The Money Laundering Reporting Officer (MLRO), is legally obligated to review employee reports of suspicious activity and determine whether or not such data should be made the subject, of a suspicious transactions report (STR). Where any ambiguity arises, I would advise you to report. The information provided to the Financial Inteliigence Unit (FIU), may be the essential link with intelligence, in our possession.
The Bahamas’ FIU has foreign FIU counterparts, who are equipped to assist in regulating suspicious activities in the foregoing circumstances. It is vital for all suspicious activities to be reported, since this could lead to the prosecution of a criminal. In a recent case, subsequent to the submission of a STR, the FIU, along with the financial institution, were able to initially block all of the accounts held by the individual, under the powers as codified in S 4(2) (b) of the FIU Act (the Act) which provides that, “the Director can order in writing, any person to refrain from completing any transaction, for a period not exceeding 72 hours.” Due to information obtained from the Commissioner of Police, a further request was made to freeze such accounts under S 4(2)(c)of the Act, for an additional 5 days.
All members of staff are trained to be vigilant, while dealing with customers of various financial services institutions. Just as you are mandated to know your customers, do you know your employees? Have you conducted background checks on your employees? Are they susceptible to being lured to use client’s funds, for their own benefit? This is a very real issue which MLRO’s should not ignore.
Statute has only placed the obligation on all financial institutions to report STRs but it is mandatory to do so (see S 14 of the Financial Transactions Reporting Act). Although this is the law, the FIU has received less than 300 STR’s for the year of 2004. There are over 1000 MLROs registered with the FIU, varying from the traditional banking sector to insurance, law firms, accounting firms, corporate service providers, property managers and credit unions, inter alia.
Each sector may have different concerns. Yet, if you do not communicate with the FIU as to what your particular needs are, how it then effectively render assistance to you? It is of mutual benefit to discuss concerns and issues in your financial service, so that you may know how the FIU can facilitate you. A seminar is the ideal forum for us to raise some of them. Feedback is required in order for the FIU to evolve, so that it can be guided as to how to design training programs for your particular industry.
Why is it that MLRO’s are not reporting suspicious transaction reports to the FIU? The FIU has come up with several reasons why MLRO’s do not report STR’s though they are mandated to do so under S 5(d) of the Financial Intelligence (Transactions Reporting) Regulations. Such section places the burden of reporting STR’s, on the MLRO so that it may disclose to the FIU where he or she knows, suspects or has reasonable grounds to suspect that a person is engaged in money laundering. To date, even though no prosecutions have been made under these regulations, it does not negate the importance of complying and ensuring that your financial institution, is conforming to the standards set by the Regulations.
Prepared by Mrs Kenrah Newry Legal Counsel Financial Intelligence Unit (FIU)
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