Revised Guidelines Take Effect for Suspicious Transactions Reporting

After consultation with local regulators of financial services in The Bahamas, the Financial Intelligence Unit (FIU) has released the 2007 Suspicious Transactions Guidelines, which relate to the prevention of money laundering and the financing of terrorism.

The 2007 guidelines replace the 2001 guidelines and apply to all financial institutions in The Bahamas as defined in section 3 of the Financial Transactions Reporting Act 2000.

Edward Smith, FIU deputy director, said the guidelines tell the financial institutions what to do and give examples of how money is laundered, and how transactions are considered suspicious.

“It’s just guidance to help them understand how things are done globally,” he said.

Suspicious Transactions, according to the guidelines, are financial transactions where there are reasonable grounds to suspect that the funds involved are related to the proceeds of criminal activity.

Based on the guidelines, financial institutions can recognize suspicious transactions because they can fall into one of many categories such as unusual financial activity of a customer, and unusual transaction in the course of some usual financial activity.

According to the guidelines, money laundering covers all procedures to conceal the origins of criminal proceeds so it will appear to have originated from a legitimate source and also includes hiding the origin of legally acquired money that will be used to finance criminal activities.

The three stages of laundering – placement, layering, and integration – can sometimes occur sequentially but often overlaps, the guidelines pointed out.

Placement is the physical disposal of criminal proceeds and in many serious crimes the

proceeds can take the form of cash, the guidelines said.

Layering is the separation of criminal proceeds from their source by the creation of complex layers of financial transactions designed to disguise the audit trial and to provide the appearance of legitimacy, according to the guidelines.

When criminal proceeds are treated as legitimate, they have reached the stage of integration, the guidelines stated.

The guidelines provide examples of terrorist financing to help financial services businesses recognize terrorist transactions.

Terrorists are financed through donations, extortion, smuggling, charities, drugs, and counterfeit goods, according to the guidelines.

Extortion is the crime of obtaining money or something valuable by the abuse of one’s office or authority and, according to the guidelines this form of raising money continues to be one of the most prolific and highly profitable.

Financial institutions have a responsibility under the law to know their customers and identify suspicious activities that may relate to criminal activities, like financing of terrorism and report it to the FIU, Mr. Smith pointed out.

The FIU is the central national agency for the investigation of reports of suspicious transactions in The Bahamas and its mandate is to receive, analyze, obtain, and disseminate information from suspicious transaction reports, he reminded.

“FIU has the responsibility to analyze the information and determine if the reports relate to criminal activities and if so submit them to the Royal Bahamas Police Force for investigation,” Mr. Smith added.

He pointed out that under the FIU Act 2000, the FIU has the permission to issue guidance in relation to suspicious transaction reporting.

By Deandrea Williamson
The Bahama Journal

http://news.bahamianyellowpages.com/2007/03/21/revised-guidelines-take-effect-for-suspicious-transactions-reporting-2/