The Financial Intelligence Unit

What should it do?

And who should do it?

Martin Comley
 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
• Freezing and confiscating terrorist assets III
• Reporting suspicious transactions related to terrorism IV
• International co-operation V
• Alternative remittance VI
• Wire transfers VII
• Non-profit organisations VIII
• Cash Couriers IX
 Methodology for assessing compliance with
FATF 40 (+ 8) Essential and Additional
Criteria are measured…

  Criteria   Criteria   Criteria   Criteria   Criteria

Additiona
Rec Essential l 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
 Methodology for assessing compliance with FATF
40 (+ 8), paragraphs where FIU / STR are directly
referenced:

• 3.4 • 27.6
• 13.1, 13.2, 13.5 • 30.1
• • Footnote 28
14.1, 14.2, 14.3
• 31.1, 31.1 a
• Footnote 22
• 32.2 a spot 1, 32.2 c spot
• 16.2, 16.6 2, 32.2 c spot 3
• 17.2 • 40.2
• 21.2 • 40.4.1
• 25.2 • 40.11
• 26.1, 26.2, 26.3, 26.4, • IV.1
26.5, 26.6, 26.7, 26.8, • VII.7
26.9, 26.10 • IIIV.3
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!
Rule 1: The FIU does not stand alone! It should be one
component of the National AML/CFT strategy.
Government
Policy / Strategy

Regulations
Legislators /
Guidance

Prosecutor
Financial
&
Judicial System
FIU Sector

Law
Enforcement Financial
(in its broader Sector
sense) Regulators

Always remember that M/L is the result of other criminality.

 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 we’ve 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?
Remember, the FIU is often the bridge across the
differing aspects of the AML/CFT regime…
Criminal
Criminal and or Administrative
Administrative

Regulations
Legislation And or
Guidance

Financial
Prosecutor FIU Sector

Law Financial
Enforcement Sector
Regulators
When you have looked at Receipt, Analysis and
Dissemination the consider…

1. What skills are necessary to undertake the above

functions.
2. What agency has most of these skills? [Ignoring
whether funds or human resources are available at this
stage]
3. What skills are NOT covered within the agency
identified in ‘2’?
a) Can they be obtained from another agency?
b) Are there still skills gaps?
 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
Ministry and autonomy to ensure
of Interior that it is free from undue Central Bank
influence or interference.

Financial
Ministry FIU Sector
of Justice
Regulator

Ministry Someone else? Law

of Finance Enforcement
Or a NEW body?
 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
 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
 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.
 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)
 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
 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)

 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.
 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 SRO’s and DNFBP

• Does it have regard to:

– the Egmont Statement of Purpose
– The Egmont principals
 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)
 FIU Interaction & Timing with others…
Research, Intelligence Reports

Suspicious Transaction Reports Feedback Feedback

Set by Law.
As soon as suspicion aroused i) ‘z’ working days
ii) ‘y’ working days
As required
‘x’ working days

Financial
Financial Intelligence
Law
Unit
Institution Enforcement
Research
Update Files

‘z’ working days ‘x’ working hours/days

b) ‘x’ working hours/days ‘x’ working hours/days
a) As soon as possible

a) Acknowledgements b) Consent (or not) Intelligence Package

Feedback Enquiry Results
Evaluation Criteria, what’s 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 country’s 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.
 Evaluation Criteria, what’s 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
 Evaluation Criteria, what’s 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?