MONEY LAUNDERING

The process of taking cash

earned from illicit
activities, and making the
cash appear to be
earnings from a legal
business activity. The
money from the illicit
activity is considered dirty
and the process
“launders” the money to
make it look clean.
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MONEY LAUNDERING
When a criminal activity generates
substantial profits, the individual or
group involved must find a way to
control the funds without attracting
attention to the underlying activity or the
persons involved. Criminals do this by:

disguising the sources, Changing the form

Moving the funds to a

place where they are less
likely to attract attention.

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WHAT LEGISLATION
GOVERNS MONEY
LAUNDERING?
 LEGISLATION
The Proceeds of Crime
Act and Regulations
2007

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WHAT IS TERRORISM
FINANCING?
Terrorist Financing:
• Financial support in any form, of terrorism or of those
who encourage, plan or engage in terrorism.

• May involve funds raised from:

LEGITIMATE SOURCES ILLEGAL SOURCES

•personal • Drug trade

donations • Smuggling of weapons
and other goods
•profits from • Kidnapping
businesses • fraud
•charitable • Extortion
organizations • Human Trafficking

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WHAT LEGISLATION
GOVERNS THE
COUNTER-
FINANCING OF
TERRORISM?
 LEGISLATION
The Terrorism Prevention Act (2005)
and
Regulations(2010)

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OBJECTIVES OF LEGISLATION
 Prevent offenders from
profiting from illegal
Prevent activities.
 Remove illicit proceeds from
Remove use in future criminal
enterprise
 Deter persons from engaging
Deter in crime
 Protect financial institutions
from inadvertent
Protect involvement in money
laundering activities which
could damage their
businesses.
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OBJECTIVES OF LEGISLATION
cont’d
Better position Jamaica in the global
financial marketplace.

Encourage foreign direct investment and

economic growth through successful capital
market investment

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How are these objectives
achieved?
 Identifying the Offence of Money • Identification
Laundering Step 1
 Action against the proceeds of crime
• Action
 Action against the perpetrators of Step 2
crime
 Action against the funding of crime • Compliance
 Satisfying mandatory international Step 3
requirements

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OFFENCE OF MONEY
LAUNDERING
Engaging
• In a transaction that involves criminal property
Concealing
• Disguising, disposing of or bringing into Jamaica
criminal property
Converting
• Transferring or removing criminal property
Acquiring
• Possessing or using criminal property
Facilitating
• Entering into an arrangement to use or
control of criminal property
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Amendment to the
Legislation
• The Proceeds of Crime Act (s 101A)
now prohibits non deposit taking
institutions from taking CASH of JA$
1 M and over.

• So only permitted persons as

specified in the act can take this
CASH.

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Laundering the Proceeds
From Crime
 Traditionally, money laundering has been
associated with organized crime activities and
narcotics trafficking.

 More recently, however, law enforcement and the

public at large have realized its strong association
with terrorism, illegal arms dealing, bribery,
embezzlement, insider trading etc.

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How Is Money Laundered?
There are 3 stages of Money Laundering:

Integration

Layering
Placement

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How Is Money Laundered?
Placement
The process of putting unlawful cash proceeds into traditional financial institutions, through
deposits or other means. At this stage cash from criminal activity is introduced into the
financial system.

Layering
This involves a complex system of transactions designed to hide the source and ownership
of the funds. Once cash has been successfully placed into the financial system, launderers
can engage in a number of transactions and transfers designed to hide the audit trail and
thus the source of the property and provide anonymity

Integration
This is the stage at which laundered funds are reintroduced into the legitimate economy, and
appear to have originated from a legitimate source. Integration is the final stage of the
process, whereby property originating from criminal activity has been placed, layered and
returned to the legitimate economic and financial system
Stages of Money Laundering
Disposal of Bulk Cash:
Payment of premiums for policies,
including top-ups, • Placement
Large number of transactions
Using cash or cash equivalents rather
than through banking channels

Disguise Origin of Initial Funds Through:

Multiple transactions,
Borrowing against insurance policies, • Layering
Termination of policies
Sale of units in investment-linked products

Use Layered Funds to Purchase

“Clean, Legitimate: Assets:
Money Assets
Fixed Assets
• Integration
Business

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A Few Methods Used to Launder
Structuring [smurfing]

Money Transfers / Cambios

Travel Agency. [World Ticket cancel vacations]

Casinos

Securities / Insurance Policy

Lottery Tickets.

Offshore accounts
Business that are ideal for
laundering cash
Banks; • Restaurants;
• Security houses; • Hotels;
• Financial intermediaries; • Bars;
• Accountants; • Nightclubs;
• Solicitors; • Dry cleaners;
• Surveyors and estate agents; • Video rental companies;
• International money transmitters; • Vending machines operators;
• Company formation agents and • Fairgrounds and attractions;
management services companies; • Parking lots;
• Casinos and bookmakers; • Retail outlets;
• Art, bullion and antique dealers; • Others, dealing in high value
• Car dealers; commodities and luxury goods.
Current ML Trends
The methods used to launder proceeds of criminal
activities and finance illicit activities are in constant
evolution: as the international financial sector
implements the FATF standards, criminals must find
alternative channels.
Current ML Trends (Cont’d)
Online Marketplaces

Shell Companies

Legitimate Businesses

Human Trafficking

New Payment Product & Services

• Crypto currencies, eg. Bitcoins
• Prepaid Cards
• Online Games
Current AML Trends (Cont’d)
 De-Risking/De-Linking

Where financial institutions terminate or

restrict business relationships with certain
customer categories
The Importance of Financial Institutions
Financial institutions are
the “gatekeepers” in the
fight against money
laundering and terrorism
financing, therefore their
effectiveness in the
implementation of systems
that reduce the likelihood
of each institution from
being utilized for this
purpose is highly critical.

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Financial Institutions
Financial Institutions for purposes of the Act includes:
A person licenced under the various Acts including the Banking Act,
Financial Institutions Act, Building Societies Act, Co-operative Societies
Act, Bank of Jamaica Act, Securities Act and Insurance Act.
Any other person so designated by the Minister
A designated non-financial institutions is:-
A person who is not primarily engaged in carrying on financial
business; and who is designated as a non-financial institution for the
purpose of POCA by the Minister of National Security by order subject to
affirmative resolution. This includes Accountants, Real Estate Dealers,
Casinos, Precious Metal Dealers, Gaming Lounges & Attorneys.

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Duties of A Regulated Institution

 Comply with instructions of the

Designated Authority;

 Establish regulatory controls;

 File reports in regard to threshold and

suspicious transaction; and non-
disclosure.
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What to look out for?
Special attention should be paid to -
 Complex, unusual or large business transactions carried
out by that customer with the business, and
 Unusual patterns of transactions, whether completed or
not, which appear to be inconsistent with the normal
transactions carried out by that customer (or any
customer) with the institution .
 Constant requests for payments to be made to third party
individuals

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Examples of suspicious transaction
from an Insurance Perspective
 Application for a policy from a potential client in a distant place
where comparable policy could be provided “closer to home”.

 Application for business outside the policyholder’s normal pattern of

business.

 Introduction by an agent/intermediary in an unregulated or loosely

regulated jurisdiction or where organized criminal activities (e.g. drug
trafficking or terrorist activity) are prevalent.

 Any want of information or delay in the provision of information to

enable verification to be completed.

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Examples of suspicious transaction
from an Insurance Perspective
 Any transaction involving an undisclosed party.

 Early termination of a product, especially at a loss caused by front end

loading, or where cash was tendered and/or the refund cheque is to a
third party.

 A transfer of the benefit of a product to an apparently unrelated third

party.

 Requests for a large purchase of a lump sum contract where the

policyholder’s experience is small, regular payments contracts.

 Applicant for insurance business purchases policies in amounts

considered beyond the customer’s apparent means.

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REPORTING OBLIGATIONS
 Suspicious Transaction Report – (“STR”) – TPA &
POCA)
 Threshold Transaction Report – (“TTR”)
 Authorized Disclosure
 Report of International Transportation of Currency or
Bearer Negotiable Instruments
 UN Security Council Prescribed Person or Entity
Report
 Listed Entity Report
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 What Should I Report?
 Name, age, address, telephone number, description of the
person(s) (copy of a picture identification) involved in the
suspicious transaction.

 The type of activity associated with the suspicious transactions,

i.e. payment made by an unusually large volume of cash, use of
nominees, currency exchange, smurfing, refining etc.

 The amount of the suspicious transaction.

 Date, time and location of the transaction.

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What Should I Report?
 Any credit/debit card information or other personal information
about the subject that might be available.

 Description of policy type and number associated with the

suspicious transaction/activity if relevant.

 The circumstances, details and events that aroused your

suspicion.

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How Should I Report a Suspicious
Transaction?
Any employee conducting a transaction that
he/she believes may constitute a suspicious
transaction should submit his/her internal
report to the Nominated Officer.
Employees are not restricted in making
reports to only cases of transactions over the
threshold limit. Suspicions that another
person has engaged in money laundering
must also be reported internally to the
Nominated Officer. GLL’s Nominated officer
CLAUDETTE ASHMAN

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 TIPPING OFF
A Person commits the offense of “Tipping Off” if:-

✓ He or she knows or has reasonable grounds to

believe that they are making a disclosure which is
likely to prejudice any investigation that might be
conducted following a report.

✓ Knowing or having reasonable grounds to

believe that the enforcing authority is acting or
proposing to act in connection with a money
laundering investigation which is being, or about
to be, conducted, he discloses information relating
to the investigations to any other person.
Exemption From Liability
No action, suit or other
proceedings may be brought or
instituted against any financial
institution or any employee
thereof in respect of any act or
omission done in good faith, in
the course of carrying out the
provisions of the Act.

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Designated Authority vs.
Competent Authority
The Designated authority is charged with conducting
criminal investigations with emphasis on money laundering
offences. Financial Investigations Division “FID”

The Competent authorities are charged with providing

operational guidance and oversight to regulated financial
institutions such as banks, securities dealers, insurance
companies, pension-management companies, building
societies, cambios, professionals such as accountants, lawyers
and real estate brokers. BOJ, FSC or other respective
oversight body
KNOW YOUR EMPLOYEES (KYE)
A good KYE programme includes the following basic
components:
Employee Identification Program (“EIP”)
Collect, verify and maintain records of employee identification information and screening of employees
(background & credit checks), previous convictions, etc.

Code of Conduct (“CC”)

All current employees should be required to sign to a code of business conduct

Financial Review (“FR”)

Require and review periodical financial position of employee

Monitoring
Look out for unusual changes in the employee lifestyle

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KNOW YOUR CUSTOMERS (KYC)
The basic elements of a good KYC programme includes the
following basic components:
Customer • Collect, verify and maintain records of
customer identification information and
Identification screening of customers
Program (“CIP”)

Basic Customer • Verify the identity of a customer and asses

the risks associated with that customer
Due
Diligence (“CDD”)

• Obtain additional information for higher-

Enhanced Due risk customers in order to provide a
Diligence (“EDD”) deeper understanding of customer activity
to mitigate associated risks

Ongoing • Oversight of financial transactions and

accounts based on thresholds developed as
Monitoring part of a customer’s risk profile
(“ON”)

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KYC - Identification
VALID Identity documents, such as passports, driver’s licences, national
identification cards (picture I.D.), which are verifiable from the issuing
institution should be requested.
Personal Details required - Individuals:
Name and/or names used Tax Registration Number/US Tax
Identification Number (If US Citizen)
Present address Specimen signature
Current address & telephone number Source of funds
Mailing address (if different) Nationality and /or Citizenship
Date and place of birth Occupation, nature of work, name of
employer or nature of employment or
business, employer’s telephone
number and address;
At least 2 character references

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 KYC - Verification
Proof of Address verification:
As part of the verification process, the name and permanent address of
the customer should be verified by an independent source. The following
methods may be used:

 reviewing a current utility bill for the customer’s residence;

 checking the telephone directory;
 Drivers Licence
 Electoral ID
 current credit card statement(s) and/or bank statements (must be no
more than 3 months old and must be the original document prepared
and dispatched directly from the financial institution

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 KYC - Verification
Failure to complete verification:
 In the event of failure to complete verification of any relevant
verification subject any business relationship with, or one-off
transaction for, the applicant for business should be suspended, and
any funds held to the applicant’s order returned in the form in which
it was received, until verification is subsequently completed (if at all).

 Note that funds should never be returned to a third party but

only to the source from which they came.

 Financial institutions should consider making a suspicious

transaction report when unable to obtain satisfactory evidence or
verification of identity of customers/beneficial owners.

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 RECORD KEEPING

Financial institutions are

required to maintain records of
their customers for a period of
7 years commencing with the
date on which the relevant
financial business was
completed. This period may be
extended as may be required by
the Designated Authority.

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Public Figures/Politically Exposed
Persons (PEPs)
 A “Public Figure” or “PEP” is one person who has been entrusted
with prominent public functions. These customers pose unique
reputational and other risk

 Enhanced due diligence must be executed for business relations with PEPs

 Once verification has been completed (and subject to the keeping of records in
accordance with the regulations), no further evidence of identity is needed
when transactions are subsequently undertaken, except, to update customer
information at least once every seven years during the course of the business
relationship

 The duty of continuous verification also requires the institution to

continuously monitor accounts for their consistency with the stated account
purpose or the source of funds, or pattern.

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Public Figures/Politically Exposed
Persons (PEPs)
PEPS include:
 Senior official in the executive, legislative, administrative, military or judicial
branches of a foreign government (whether elected or not)
 A senior official of a major foreign political party
 Head of State or Government
 Senior politicians
 Senior government members
 Member of any Parliament
 Minister of Government
 Member of judiciary
 A military official above the rank of captain
 A member of the police of or above the rank of Asst. Commissioner
 Senior executives of state owned companies
 Any corporation, business or other entity formed by or for the benefit of, a senior
political figure
 Important political party official
 Any “immediate family” and “close associates”

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Customer Risk Profile
 In line with the requirements of AML/CFT a customer risk profile will have
to be established. Customers at the higher end of the spectrum will require
more monitoring of their account activities.
 In terms of our operations, the following are determined to be the main
Risk Categories:
 Geography/location
 Customers
 Products and services
 Type of Business
 Occupation
 Line of Business
 Customer will then be grouped in terms of Risk:
 Low,
 Medium or
 High Risk

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Major Penalties
Penalties for Involvement in ML (S.98 (1))
Parish Court:
▫ Individual - Fine not exceeding
$3M or imprisonment for a term
not exceeding 5 years or both
fine and imprisonment.
▫ Body corporate - Fine not
exceeding $5M.
Circuit Court:
▫ Individual - Fine or imprisonment
for a term not exceeding 20
years or both fine and
imprisonment.
▫ Body corporate – Fine
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Major Penalties
“Tipping Off”

Parish Court;
- Fine not exceeding $ 1 M or imprisonment for
a term not exceeding 12 months or both.

Circuit Court;
-Fine or imprisonment for a term not exceeding
10 years or both such fine and imprisonment.

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Major Penalties
OFFENCES UNDER THE INDIVIDUAL COMPANY
ANTI-MONEY LAUNDERING
LEGISLATION

Failure to make required Up to 1 year in prison &/or

disclosure (suspicious transaction) up to a fine of J$1M
reports to the Nominated Officer or the (Parish Court);
Designated Authority Up to 10 years in prison
&/or a fine (Circuit
Court)
Failure to carryout identification, Up to 1 year in prison &/or Fine up to
record keeping, internal control up to a fine of J$1M J$3M
& communication, training relating to (Parish Court); (Parish
the recognition of transactions relating Up to 20 years in prison Court);
to money laundering & the provisions &/or a fine (Circuit A fine
of the Act & any regulations. Court) (Circuit
Court)
Major Penalties
OFFENCES UNDER THE INDIVIDUAL COMPANY
ANTI-MONEY LAUNDERING
LEGISLATION

Failure of a branch/subsidiary of a A fine of up to J$1M &/or A fine of up

regulated entity to comply with Part V up to 1 year in prison to J$3M
of POCA & POCMLPR or the higher of (Parish Court) (Parish
the required standard between the Court)
jurisdiction where the regulated
business is located & that which the
branch/subsidiary is located.
Failure to implement controls to detect A fine of up
& prevent laundering to
J$400,000
(Parish
Court)
Major Penalties
OFFENCES UNDER THE INDIVIDUAL COMPANY
ANTI-MONEY TERRORISM
PREVENTION LEGISLATION

Failure to report in accordance with Up to 12 months in A fine of up to

the TPA (Various) – To disclose or to jail &/or J$1M J$3M
report (Parish Court) (Parish Court)
Unauthorized disclosure re: Up to 2 years in jail Fine up to J$6M
investigation of terrorism offence by &/or
the Designated Authority and J$2M
Terrorism Reports made to the
designated officer and the Designated
Authority
Failure to implement regulatory A fine of up to
controls J$1M
(Parish Court)
 If You Suspect Money
Laundering or Terrorist
Financing

Report It!!!

03/15/2021 54
03/15/2021 55
Questions?

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THANK YOU FOR YOUR
PARTICIPATION

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You may now take the quiz

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