Reporting suspected money laundering and terrorist financing

Transcription

1 Guidance for supervised entities which, under the Money Laundering and Terrorist Financing (Prevention) Act (Anti-Money Laundering Act), must review and report suspicious transactions. Reporting suspected money laundering and terrorist financing Information from the Coordination Supervisory Body January 2017

2 This brochure provides guidance for supervised entities on how to report suspicious transactions under the Anti-Money Laundering Act. The brochure has been prepared by the Coordination Supervisory Body. The Coordination Supervisory Body consists of representatives from the Swedish Companies Registration Office, Estate Agents Inspectorate, Finansinspektionen (the Swedish FSA), the Swedish Financial Intelligence Unit, the Gambling Authority, the Supervisory Board of Public Accountants, the Swedish Bar Association, the Swedish Security Service and the administrative boards of the counties of Skåne, Stockholm and Västra Götaland.

3 Why suspected money laundering and terrorist financing must be reported Supervised entities covered by the Money Laundering and Terrorist Financing (Prevention) Act (Anti-Money Laundering Act) shall review and report their customers transactions to enable the detection of suspected money laundering or terrorist financing. When suspicions are reported, this can lead to criminal investigation authorities uncovering and solving crimes in society that would otherwise have gone undetected. The Swedish Financial Intelligence Unit is a section of the Swedish Police that accepts, registers, processes and analyses received reports on suspected money laundering or terrorist financing. The Swedish Financial Intelligence Unit judges whether reported transactions can be linked to a particular crime or form part of criminal activity. If the efforts of the Swedish Financial Intelligence Unit result in a suspicion of predicate crime, the relevant law enforcement agency is informed, such as the Swedish Police, the Swedish Economic Crime Authority, the Swedish Security Service or the Swedish Tax Agency. It is crucial that supervised entities that are obliged to report suspicious transactions actually do so. When supervised entities report suspicious transactions, the Swedish Financial Intelligence Unit can gain a clearer picture of a potential money laundering or terrorist financing chain. This ultimately better equips the Swedish Financial Intelligent unit to get back to the supervised entities to inform them of risks and methods. 3

4 Obligation to refrain from conducting transactions Supervised entities shall refrain from conducting transactions that constitute suspected money laundering or terrorist financing. If it is not possible to refrain from conducting a suspicious transaction, or if doing so would hamper further investigation, the transaction may be carried out anyway. In that case, a report must be submitted immediately thereafter to the Swedish Financial Intelligence Unit. If you refuse to conduct a transaction due to suspected money laundering or terrorist financing, the circumstances that gave rise to the suspicion shall also be reported to the Swedish Financial Intelligence Unit. Supervised entities that consciously conduct a transaction that forms part of money laundering or terrorist financing may be guilty of a money laundering offences. When to report According to the Anti-Money Laundering Act, supervised entities are obliged to review and report suspicious transactions. Proof does not have to exist of money laundering or terrorist financing actually having occurred. The rules state that supervised entities must review a suspicious transaction. If the suspicion persists once a more detailed analysis has been performed, the suspicious transaction must be reported to the Swedish Financial Intelligence Unit without delay. A suspicious transaction report is not the same thing as reporting a matter to the police. Specific supervised entities are exempted from the reporting obligation in certain cases. How to report When reporting for the first time, contact the Swedish Financial Intelligence Unit by ing fipo@polisen.se. The Swedish Financial Intelligence Unit then refers you to a URL to be used for reporting. 4

5 What the report should contain A report on suspected money laundering or terrorist financing should contain information about all the circumstances surrounding the suspicion, which might indicate suspected money laundering or terrorist financing. In order for the Swedish Financial Intelligence Unit to investigate a report, the suspicions must be described well. A high level of report quality is crucial in enabling the Swedish Financial Intelligence Unit to investigate and assess money laundering and terrorist financing. Any documentation that might confirm the information in the report must be appended for example, a copy of an account statement, an id document, a contract or a receipt. Bear in mind that account statements and large compilations of relevant material should be appended in excel or other editable format to facilitate processing. What happens to the report next The Swedish Financial Intelligence Unit assesses the information to investigate whether it is a case of money laundering or terrorist financing. Information in a submitted report might ultimately form part of an intelligence file in which crimes can be uncovered by a law enforcement agency. If terrorist financing is suspected, an intelligence file is sent immediately to the Swedish Security Service for further assessment and investigation. The money laundering report that you submit might be the crucial factor in enabling uncovering a money laundering or terrorist financing chain. 5

6 The identity of supervised entities that submit reports is protected The identity of parties that have submitted a money laundering report to the Swedish Financial Intelligence Unit will be subject to secrecy. The Swedish Financial Intelligence Unit does not disclose to the reported party that a report has been submitted, or who submitted it. Note that a money laundering report is not the same thing as reporting a matter to the police. Tipping-off ban Under the Anti-Money Laundering Act, it is prohibited to tip off a customer, or inform a third party, that a report has been submitted to the Swedish Financial Intelligence Unit. In other words, supervised entities may not inform anyone of having submitted a report. Despite the ban, they are always permitted to submit such information to the authority that supervises their business. 6

7 Examples of described suspicions and how they can arise The following examples are provided to enable supervised entities, or their representatives, to better understand how and when their business or products and services can be exploited as part of money laundering or terrorist financing. The examples describe the circumstances which, individually or in combination, can make up the concrete suspicion in a money laundering or terrorist financing arrangement. In the report you submit to the Swedish Financial Intelligence Unit, the circumstances encountered must be described in as much detail as possible. The circumstances below are merely examples and do not form an exhaustive list of suspicious transactions, events or activities. Transactions Grounds for suspicion could be: If a customer refuses to respond to customer due diligence questions or does not wish to provide documentation or materials which, for example, support the purpose of the transaction, the origin of the money or the identity of the intended recipient. If a customer wishes to conduct transactions that are more complex than what the situation would normally require. For example, the customer might want to send money to Germany, but wants the money to first pass through a bank account in Dubai, without being able to provide a reasonable explanation for this. If a customer reuses supporting materials several times such as account statements, wills, donation certificates or promissory notes to prove the origin of the money or purpose of the transaction. In such a case, a description of the customer s approach and copies of the supporting materials submitted by the customer can constitute good documentation for your report to the Swedish Financial Intelligence Unit. 7

8 If a customer seems to be conducting transactions on someone else's behalf or is not familiar with the purpose of the transaction or business. If the customer does not appear to be the same person as the actual account holder. For example, the internet bank is logged into from abroad despite the customer having stated that he is in Sweden. Solid supporting materials for the report to the Swedish Intelligence Unit could be a concrete description of events and the IP addresses from which the customer logged in. If a customer is a company whose stated business and sales are not consistent with the transactions conducted by the company. For example, the company may buy and sell goods at abnormal prices, or invoice amounts that are too high or low. Good supporting materials for the report to the Swedish Financial Intelligence Unit could be an account statement describing the customer s transactions. If the suspicion consists of the customer having conducted a large transaction that diverges from those usually conducted by the customer and which cannot be explained based on what is known about the customer, this shall be stated in the report. In such cases, it does not suffice to merely state that the customer has carried out a large transaction. It s important to describe why the suspicion arose. 8

9 Investments Grounds for suspicion could be: If a customer, after a short time, sells off an investment which is considered to be a long-term one. If a customer cannot seemingly justify the need for requested tax advice. If a customer is interested in the bank secrecy rules of other countries and is interested in buying or taking over foreign companies in countries to which the customer or the customer s business is not linked. If a customer states that he has a certain business, but that business does not at all reflect what the customer specified in the register of the Swedish Companies Registration Office. Real estate Grounds for suspicion could be: If a customer does not appear to show any interest in charges or costs for the transaction. If a customer wishes to purchase an unseen property without caring about the price or other details of the transaction. It might be suspicious if a customer takes out a mortgage, and loan instalments for the mortgage are paid from unusual sources or by other people. If a mortgage is repaid in its entirety after a very short time and with no reasonable explanation. 9

10 Charitable organisations and foundations Grounds for suspicion could be: If a charitable organisation or a foundation conducts transactions that appear to lack a logical purpose or financial objective, or if the transactions are made to a country where the organisation does not operate. If an account linked to a charitable organisation or foundation is used in a way that is not consistent with the information provided by the customer about the nature of the account or business relationship, and how the account is supposed to be used. If an account, linked to a charitable organisation, does not have regular incoming payments in the form of member fees, despite information stating that its operations are financed that way. If a foundation unduly delays or does not wish to produce documentation supporting transactions conducted on behalf of the foundation. Retail trade Grounds for suspicion could be: If a customer buys an expensive product such as a watch, car or boat, and then returns shortly thereafter to have the product redeemed. Be particularly vigilant if the customer wants the money returned to an account that was not used for the purchase in the first place. If a customer purchases an expensive item on credit that extends over a certain period of time and the customer, after a short time, chooses to repay the entire credit, especially if the customer pays in cash. 10

11 Insurance Grounds for suspicion could be: If a customer s insurance premiums are paid for in cash or through transfers from the accounts of other people, or from an account in a foreign country to which the customer has no connection. If the size or scope of the insurance policy is not consistent with the customer s need for it. If a customer terminates an agreement without seeming to care about consequent taxes and charges, and without being able to provide a credible or reasonable reason for terminating. If a customer wishes to take out an abnormally large policy and is more interested in the rules for redeeming the policy than what it covers. If a customer is young and wishes to take out life insurance without appearing to be in need of such. It might also be of significance if the beneficiary is a friend and not a closely related person, such as a family member. 11

12 Hypothetical scenarios describing examples of various money laundering and terrorist financing arrangements The hypothetical scenarios are provided to enable supervised entities, or their representatives, to better understand how and when their business or products and services can be exploited in a criminal arrangement. In order to understand how different crimes involve different industries and supervised entities, we have illustrated links and actions using six different hypothetical scenarios. The various scenarios illustrate money laundering or terrorist financing arrangements in which supervised entities from many different industries make up one or several stages of the criminal arrangement. The various stages of the scenarios are numbered together with an associated description for each stage, making it easy to follow the hypothetical chain of crime from start to finish. 12

13 Prevailing regulations Money Laundering and Terrorist Financing (Prevention) Act The Money Laundering Offences Act Act on Criminal Responsibility for the Financing of Particularly Serious Crime in some cases The directives of the supervisory authorities governing money laundering and terrorist financing. Questions? If you have any questions about reporting suspected money laundering or terrorist financing, please contact the Swedish Financial Intelligence Unit by ing 13

14 Transaction (e.g. purchase, transfer, cash) Association/power of attorney/ relationship Perpetrator/person participating in an arrangement Person unwittingly Company represented/used by the perpetrator Company/institution unwittingly Supervised entity Illegally earned/black money Legally earned/white money Goods/assets 14

15 Transaction (e.g. purchase, transfer, cash) Association/power of attorney/ relationship Perpetrator/person participating in an arrangement Person unwittingly Company represented/used by the perpetrator Company/institution unwittingly Supervised entity Illegally earned/black money Legally earned/white money Goods/assets 15

16 16 Goods/assets Legally earned/white money Illegally earned/black money Supervised entity Company/institution unwittingly Company represented/used by the perpetrator Person unwittingly Perpetrator/person participating in an arrangement Association/power of attorney/ relationship Transaction (e.g. purchase, transfer, cash)

17 Transaction (e.g. purchase, transfer, cash) Association/power of attorney/ relationship Perpetrator/person participating in an arrangement Person unwittingly Company represented/used by the perpetrator Company/institution unwittingly Supervised entity Illegally earned/black money Legally earned/white money Goods/assets 17

18 Transaction (e.g. purchase, transfer, cash) Association/power of attorney/ relationship Perpetrator/person participating in an arrangement Person unwittingly Company represented/used by the perpetrator Company/institution unwittingly Supervised entity Illegally earned/black money Legally earned/white money Goods/assets 18

19 Transaction (e.g. purchase, transfer, cash) Association/power of attorney/ relationship Perpetrator/person participating in an arrangement Person unwittingly Company represented/used by the perpetrator Company/institution unwittingly Supervised entity Illegally earned/black money Legally earned/white money Goods/assets 19

20 Guidance for supervised entities which, under the Money Laundering and Terrorist Financing (Prevention) Act (Anti-Money Laundering Act), must review and report suspicious transactions. Information from the Coordination Supervisory Body