What constitute a suspicion?
A suspicious transaction will often be one when the transaction raises questions or gives rise to discomfort, apprehension or mistrust. When considering whether there is reason to be suspicious of a particular situation one should assess all the known circumstances relating to that situation. This includes the normal business practices and systems within the industry where the situation arises.
A suspicious situation may involve several factors that may on their own seem insignificant, but, taken together, may raise suspicion concerning that situation. The context, in which a situation arises, therefore, is a significant factor in assessing suspicion. This will vary from business to business and from one customer to another.
The Financial reporting Centre has issued a Guidance note on suspicious and unusual transactions reporting.
What is the meaning of AML/CFT?
AML/CFT is a widely used abbreviation for Anti-Money Laundering and Combating Financing of Terrorism. It embodies the counter measures and strategies developed or being developed to combat money laundering and terrorist financing at national, regional and international levels.
How do we combat money laundering and terrorist financing?
AML/CFT counter measures range from legislation to awareness creation. AML/CFT legislation, for example, criminalises money laundering, defines the offence and penalties and spells out the institutional or other measures put in place to combat financial crimes. AML/CFT supervision relates to compliance with guidelines issued by regulators and other requirements such as ‘know-your-client’ and maintenance of records. The setting up of the FRC in itself is a crucial AML/CFT measure alongside effective investigation and prosecution for offences of money laundering and terrorist financing.
Other AML/CFT measures include assets seizure or forfeiture, training, awareness-creation among the wider public and development of a strong reporting culture to the FRC to protect the financial system from abuses. By and large, AML/CFT frameworks tend to reflect the 40 Recommendations of the Financial Action Task Force.
What is a suspicious transaction?
A "suspicious transaction" means a transaction which
(a) Gives rise to a reasonable suspicion that it may involve –
(i) The laundering of money or the proceeds of any crime; or
(ii) Funds linked or related to, or to be used for, terrorism or acts of terrorism or by proscribed organisations, whether or not the funds represent the proceeds of a crime;
(b) Is made in circumstances of unusual or unjustified complexity;
(c) Appears to have no economic justification or lawful objective;
(d) Is made by or on behalf of a person whose identity has not been established to the satisfaction of the person with whom the transaction is made; or
(e) Gives rise to suspicion for any other reason.
A "transaction" includes -
(a) Opening an account, issuing a passbook, renting a safe deposit box, entering into a fiduciary relationship or establishing any other business relationship, whether electronically or otherwise; and
(b) A proposed transaction.
What is FATF?
The Financial Action Task Force (FATF) is the recognized international standard setter in the AML/CFT combat. Its purpose, besides promoting the adoption of its 40 Recommendations, is to evaluate and monitor compliance with its standards. It also carries typologies studies on methods, trends and techniques of money laundering and terrorist financing and responds to new and emerging threats in that area.
What is the Egmont Group?
The Egmont Group (EG) is the recognized international organization which provides a forum for FIUs to improve respective national AML programs and cooperation in the fight against money laundering and terrorism financing. The EG also helps in enhancing expertise and capabilities of FIUs’ staffs and fosters better communication among its 120 members.