money laundering - government of the british virgin islands money laundering booklet... · •...
TRANSCRIPT
Money Laundering
Money Laundering is the process by which criminals attempt to conceal the true source of the money they gain through criminal activities. The process is usually done through placement, layering and integration.
• Placement: involves the introduction of illegal funds into the financial system such as through a bank.
• Layering: involves creating complex trails to disguise the actual source of funds, for example, making multiple deposits and wire transfers, through onshore and offshore banks.
• Integration: is when laundered money becomes a part of the financial services system and appears legal. Sometimes this includes purchasing high valued goods for resale.
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How Money Laundering Affects YOU!
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Do you think that your insurance company asks too many questions just to insure your car? Why does your bank want to get into your personal business: a copy of your passport identification page, original salary slips, and your utility bills?
1) It’s the law! Banks and insurance companies are required by BVI law to verify the identity of their clients and to identify their source of funds.
2) To protect you - Banks and insurance companies need your information to protect your identity and safeguard you against possible financial fraud.
3) To prevent handling and laundering dirty money – It is illegal in the BVI for banks and insurance companies to accept dirty money, that is, money that comes from criminal activities such as theft, corruption, gambling, fraud, prostitution and drug dealing. Without proper verification, banks and insurance companies can be used to hide and disguise the true source of dirty money. Banks and insurance companies must ensure that their establishments are not used for these purposes.
4) To prevent terrorist financing - Banks and insurance companies must ensure that their establishments are not used to move, collect, hide or make funds available for terrorist activities.
Remember, banks and insurance companies want to know more about you to protect you and help keep criminals at bay1.
How Money Laundering Affects Business1) Money gotten from crimes like embezzlement and fraud deprive businesses and affect their profit margin.
2) The use of “front companies” or companies set up to launder money that look like legitimate businesses can create unfair market competition for true businesses.
How Money Laundering Affects Society1) Money Laundering encourages criminal activity by allowing criminals to fund their activities.
2) Organised crime cells can acquire huge amounts of money that they can use to bribe public officers and essentially buy out entire legal and government systems. 1 “Five Reasons Why the Bank Wants to Know More About You” brochure produced by the BVI Financial Services Commission
and the BVI Banking Association
Shawn is travelling to St. Martin in 2 weeks. His friend asks him to carry $9,800 in cash to his sick relative who desperately needs it in
order to pay for surgery. The cash is a mixture of small bills.
What should Shawn do?
• Recommend the use of a money order, wire transfer or bank cheque to get the money to the sick relative.
Ways Money Laundering May Occur...
• Use of small bills could indicate that the money was obtained from drug trafficking or other illegal activities.
• Sending a large sum of raw cash rather than using a cheque, bank, or money remitter where it could be tracked is questionable.
• In some countries travelers are required to declare monies in excess of $10,000 when travelling. The $9,800 which Shawn’s friend has requested that he deliver is just under the $10,000 threshold. Shawn’s friend may have deliberately provided an amount just under this threshold to ensure that the money would not have to be declared.
• Shawn’s friend has a sick relative and is willing to wait two weeks to supply the money when there are means by which the money could be made available to the relative almost instantaneously.
Red Flags: Things Shawn should consider
3 Section 87(2)(d) of the Customs Management and Duties Act, 2010 states that “A person entering or departing from the Territory shall, at the place and in the manner the Commissioner may direct, make a declaration of anything contained in the person’s baggage or carried with the person which (d) being an amount of cash, exceeds ten thousand dollars
DidyouknowthatwhentravelingtoorfromtheBVIyouareobligatedtodeclaremoniesinyourpossessionthatexceed$10,000?3
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Fighting Money Laundering Fights Crime
Although money laundering is a threat to the proper functioning of a financial system, it can be the “Achilles heel”2 of criminal activity. Being able to trace ill gotten money can help law enforcement during investigations. Connections made through financial transaction records often allow hidden assets to be located and reveals the identity of the criminals. Successful money laundering investigations often lead to the seizure or confiscation of criminal assets. This cripples a criminal network and can put an end to particular criminal activities.
2 “Money Laundering: What is Money Laundering” FATF - www.cfatf-gafi.org/pages/faq/moneylaundering
Ways Money Laundering May Occur...
Your long time friend asks you to deposit $10,000 on your bank account because his wife has access to all his accounts and continually wastes his money shopping online. You are aware that your friend earns a modest income and is still paying child support for three children from his
previous marriage. In addition, you have noted that in recent years he has become very close with his brother-in-law who is
a senior member of a political party and owns a number of thriving businesses.
• How has your friend of such modest means been able to save $10,000 given his expenses?
• Why hasn’t he spoken to his wife about her spending habits or alternatively created a separate account in his name to hold the money?
• Why has he chosen you, someone also of modest means, to hold this money as opposed to a family member like his mother, father or even brother?
What should YOU do?
• Tell your friend to ask a person he trusts to speak to his wife about her spending habits.
• Tell your friend that $10,000 is a lot of money and even though you are good friends he needs to explain how he has earned this money and provide evidence.
• Request that he explain why he has chosen not to set up an independent account in his own name or a family member’s name to hold the funds.
Red Flags: Things you should consider
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Money Laundering is a Crime
4 Section 28 of the Proceeds of Criminal Conduct Act, 1997 criminalises money laundering. The objective of criminalizing money laundering is to take the profit out of crime.
Many people do not realize that Money Laundering is a crime (offence). Assisting another person in laundering money is also a crime.4 Money laundering offences in the BVI are punishable summarily on conviction by a magisrate’s court or indictably on conviction by the High Court. The offences and penalties are outlined below:
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Section of the Proceeds of Criminal Conduct
Act, 1997 and Amendments
Description of Offence Penalties Applicable
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Entering into or otherwise concerned with an arrangement which is known or suspected to facilitate money laundering by or
on behalf of another
On Summary Conviction a fine not exceeding $250,000 or
imprisonment not exceeding 2 years or both
On Conviction on Indictment a fine not exceeding $500,000 or
imprisonment not exceeding 14 years
29Knowingly acquiring property that represents proceeds of criminal
conduct
On Summary Conviction a fine not exceeding $250,000 or
imprisonment not exceeding 2 years or both
On Conviction on Indictment a fine not exceeding $500,000 or
imprisonment not exceeding 14 years
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Concealing, disguising, converting and transfering proceeds of
criminal conduct knowingly for one's own benefit or for the benefit of another person
On Summary Conviction a fine not exceeding $250,000 or
imprisonment not exceeding 2 years or both
On Conviction on Indictment a fine not exceeding $500,000 or
imprisonment not exceeding 14 years
30A (10)(a)&(b)Failure to disclose or report to the FIA suspicious activity of money
laundering
On Summary Conviction a fine not exceeding $150,000 or
imprisonment not exceeding 3 years or both
On Conviction on Indictment a fine not exceeding $500,000 or
imprisonment not exceeding 5 years or both
31Tipping off a person thereby providing information that prejudices an investigation
On Summary Conviction a fine not exceeding $250,000 or
imprisonment not exceeding 2 years or both
On Conviction on Indictment a fine not exceeding $500,000 or
imprisonment not exceeding 5 years or both
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Disclosing information that prejudices a known or suspected investigation for which a formal warrant has been obtained and is
taking place
On Summary Conviction a fine not exceeding $150,000 or
imprisonment not exceeding 2 years
In addition, the law empowers the Financial Services Commission to impose administrative penalties not exceeding $100,000 for any failure to comply with or any contravention of a provision of the Anti-Money Laundering and Terrorist Financing Code of Practice, 2008 (AMLTFCOP). The offences and penalties are prescribed in Schedule 4 of the (AMLTFCOP) and range from $50,000 to $75,000.
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Section of the Proceeds of Criminal Conduct
Act, 1997 and Amendments
Description of Offence Penalties Applicable
28
Entering into or otherwise concerned with an arrangement which is known or suspected to facilitate money laundering by or
on behalf of another
On Summary Conviction a fine not exceeding $250,000 or
imprisonment not exceeding 2 years or both
On Conviction on Indictment a fine not exceeding $500,000 or
imprisonment not exceeding 14 years
29Knowingly acquiring property that represents proceeds of criminal
conduct
On Summary Conviction a fine not exceeding $250,000 or
imprisonment not exceeding 2 years or both
On Conviction on Indictment a fine not exceeding $500,000 or
imprisonment not exceeding 14 years
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Concealing, disguising, converting and transfering proceeds of
criminal conduct knowingly for one's own benefit or for the benefit of another person
On Summary Conviction a fine not exceeding $250,000 or
imprisonment not exceeding 2 years or both
On Conviction on Indictment a fine not exceeding $500,000 or
imprisonment not exceeding 14 years
30A (10)(a)&(b)Failure to disclose or report to the FIA suspicious activity of money
laundering
On Summary Conviction a fine not exceeding $150,000 or
imprisonment not exceeding 3 years or both
On Conviction on Indictment a fine not exceeding $500,000 or
imprisonment not exceeding 5 years or both
31Tipping off a person thereby providing information that prejudices an investigation
On Summary Conviction a fine not exceeding $250,000 or
imprisonment not exceeding 2 years or both
On Conviction on Indictment a fine not exceeding $500,000 or
imprisonment not exceeding 5 years or both
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Disclosing information that prejudices a known or suspected investigation for which a formal warrant has been obtained and is
taking place
On Summary Conviction a fine not exceeding $150,000 or
imprisonment not exceeding 2 years
Working Together: YOU can Help!If you work for a Financial Institution or Designated Non-Financial Business and Profession (DNFBP) and suspect that any clients are laundering money, contact your office’s Money Laundering Reporting Officer (MLRO). They will report it to the local financial investigative authority which in the BVI for these purposes is the Financial Investigation Agency (FIA). They can be contacted by calling 494 1335 or emailing [email protected].
If you are a member of the public and suspect someone of money laundering contact the Financial Crimes Unit of the Royal Virgin Islands Police Force by calling 494 3822 or simply dialing 311.
For more information about the fight against money laundering in the BVI visit the BVI National Risk Assessment website at www.bvinra.org