limit ongoing CDD and risk profile updating;

• CDD in the credit union and building society sectors appears to be generally weak, and supervision of compliance has just commenced for credit unions and is non-existent for the building and loan society. This is a significant weakness considering the risks inherent in both sectors activities with respect to money remittance business and back-to-back loans;

• Some banks, but not other FIs, require senior management and/or head office approval for establishing correspondent and PEP accounts. Supervisors state that a number of banks subscribe to database services for PEPs and other official ML/FT lists, and that the FIU circulates terrorist lists. However, not all FIs interviewed were aware of the latter;

• Inadequate CDD and risk assessment for correspondent account relationships in the domestic banking sector, including such facilities to offshore banks;

• There appears to be insufficient oversight and training on AML/CFT by insurance companies over the activities of their agents and sales representatives, and where applicable brokers, especially in the domestic sector. The agency contracts between the insurers and intermediaries generally do not contain AML/CFT elements to assist the insurers comply with their own CDD and other requirements. Most insurance intermediaries accept cash from clients which raises the potential for placement stage ML risk.

R.5

R.6

• Require FIs to conduct additional and enhanced CDD measures, or to obtain senior management approval, for on new and/or existing PEPs relationships.

R.7

• Require FIs to for perform, inter alia, additional and enhanced CDD on correspondent banking relationships, assess the AML/CFT controls of respondent institutions, and obtain senior management approval before establishing correspondent account relationships.

• Introduce requirements with respect to the provisions of correspondent payable-through accounts.

• Enhance supervision of risk management practices and compliance with R.7 by domestic banks that provide correspondent/nested correspondent banking facilities to international (offshore) banks in breach of R.7 and the ECCB’s prudential guidelines on correspondent banking (March 2001).

R.8

• Require FIs to have policies or measures in place to prevent misuse of technological developments for ML or FT, including non-face to face business relationships and transactions, and review the exemptions provided in the GNs for this type of business.