The Financial Intelligence Unit

1
The Financial Intelligence Unit

• What should it do?
• And who should do it?
• Martin Comley

2
Overview of the 40 ( 9) Recommendations

• A. LEGAL SYSTEMS Recommendation
• Scope of the Criminal Offence of Money
  Laundering 1 - 2
• Provisional Measures and Confiscation 3
• B. MEASURES TO BE TAKEN BY FINANCIAL INSTITUTIONS
  AND NON-FINANCIAL BUSINESSES AND PROFESSIONS TO
  PREVENT MONEY LAUNDERING AND TERRORIST FINANCING
• Removal of banking secrecy 4
• Customer Due Diligence and Record-keeping 5 -
  12
• Reporting of Suspicious Transactions and
  Compliance 13 - 16
• Other Measures to Deter Money Laundering and
  Terrorist Financing 17 - 25
• C. INSTITUTIONAL AND OTHER MEASURES NECESSARY IN
  SYSTEMS FOR COMBATING MONEY LAUNDERING AND
  TERRORIST FINANCING
• Competent Authorities, their Powers and
  Resources 26 - 34
• D. INTERNATIONAL CO-OPERATION
• International Co-operation 35 40
• EIGHT SPECIAL RECOMMENDATIONS
  Special Recs
• Ratification and implementation of UN
  instruments I
• Criminalising the financing of terrorism
  associated money laundering II

3
Methodology for assessing compliance with FATF 40
( 8) Essential and Additional Criteria are
measured
  Criteria Criteria   Criteria Criteria   Criteria Criteria   Criteria Criteria   Criteria Criteria
Rec Essential Additional Rec E A Rec E A Rec E A Rec E A
1 7 1 11 3 0 21 3 0 31 1 1 I 2 0
2 5 0 12 3 0 22 2 1 32 2 1 II 4 0
3 6 1 13 4 1 23 7 0 33 4 1 III 13 2
4 1 0 14 2 1 24 2 0 34 3 0 IV 2 0
5 18 0 15 4 1 25 2 0 35 1 1 V 5 4
6 4 2 16 4 2 26 10 0 36 7 1 VI 5 1
7 5 0 17 4 0 27 2 4 37 2 0 VII 9 0
8 2 0 18 3 0 28 2 0 38 5 1 VIII 3 1
9 5 0 19 3 2 29 4 0 39 4 1   Essential Additional
10 3 0 20 2 0 30 3 1 40 9 2 Total 206 34
4
Methodology for assessing compliance with FATF 40
( 8), paragraphs where FIU / STR are directly
referenced

• 27.6
• 30.1
• Footnote 28
• 31.1, 31.1 a
• 32.2 a spot 1, 32.2 c spot 2, 32.2 c spot 3
• 40.2
• 40.4.1
• 40.11
• IV.1
• VII.7
• IIIV.3

• 3.4
• 13.1, 13.2, 13.5
• 14.1, 14.2, 14.3
• Footnote 22
• 16.2, 16.6
• 17.2
• 21.2
• 25.2
• 26.1, 26.2, 26.3, 26.4, 26.5, 26.6, 26.7, 26.8,
  26.9, 26.10

Whilst FIU/STR are directly referenced in the
above paragraphs these paragraphs should be read
in context of the whole section/document and not
read in isolation!
5
Rule 1 The FIU does not stand alone! It should
be one component of the National AML/CFT strategy.
Government Policy / Strategy
FIU
Always remember that M/L is the result of other
criminality.
6
What should the FIU do?

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

7
Remember, the FIU is often the bridge across the
differing aspects of the AML/CFT regime
Criminal and or Administrative
Criminal
Administrative
Regulations And or Guidance
Legislation
FIU
Prosecutor
Financial Sector
Law Enforcement
Financial Sector Regulators
8
When you have looked at Receipt, Analysis and
Dissemination the consider

• What skills are necessary to undertake the above
  functions.
• What agency has most of these skills? Ignoring
  whether funds or human resources are available at
  this stage
• What skills are NOT covered within the agency
  identified in 2?
• Can they be obtained from another agency?
• Are there still skills gaps?

9
Having looked at function and skills where to
place the FIU may now follow...
The FIU should also be independent (Rec. 26.6 and
30.1)! The FIU should have sufficient operational
independence and autonomy to ensure that it is
free from undue influence or interference.
10
Financial Intelligence Unit (FIU)FIU Structure

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

11
Financial Intelligence Unit (FIU) FIU Integrity
/ Accountability

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

12
Financial Intelligence Unit (FIU) FIU Staff
Skills

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

13
Financial Intelligence Unit (FIU)FIU Function

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

14
Financial Intelligence Unit (FIU)FIU Function

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

15
Financial Intelligence Unit (FIU)FIU Function

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

16
Financial Intelligence Unit (FIU)FIU Feedback

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

17
Financial Intelligence Unit (FIU)FIU
Coordination / Co-operation

• Are there effective domestic mechanisms to enable
  effective co-ordination / co-operation between
• Policy makers
• law enforcement
• Supervisors
• other competent authorities
• Are all the above effective at operational level
• Are all the above effective at policy level
• What mechanisms are in place to deal with UN
  Security Council Resolutions
• What liaison does it have with SROs and DNFBP
• Does it have regard to
• the Egmont Statement of Purpose
• The Egmont principals

18
Financial Intelligence Unit (FIU)International
Co-operation

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

19
FIU Interaction Timing with others
ii) y working days
Research
Research
Update Files
Update Files
20
Evaluation Criteria, whats expected of an FIU?

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

21
Evaluation Criteria, whats expected of an FIU?

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

22
Evaluation Criteria, whats expected of an FIU?

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