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Money LaunderingLegislation

ational Measures

Fraud Working Group

russe s - Octo er 2002

European Banking Federationue Montoyer 10- 1000 Brusselsww.fbe.be


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TABLE OF CONTENTS


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INTRODUCTION

NATIONAL MEASURES IN THE HOME COUNTRIES OF THE FBE MEMBERS

AUSTRIA 1

BELGIUM 4

DENMARK 9

FINLAND 12

FRANCE 15

GERMANY 20

GREECE 24

ICELAND 29

IRELAND 33

ITALY 38

LUXEMBOURG 42

THE NETHERLANDS 46

NORWAY 51

PORTUGAL 56

SPAIN 59SWEDEN 63

SWITZERLAND 66

UNITED KINGDOM 71

NATIONAL MEASURES IN OTHER EUROPEAN COUNTRIES

ANDORRA 75

BULGARIA 78

CROATIA 82

CYPRUS 86

CZECH REPUBLIC 89

ESTONIA 92

HUNGARY 96

LATVIA 102


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LITHUANIA 107

MALTA 110

POLAND 114

SLOVAK REPUBLIC 117

SLOVENIA 120

TURKEY 124

NATIONAL MEASURES IN THIRD COUNTRIES

AUSTRALIA 127

GIBRALTAR 131

JAPAN 134

MONACO 138NEW ZEALAND 142

UNITED STATES OF AMERICA 146

ANNEX 1: IDENTIFICATION AT A DISTANCE (I-III) 150

ANNEX 2: TERRORIST FINANCING (I-XXVII) 154

LIST OF ADDRESSES 155


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INTRODUCTION


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NATIONAL MEASURES IN THE HOME COUNTRIESOF FBE MEMBERS


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Austria1

AUSTRIA

1. MONEY LAUNDERING LEGISLATION

- The Austrian Penal Code (Strafgezetzbuch) provides for a specific money laundering

offence covering the proceeds of all serious crimes and deals with the confiscation ofproceeds from crime and extradition. In August 2002 an amendment to the Penal Codewidened the scope of money laundering to cover fully the requirements of the UNConvention on Organized Crime including the financing of terrorism.

- Banking Act ( 40, 41): stipulates a mandatory system based on reporting suspicions (tothe Austrian Financial Intelligence Unit), including inter alia enhanced customeridentification and record-keeping requirements (for transactions in excess of EUR 15,000or the equivalent amount in foreign currency). Amended in 2000.

- On 1 November 2000, the Austrian Banking Act was amended to prohibit the opening of

so-called anonymous savings accounts; the provisions on the identification rulesconcerning depositing and withdrawing funds with regard to such savings accounts havebeen adapted accordingly. The transition period for existing anonymous accounts endedon 30 June 2002.

2. CENTRAL AUTHORITY FOR REPORTING

The General Directorate for Public Security within the Federal Ministry of the Interior(Bundeskriminalamt Geldwschemeldestelle).

3. BUSINESSES COVERED BY THE LEGISLATION

Only financial institutions are covered by the Banking Law, however the provisions of thePenal Code relating to money laundering as an offence also concern individual persons andare not limited to specific businesses or institutions.The Austrian Industrial Code (Gewerbeordnung) will be amended to implement fully the 2ndMoney Laundering Directive.

4. FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION

The Banking Law provides for feedback as a standard procedure. However, this is currentlyimplemented in a pragmatic way through periodic direct contacts between banks (and/ortheir security officers) and the Unit for the Fight against Organised Crime set up within theGeneral Directorate for Public Security.

5. OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED

The legislation covers all assets of criminal origin.


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Austria2

6. CONSERVATION OF RECORDS AND DOCUMENTS

DurationIdentification documents: banking law obliges banks to keep evidence for at least 5years after the end of the business relationship with the customer.Transaction documents: supporting evidence and records of all transactions for aperiod of at least five years following the execution of the transaction.

7. PERSONS RESPONSIBLE FOR REPORTING

In general a person is appointed to act as the central point for reporting suspiciousoperations for the bank as a whole. He/she is the point of contact with the moneylaundering authorities.

8. PURPOSES FOR WHICH THE INFORMATION MAY BE USED

Legislation only provides for the information collected to be used to combat criminal, notfiscal, offences.

9. LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION

Under the Banking Law ( 40, 41), bank staff have no liability if the notifications are made ingood faith; banks are prohibited from warning customers that notifications have been made.

10. REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUSOPERATION (EXECUTION/NON-EXECUTION)

Credit institutions and financial institutions have to inform the General Directorate for PublicSecurity if there is reasonable suspicion that:

a transaction which has already been concluded, is in progress or is about to beconcluded is for the purpose of money laundering; or,

a customer has breached his duty to disclose fiduciary relationships.In case of doubt, instructions regarding deposits may be executed, but withdrawals may notbe made.If, within 24 hours (end of the following banking day) of the proposed transaction beingnotified, the competent authority has not prohibited the transaction, the transaction maythen be executed.

11. IDENTIFICATION

a) Identification threshold amountUnder the Banking Law, there is a mandatory system for customer identificationwhen a permanent business relationship is established or in the case of transactionsamounting to at least EUR 15,000 or the equivalent amount in foreign currency,irrespective of whether the transaction is carried out in a single operation or inseveral operations which are obviously closely linked.

b) Means of identificationBanks are obliged to register the identity of their customers.In general, means of identification are:


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Austria3

Natural persons: an official identification document, e.g. passport,Austrian national identity card; (Austrian) drivers license, a nationalidentity card of a member state of the European Union;

Legal persons: extracts from the Commercial Register (which is acomputerized official on-line database containing all relevant informationon a company) or a certificate of incorporation or registration.

Under the Foreign Exchange Law banks and financial institutions areobliged, when entering into a business relationship with a customer, toverify the customer's status with regard to foreign exchange regulations.

Natural or legal persons acting for the account of a third person:Insofar as a natural or legal person acts as trustee for funds from non-residents, the depositor must inform the account holding institution ofthe beneficiary's identity (disclosure of the beneficiary's name andresidence and the depositor must prove that he has the right under apower of attorney to act for the beneficiary).

c) Identification at a distanceIn certain limited circumstances, an account may also be opened without theprospective account holder being obliged to go in person to the credit institution. Inpractice, banks also accept identification checks, but only through reliable thirdparties that carry out the identity checks on their behalf. Reliable third parties are,for instance, correspondent banks, which are also subject to the obligations of the ECDirective on money laundering, banks from countries that have comparable moneylaundering rules, such as US banks, or Austrian consulates abroad.A customer may not open an account if his or her identity cannot be established, i.e.in case of correspondence by letter or by telephone. Therefore, the opening ofaccounts by correspondence, telephone and, according to the jurisprudence of theAustrian Supreme Court, by fax, is not possible.

12. STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY

LAUNDERING

The Association keeps its members informed of legislative developments. Audiovisual aidshave been made available.Internal training is organised within banks.


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Belgium4

BELGIUM


The EC Directive has been transposed in various stages:

- Article 2 of the EC Directive (prohibition on money laundering) was transposed intothe law of 17 July 1990. Under this law, moneylaundering constitutes the criminaloffence of possession and handling of stolen goods (recel) "in the broad sense";

- The rules on banking practices laid down in the EC Directive (Articles 3, 4, 5 and11) were first set out in a circular issued by the Banking and Finance Commission(BFC) on 17 July 1991 addressed to the credit sector. These standards have sincebeen confirmed in the law of 11 January 1993 (the scope of which is broader asregards rationae personae). As far as substance is concerned, the circular and thelaw generally concur. However, there are some differences:

first, the obligations imposed under the circular are more detailed,and consequently more concrete, than those provided for under thelaw;

secondly, the law sometimes proposes alternative solutions withregard to detailed implementation of ethical obligations;

thirdly, in contrast with the law, the circular also imposes obligationson branches of Belgian banks established abroad.

The Banking and Finance Commission (BFC) published an update of its circular inSeptember 1993 that took into account the conclusions which could be drawn fromthe law of 11 January 1993 (the circular has subsequently been updated following

the adaptations made to the regulations; the latest circular dates from May 1999).

- The disclosure obligation was formalised in the law of 11 January 1993 and becameapplicable on 1 December 1993, with the setting up of the unit responsible fordisclosures;

- The law of 11 July 1994 extending the offences covered to illegal trafficking inhormones;

- The law of 7 April 1995 extending the offences covered to illegal trafficking inhuman tissues and organs, fraud damaging the interests of the European Union,

serious and organised tax fraud, corruption of public officials, investmentirregularities, swindling, hostage taking, theft or extortion with violence andintimidation, and fraudulent bankruptcies;

- The Royal Decree of 27 December 1994 concerning bureaux de change and foreignexchange dealing established an obligation for bureaux de change to be registeredwith the Banking and Finance Commission, to comply with money launderingregulations and to issue a transaction statement. A list of registered bureaux dechange is published in the Belgian Official Gazette on a regular basis;


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- The law of 10 August 1998 amending the law of 11 January 1993 and extending theoffences covered to public notaries, bailiffs, company auditors, independentauditors, casinos and estate agents.


The "Cellule de Traitement des Informations Financires" (hereinafter the DisclosureUnit).


A distinction must be made between:

- The Penal Code, which has general application: it is applicable to any offence;- Recommended banking practice set out in the circular issued by the Banking and

Finance Commission, which only applies to the credit sector;- The law of 11 January 1993 which applies to financial institutions and the following

parties:

the Banque Nationale de Belgique; Belgian credit institutions (including public-sector credit institutions and

businesses governed by Chapter I of the law of 10 June 1964); investment firms, and more specifically stockbrokers, investment managers

and investment advisers; the branches in Belgium of foreign investment companies; Belgian insurance companies; the Belgian Post Office/Postbank, "La Poste"; savings banks; the "Caisse des Dpts et Consignations" (the parapublic savings bank); mortgage and credit companies, credit card schemes and leasing companies

(Royal Decree of 24 March 1995); all persons who undertake, for professional purposes, the purchase or sale

of spot currencies in the form of cash or cheques denominated in foreigncurrencies or by using a credit card or a payment card;

foreign exchange dealers and "bureaux de change"; notaries public; bailiffs; company auditors; independent auditors, casinos; security companies; estate agents.


There is no provision for feedback (except as regards instructions by the Disclosure Unitconcerning the execution of a notified transaction).


A distinction must be made between:


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The European Banking Federation(FBE) is publishing a new version of its Reporton Money Laundering Legislation: National Measures. This extensive documentoffers an inventory of national regulations on money laundering in more than 35countries in Europe and beyond.

National legislation are detailed and listed with identical headings (type of legislation,business covered, reporting procedures, identification requirements, etc.) whichintroduce some valuable elements of comparison among countries. Due to recentdevelopments in this matter, we have also taken particular interest in more topicalquestions such as identification at a distance and terrorist financing (see thecomparative tables in the Annexes).

Please note that the Report is based on information collected from July to October2002. The FBE cannot be held responsible or liable in any way for possible omissionsor inaccuracies.

Catherine MARTYThe FBE Secretariat, October 2002.

The European Banking Federation is the united voice of some 3,000 banks of the European Union (EU)and the European Trade Association (EFTA) countries. The Fraud Working Group of the FBE is in chargeof the money laundering issues.

Reproduction of this text or any part thereof without mention of the European Banking Federation asthe author is totally prohibited.


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Under Article 20 of the law of 11 January 1993 on the Prevention of the Use of theFinancial Systems for Money Laundering, no civil, penal or disciplinary action, orprofessional sanction can be taken against bodies or persons covered by Article 2, theiremployees or representatives who have communicated information in good faith, inaccordance with Articles 12 to 15.


In principle, the operation to be performed must first be notified to the Disclosure Unit; thelatter must be informed at the same time of the deadline for execution of the operation.The Unit may then, prior to the expiry of the deadline, prohibit execution of the operation;this prohibition is valid only for 24 hours, unless it is extended.But when it is impossible to postpone execution due to the nature of the operation, or ifpostponement would impede prosecution of the beneficiaries, the operation may beexecuted. The Unit must however be informed immediately afterwards; it must also beinformed of the reasons why prior notification was not made.It is also possible for a credit institution confronted with a suspect operation to decide torefuse the order. This would appear to be permitted under Belgian legislation provided,however, that the credit institution takes the initiative of informing the Unit of the groundsfor suspecting money laundering.

11. IDENTIFICATION

The regulations have been drafted in very general terms to enable businesses to tailorsolutions to specific cases, in line with the companys recommendations and practices.

a) Identification threshold amountIdentification of customers is required in the case of transactions, including foreign

exchange transactions, of EUR 10,000.

b) Means of identificationUnder the provisions of the law of 11 January 1993, financial institutions mustcheck the identity of customers by means of documents constituting evidence:- Natural persons

Identification of their surname, first name and address.- Legal persons

Identification of their corporate name, address or, as appropriate, the headoffice.

- Natural or legal persons acting on behalf of a third person

The circular of the Banking and Financial Commission states moreover thatwhen there are grounds for ascertaining the identity of a beneficiary of anoperation but the identity of the beneficiary cannot be determinedsufficiently clearly, credit institutions must obtain from the customer asigned declaration confirming that he is acting on his own or on behalf ofanother person and that, insofar as he is aware, the funds are not derivedfrom major criminal activities prohibited by the international community andmore specifically those related to drug trafficking.


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c) Cases in which the identification requirement does not applyIn accordance with the EC directive, Belgian regulations impose no identificationrequirements if the customer is a credit institution. Following the Royal Decree of 27December 1994 concerning Bureaux de Change and Foreign Exchange transactions,the same rule also applies if the counterparty is a bureau de change - providedthat it is registered with the Banking and Financial Commission or subject to theobligations and sanctions imposed under the Money Laundering Directive.

d) Identification at a distanceThe BFC circular states that credit institutions must establish adequate customer

identification procedures and internal control procedures for distance transactions.These procedures must enable credit institutions to comply with all their legalobligations and the principles set out in the circular.

12. STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEYLAUNDERING

In December 1992 and January 1993, the Association provided training in technical andlegal aspects of money laundering to bank units responsible for training employees withregard to money laundering. At the same time, the units in question were shown how touse the training kit for training their employees in customer awareness. This kit consists ofa manual containing the full text of a half-day seminar that they will be required toorganise, as well as a set of slides for use in the seminar and reference brochures for theparticipants. In addition there is a diskette containing examples of money launderingtailored to the specific needs of the participants. On request, the Belgian Association willprovide training to all the bank's staff, determining the content of practical examples inconsultation with the banks management.Each year, the Association tries to organise an information meeting with the competentauthorities. Part of this meeting is devoted to examining the most important aspects andways of laundering money.


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Denmark9

DENMARK


The Danish law implementing the 1991 EC Directive came into force on 1 July 1993. The

Danish system is the so-called mandatory system. Banks and other financial institutionsare under an obligation to report any suspicions that they may have about moneylaundering under Danish criminal law.


A special branch of the Danish police (Department for Special Crime).


The law covers the financial sector, i.e.: commercial banks; savings banks; mortgage lenders; brokerage companies; credit card companies; leasing companies; factoring companies; life-insurance companies; pension funds; bureaux de change; casinos.


Practical procedures for feedback from the police have not yet been finalised.


The money laundering legislation covers any punishable offence, not just those linked todrug trafficking.


a) Duration

Evidence must be kept for at least five years after termination of the customerrelationship or the execution of the transaction.


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b) Means of conservation

Records may be stored photographically, in data form or on microfilm.


The Danish Bankers Association has recommended that member banks establish reportingprocedures in departments and branches for suspicious operations to be notified to acentral body within the bank (e.g. the legal department) which would be responsible forreporting to the police.


The Danish law does not make provision for the information to be used for purposes otherthan combating money laundering.


If there is suspicion that a transaction is associated with money laundering, the bank mustinvestigate it. If the suspicion cannot be disproved, the transaction must be suspendeduntil the police have been informed. Where it is impossible to prevent the transactionbeing carried out, or this might hinder prosecution of those benefiting from the suspectedmoney laundering transaction, the police must be informed as soon as the transaction hasbeen completed.

10. IDENTIFICATION

a) Identification threshold amount

The identity of occasional customers must always be checked when the amount ofthe transaction exceeds EUR15,000. Identification is required in all cases wherethere are suspicions of money laundering.

b) Means of identification

The law requires a new customers name, address and personal or corporateregistration number to be checked. The following means of identifying customersare recommended:

- Natural personsPassport, driving license, joint cash card and ID card of the Danish

banks and savings banks and other official ID cards.- Legal persons Publicly registered companies:a copy of the relevant register

showing name, management, registration number, etc. Other legal persons (societies, etc.): the requirements for

identification vary.

In all categories the address must be checked.


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Finland12

FINLAND


- An amendment to the Penal Code came into force on 1 January 1994.

- The new law: Act on Preventing and Combating Money Laundering (68/98), came

into force on 1 March 1998. (The new law partly repeals the previous laws: theCredit Institution Actof 1 January 1997 and The Insurance Intermediary Actof 1January 1994). Some minor changes after that; a couple of initiatives to change thelaw, one in the Parliament and one bill in Ministry.

- Under the new law, the Ministry of the Interior issued on 1 March 1998 newregulations to prevent and combat money laundering. A new one came into forceon 15 February 2002.


- The Money Laundering Clearing Unit (MLCU) established at the National Bureau ofInvestigation (NBI).


- The Criminal Code has general application.- The Act on Preventing and Combating Money laundering covers:

credit institutions and financial institutions; bureaux de change; branches and agencies of foreign credit institutions and foreign financial

institutions; branches and agencies of foreign investment companies; co-operative societies engaged in savings fund activities; insurance companies; agencies of foreign insurance companies; insurance brokers; pawnshops; casinos; lottery; real estate agents.

- A few other businesses will be covered after the planned changes.


No regular feedback from the NBI Money Laundering Clearance Unit (except in the case ofan order by NBI to suspend a transaction for five banking days).


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The legislation covers all crimes, including tax offences.


a) DurationIdentification documents must be kept for 5 years.

b) Means of conservationAny reliable manner.


A bank clerk who has grounds for suspicion must contact his/her superior. The superior willnotify the contact person at the bank's head office. The contact person will notify theNational Bureau of Investigation.


The information may only be used to combat money laundering.


The bank is liable for damages for any financial loss caused to a customer due to clearing atransaction, reporting a suspicious transaction or suspending or refusing to execute atransaction only if the bank fails to exercise due diligence in a manner that, in thecircumstances, could have been expected of the bank.

Persons who fail to comply with the obligation to identify a customer are liable to a fine orimprisonment of maximum six months, unless a more severe punishment is stipulatedelsewhere in the law.


When money laundering is suspected, the bank may:

refuse to execute the transaction, in which case the bank must make a notification

to MLCU/NBI; execute the transaction but make a notification to MLCU/NBI.

MLCU/NBI can instruct the bank to suspend a transaction for five banking days. If thepolice does not intervene during that period, the bank has the right and obligation tocomplete the transaction.


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11. IDENTIFICATION

a) Identification threshold amountCustomers must always be identified when the transaction exceeds EUR 15,000.The customer must always be identified at the start of a permanent businessrelationship (e.g. opening of an account, rental of a safe-deposit box, etc).In the event of any suspicions regarding a transaction, identification is alwaysrequired. Details of the background and purpose of the transaction are required.

b) Means of identification

Valid identification documents are:- Natural persons identity card issued by the police; driver's licence; passport; bankcard with photo; health insurance card with photo.

- Legal persons extract from trade register; articles of association; extract from the minutes which include the decision to open the

account.- Natural or legal persons acting for the account of a third person

Banks ask for identification of any "middlemen" when the person carryingout the operation is not acting on his own behalf. The middlemansidentification is checked by all appropriate means.

c) Cases in which the identification requirement does not applyFor transactions carried out in the framework of a permanent business relationship,not exceeding EUR 15,000 and when there is no suspicion of money laundering.

The identity of a customer does not need to be checked if the payment included in

a transaction is made from a customers account with a credit institution or financialinstitution authorised in a Member State of the European Economic Area or with thebranch operating in a Member State of the European Economic Area of a creditinstitution or financial institution not authorised in a Member State of the EuropeanEconomic Area.

The identity of a customer does not need to be checked if the customer is a creditinstitution, financial institution, investment company or life insurance company or abranch operating in a Member State of the European Economic Area of EconomicArea.


The Finnish Bankers Association has produced new guidelines for banks; these are basedon the new law and form the basis of new training material.The banks are responsible for training their own staff.


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France15

FRANCE


1.1 Banks obligations with regard to combating money laundering

- Act no. 90-614 of 12 July 1990, supplemented by decree no. 91-160 of 13 February 1991and Banking and Financial Regulations Committee regulation no. 91-07 of 15 February1991. Banks must report to TRACFIN [the French body for action against clandestinefinancial channels] all amounts and transactions that appear to be derived from drugtrafficking. These reports are known as suspicious transaction reports. The banks also havevigilance obligations:

- customer identification obligation (see point 11);

- obligation to monitor specifically transactions over EUR 150,000 which have

unusually complex conditions and do not seem to have any economic justification orlawful purpose. Banks must ask the customer to provide information about thetransactions characteristics and record these in writing.

- Act no. 93-122 of 29 July 1993, amending the Act of 12 July 1990. Suspicious transactionreports are extended to cover amounts and transactions that appear to be derived from theactivities of criminal organisations.

- Act no. 2001-420 of 15 May 2001. This Act imposes new obligations on financial institutionsin addition to the existing suspicious transaction reporting obligation. The following mustbe reported automatically to TRACFIN:

--any transaction where the identity of the principal or beneficiary remains doubtfuldespite the identity checks that financial institutions have to carry out,,

- any transaction involving a foundation (and in particular a trust) where theidentity of the principal or beneficiaries is unknown.

- transactions of a certain amount, carried out with certain countries or territories,whose legislation or practices are considered by the FATF as insufficient or anobstacle to combating money laundering. These reporting obligations are specifiedon a case-by-case basis by decree (the first decree to be adopted on the basis of

this provision was decree no. 2002-145 of 7 February 2002, which made itobligatory for financial institutions to report to TRACFIN any transactions carried outon behalf of a customer or a customers principal in an amount greater than 8,000euros, with persons resident, registered or established in Nauru).

- The Act of 15 May 2001 also amended the scope of the suspicious transaction report,which now covers amounts and transactions that could (instead of appear to) bederived from drug trafficking or organised criminal activity (instead of the activities ofcriminal organisations). These new expressions significantly extend the scope of thesuspicious transaction report insofar as:


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- with regard to the first, a report must now be filed if there is a mere doubt aboutthe possibility of drug trafficking or organised criminal activity, even in the absenceof specific or conclusive evidence,

- with regard to the second, the aim now is for the law to take into account criminalbehaviour rather than criminal structures.

- The Acts of 1990, 1993 and 2001 are encoded in the legislative section of the FrenchMonetary and Financial Code in articles L.561-1 et seq.

- Regulation no. 2002-01 of 18 April 2002 relating to vigilance obligations with regard tocheques for the purpose of combating money laundering imposes specific obligations onbanks with regard to cheque monitoring.

1.2 The offence of money laundering

- Act of 31 December 1987. This made the act of laundering funds derived from drugtrafficking a criminal offence for the first time.

- Act no. 96-392 of 13 May 1996. This established a general offence of money laundering (inthat it covers the proceeds of any crime or offence) in the French Penal Code (article 324-1), with the following definition:

Money laundering is the act of facilitating, by any means, the false justification of theorigin of the property or income of the perpetrator of a crime or offence that has resultedin a direct or indirect profit for such perpetrator. The act of providing assistance in atransaction to invest, conceal or convert the direct or indirect proceeds of a crime oroffence also constitutes money laundering. []


TRACFIN, under the auspices of the Finance Ministry.


The following are subject to the suspicious transaction reporting obligation (articles L 562-1and L 562-2 of the Monetary and Financial Code):

- Financial institutions (establishments in the banking sector, Banque de France,insurance companies and insurance brokers, investment companies, bureaux dechange, etc.). They are also subject to other reporting obligations and vigilanceobligations;

- Persons who carry out, monitor or advise on transactions relating to the purchase,sale, transfer or rental of real estate (since an act of 1998);

- Legal representatives and directors responsible for casinos (since the act of 15 May2001);

- Persons who normally engage in the trading of or organise the sale of preciousstones, precious materials, antiques and works of art (since the act of 15 May2001).


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In addition, persons other than those mentioned above who, in the performance oftheir profession, carry out, monitor or advise on transactions resulting in themovement of capital are obliged to report to the Public Prosecutor any transactionsof which they are aware that relate to sums that they know are derived from drugtrafficking or organised criminal activities (article L 561-1 of the Monetary andFinancial Code).


There is limited provision for feedback from TRACFIN. TRACFIN centralises the intelligencegathering and analyses the information. It forwards the information, if necessary, to thelegal authorities and informs the notifying party that this has been done. It is then subjectto the official secrecy covering all legal proceedings.


The general offence of money laundering, created by the aforementioned act of 1996,covers the proceeds of all crimes and offences.

However, the suspicious transaction reports that the institutions to which the obligationsapply have to make only relate to transactions or amounts that could be derived from drugtrafficking or organised criminal activity.

The scope of the offence of money laundering and the scope of the suspicious transactionreport are therefore not the same.


a) DurationProbative evidence is kept for 5 - 10 - 30 years (depending on the relevant

statutory provisions).

b) Means of conservationOriginal documents are required, but in practice banks only keep cheques for largeamounts. Other documents are placed on microfilm after 4 years, with insurancebeing taken out against the risk of losing a case or against being obliged to paycompensation for non-compliance in this area.


There is a designated correspondent in each bank.


The information passed on to TRACFIN in this connection cannot be used for any purposeother than combating the laundering of money derived from drug trafficking and organisedcriminal activity.


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Article L 562-8 of the Monetary and Financial Code provides that for amounts ortransactions for which the required reports have been made, proceedings on the groundsof breach of professional secrecy (articles 226-13 and 226-14 of the Penal Code) cannot bebrought against the directors and employees of the financial institution or against the otherpersons mentioned in the legislation who made the reports in good faith.

It also specifies that no action for damages in civil proceedings can be taken nor anyprofessional sanction be imposed on a financial institution, its directors or employees or on

any of the persons mentioned in the legislation who made the required reports in goodfaith. If any loss results directly from these reports, the State assumes liability for the losssuffered .

These provisions apply even if no proof is given of the criminal nature of the acts on whichthe report is based, and also if a court terminates proceedings or discharges or acquits theaccused.

When the transaction has been executed after a report has been made, in accordance withTRACFINs instructions, and unless there is fraudulent collaboration with the owner of thefunds or the principal of the transaction, the financial institution has no liability, and itsdirectors or employees cannot be prosecuted on this grounds by application of articles 222-34 to 222-41 (drug trafficking), 321-1, 2, and 3 (offence of handling stolen goods orconcealing objects obtained through crime) and 324-1 (offence of money laundering) ofthe Penal Code. The other persons subject to the suspicious transaction reportingobligation also have no liability.

In the event of a serious lack of due care or any failure in its internal control procedures, acredit institution may be subject to sanctions imposed by the Banking Commission(warning, fine, etc). However, these are professional, not penal sanctions.

10. REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS

OPERATION (EXECUTION/NON-EXECUTION)

Unless it is impossible to defer the execution of the transaction, any bank that reports atransaction to TRACFIN must suspend the transaction and await TRACFINs instructions. IfTRACFIN does not give any instructions, the transaction may be executed. If TRACFINopposes the execution of the transaction (it can only do this within a very short space oftime), the bank must defer the execution of the transaction for the period specified. Afterthis period, if the bank does not receive any instructions from TRACFIN or from the courts,the bank can carry out the transaction.In the case of regular customers, the bank has the freedom to terminate the relationshipafter a certain period of time, unless instructed otherwise by TRACFIN or by the legal

authorities.

11. IDENTIFICATION

a) Identification threshold amountBefore opening an account, financial institutions must check the identity of theparty to the contract based on the presentation of any written documentaryevidence. They must also check the identity of occasional customers who ask themto carry out transactions over EUR 8,000 or to hire a safe. Occasional customers aredefined as persons who are neither customers of the branch they approach, nor of

any branch of the bank. Persons who go to a branch where they are not known, but


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who have an account at another branch of the same bank, are not considered asoccasional customers.

b) Means of identificationBefore opening an account, financial organisations must check the identity of theircustomer using documentary evidence.- Natural persons

An official identification document with a photo of the person concerned.- Legal persons

The original or a certified copy of any act or extract from an officialcommercial register showing the name, legal form and head office, togetherwith the powers of persons acting on behalf of the company.

- Natural or legal persons acting for the account of a third personThey must ascertain the real identity of the persons on whose behalf anaccount is being opened or an operation is being performed when theysuspect that the persons opening an account, or initiating an operation, arenot acting on their own behalf.They can rely on any document which they feel is necessary.

c) Cases in which the identification requirement does not applyThe identification of occasional customers is not required for any transactionthey carry out under EUR 8,000.

Moreover, the decree of 1991 provides that: When it appears to thefinancial institution that the person asking to open an account or carry out atransaction could be acting on behalf of someone else, apart from in caseswhere the person is a financial institution itself, it must ascertain the trueidentity of the person or persons on whose behalf the account would beopened or the transaction carried out.


In 2002 the French Banking Federation started work on updating and modernising trainingwith regard to combating money laundering, aimed at the entire banking profession.


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GERMANY


- The Act on the Detection of Proceeds from Serious Crimes (hereinafter the Money

Laundering Act) was adopted on 24 September 1993 and came into force on29 November 1993. There have been two major amendments: first by the Act onImproving Measures to Combat Organised Crime of 4 May 1998, which came intoforce on 9 May 1998 and second by the Act on the Suppression of MoneyLaundering and Combating the Financing of Terrorism of 8 August 2002, whichentered into force on 15 August 2002.

- Administrative offences are deemed to have been committed and fines may beimposed for failure to comply, or to comply correctly, with the Money LaunderingAct. Additionally Section 261 (Money Laundering, concealing illegal assets) of theCriminal Code (StGB) envisages criminal sanctions imposed on persons whoknowingly or through acts of gross negligence participate in money laundering.Section 261 StGB came into force on 22 September 1992 and has been amendedseveral times since. Among other things, the list of offences was extended by eachof these amendments.

2. CENTRAL AUTHORITY FOR NOTIFICATIONS

The Money Laundering Act provides that suspicious transaction reports (STR) must bepassed on by the addressees to the competent prosecution authorities. Due to Germanysfederal structure, STR must be transmitted to police or prosecution authorities in thefederal states. A copy of each STR has to be sent to the Federal Office of Criminal

Investigation (Bundeskriminalamt)where a Central Unit for Suspicious Transaction Reports(Financial Intelligence Unit - FIU) has been set up as a consequence of the 2002amendments of the Money Laundering Act.


Following the 2002 amendments the Money Laundering Act now covers:

credit institutions, financial services institutions and financial enterprises as definedby Section 1 of the German Banking Act (i.e. financial services in a broad sense);

branches of foreign institutions are covered as well insurance companies which offer life insurance policies and/or accident insurance

policies with premium redemption; for most of the obligations, insurance brokersare deemed to be insurance companies

lawyers, legal advisers who are members of a chamber of lawyers, patent lawyersand notaries when they work towards the planning or execution of specific financialtransactions for their clients


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qualified auditors, certified accountants, tax consultants and agents in tax matters real estate brokers gambling casinos bullion dealers auctioneers other business persons carrying out their trade or business, as well as persons who

administer another persons assets against payment for the fulfilment of theiradministrative duties; also persons acting on behalf of those enterprises.


The 1999 Act on the Amendment of Criminal Proceedings amended Section 475 of theCode of Criminal Procedure. This Section entitles private individuals to request informationfrom the files of the investigating authorities under certain conditions. It is also intended bylegislators to provide for feedback. Banks do not, however, believe that this Section is anadequate basis for continuous case-by-case feedback.

The demand for more and better general feedback is strengthened by an obligation of theFIU to regularly inform the persons obliged to report, on types and methods of moneylaundering (Section 5 para 1 number 5 Money Laundering Act).


The Money Laundering Act covers not only drug-related offences but also all serious crimepursuant to Section 261 StGB. Serious tax-related crimes are included. Pursuant to the2002 amendments the Money Laundering Act now explicitly covers crimes related to thefinancing of terrorists.


a) DurationThe Money Laundering Act obliges banks to keep probative evidence for 6 yearsfrom the end of the calendar year in which the information was obtained.

b) Means of conservationRecords may be stored by way of photocopies or other data media (especiallyelectronically).


Internal procedures and control measures must be put in place, i.e. designation of a MoneyLaundering Compliance Officer (MLCO); internal rules, procedures and controls to preventmoney laundering and to ensure that employees involved in such financial transactions arereliable; the provision of regular information to employees on money laundering methods.Additionally Section 25a Banking Act obliges banks to investigate transactions before asuspicion has arisen if they based on relevant experience or information have groundsfor doing so (account-screening).



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The Money Laundering Act provides for the information collected to be used forprosecuting criminal offences mentioned in Section 261 StGB. Furthermore, the informationgiven in STR may be used for prosecuting other serious crimes. Public prosecutors areobliged to give the information they have at their disposal to the tax authorities wheninformation obtained in connection with criminal proceedings is believed to be valuable foran action by the tax authorities. In this case, the information may be used for taxproceedings and for the criminal prosecution of tax offences.


No person who reports facts suggesting a criminal offence to the appropriate authoritycanbe held responsible for his or her actions unless the report has been made untruthfullyor involves gross negligence.


A notified transaction must not be executed before the public prosecutor's office has givenits approval to the institution or before two working days following the transmission of thereport have elapsed without the transaction having been prohibited under the Code ofCriminal Procedure. If it is not possible to postpone the transaction, it may be executed butthe report must be made without delay.

11. IDENTIFICATION

a) Identification threshold amountIrrespective of any threshold, there is a requirement for systematic identificationwhen a contract establishing a business relationship intended to operate on apermanent basis is concluded. Before accepting or issuing cash, securities orprecious metals which amount to EUR 15,000 or more the person presentinghimself/herself to the institution has to be identified. The obligation also applies totransactions below this threshold if there are facts indicating that there is aconnection between these transactions (smurfing).

b) Means of identification Natural persons: Identification documents must include an identity card or

passport, as well as the customers name, date and place of birth,nationality, address, and type, number and issuing authority of their officialidentity document.

Legal persons: Extracts from official registers (Commercial Register,association register etc.)

Natural or legal persons acting for a third person: After identification, theidentified person must be asked whether or not he is acting for his ownaccount; if the identified person declares that he is not acting for his own

account, then the bank must ask for the name and address of the personfor whom he is acting. In cases of doubt, the bank must take appropriatemeasures to establish the economic beneficiary.

c) Cases in which the identification requirement does not applyThe obligations to identify customers and establish the economic beneficiarybasically do not apply to relationships between institutions.


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However, the Federal Ministries of Interior and of Finance may provide exceptionsto this principle in respect of institutions in such third countries which do not imposerequirements on institutions equivalent to the German Money Laundering Act.

Identification is not necessary when the person is well known to the bank, has beenidentified on an earlier occasion or represents a money transport business.

d) Identification at a distanceUnder the guidelines issued by the Financial Service Authority (Bundesanstalt fr

Finanzdienstleistungsaufsicht BAFin), banks are generally allowed to instruct so-called trustworthy third parties to identify customers. Certain institutions (i.e.other banks, insurance firms, notaries public, the German Post Office [PostIdentsystem] as well as embassies and consulates of EU Member States) areautomatically regarded as trustworthy third parties. Other trustworthy third partiesmay also be instructed to identify customers, provided that their trustworthiness hasbeen checked separately beforehand by banks. In addition, ways of using digitalsignatures to identify customers who open accounts via the Internet are beingdiscussed.


Information about money laundering is exchanged in a contact group operated by theMinistry of the Interior. Furthermore, there are round tables with the BAFin and theassociations of the banking industry. The Association of German Banks keeps its membersinformed about legislative developments and other trends. In addition, a working groupwithin the Association deals with money laundering issues. The Association organisesconferences on the subject and publishes the Guide to Combating Money Laundering,which complements the BAFin guidelines.

Banks organise their own training programmes. In 1998, an extensive computer-based

training programme for bank employees was developed by some major banks and givenapproval by the BAFin. The training programme is kept up to date and thus has beenamended pursuant to recent legal changes.

13. SPECIFIC MEASURES TO COMBAT THE FINANCING OF TERRORISTS

In addition to the requirements of the Money Laundering Act and the embargo regulationsGerman banks are obliged by Section 24c of the Banking Act to install databases whichcontain information about accounts and accountholders. The BAFin has automated accessto these databases and can use the information for its proceedings (especially suppression

of Money Laundering and unlicensed offering of banking services). Furthermore lawenforcement authorities are entitled to request information from the BAFin about datacontained in the databases.


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Greece24

GREECE


- Law 2331/1995 on Prevention and Combating the Legalisation of Income fromCriminal Activities was adopted on 24 August 1995. It transposes the provisionsof the Community Directive and imposes heavy penalties, including the seizure

and confiscation of property.

- A text, with the force of law, was adopted at the beginning of June 1993: anamendment to the Penal Code, making money laundering a criminal offence andamending banking secrecy legislation. It came into force in mid-July 1993.

- Bank of Greece (Supervisory Authority for Banks) Guidelines:-

N2 dated 18 February 1997 as amended with Guidelines 566/23.10.97,510/18.9.97, 132/14.4.99 and 14/18.1.99;N355 dated 7 August 2000;

N144 dated 9 February 2000.

These Guidelines do not have force of law and are only directed towardsbanks and bureaux de change. Other financial institutions, insurancecompanies and stock exchange members, are covered by guidelines oftheir Supervisory Authorities.


A special Committee was established under Presidential decree N401/10.12.96 in order

to collect, assess and investigate the information reported to it in relation to transactionssuspected of being linked to money laundering. It will forward the relevant file to thepublic prosecutor, if there are reasons for believing that a transaction is suspicious.Where suspicions are believed to be unfounded, the cases are kept in the Committeesarchives for possible use in other domestic or international investigations.The Committee must complete its investigations within five days of receipt of the reportor other information concerning a possible breach of money laundering legislation.The Committee also evaluates and investigates information on income derived fromcriminal activities which it receives from similar foreign organisations, to which itprovides every possible assistance.


Law 2331/1995 covers enterprises, legal and natural persons in the financial sector inthe broad sense, i.e.:

credit institutions:- Greek banks and other specialised national credit institutions,

including the postal bank;- branches of credit institutions from the EU and third countries, as

well as representative offices;


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financial organisations:- all enterprises covered by the term financial institution in the EU

Second Banking Directive;- insurance companies;- bureaux de change;- credit card companies;- members of the Athens Stock Exchange;- casinos.

There is a provision which would enable other measures to be enacted with respect to

other professions and activities.In addition, the competent supervisory authorities (the Bank of Greece for creditinstitutions and certain financial institutions; the Capital Market Committee forinvestment firms, stock exchange companies, mutual funds and other collectiveinvestments; the Ministry of Commerce for insurance companies) have a duty to reportto the Committee all facts which, in the course of their inspections, etc. may constituteevidence of money laundering. Every employee of the competent authority is coveredthis obligation.This also applies to any other person who is entrusted with supervising or controllingcredits institution or financial organisations if, during the exercise of his duties, heobserves any facts which could be an indication of money laundering.

Credit institutions which have their central office in Greece are responsible for doingeverything possible to ensure that their branches operating abroad comply with theprovisions of the Greek law on money laundering, especially as regards vigilance andprocedures for internal audit and communication.


Law 2331/1995 provides for feedback to the person who provided the information onthe outcome of all reports submitted by credit and financial institutions as to the result

of investigations carried out by the Committee.


Law 2331/95 extends the scope of existing legislation since the term criminal activitycovers, in addition to drug trafficking, the following:

crimes covered by the law regarding the traffic of drugs;crimes of Para. I or Article 15L. 2168/93 about guns etc;robbery (Article 380 of Penal Code);

blackmail (Article 385 of Penal Code);kidnapping (Article 322 of Penal Code);larceny involving especially high amounts (Article 372, Para. 1, Section b of Penal

Code) and special cases or Article 374, points a-f of Penal Code;embezzlement if the amount involved is particularly high (Article 375, Para. 1b of

Penal Code) or if the action involves abuse of special trust or if the remainingcircumstances of Article 375 Para. 2 of Penal Code coincide;


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More specifically, he will receive reports from branch managers, other executives andemployees of his institution on suspicious transactions or on any event which might bean indication of criminal activity. He will then report accordingly to the Committee.


Information supplied to the Committee can only be used in relation to moneylaundering.


Disclosure in good faith to the Committee or any other competent body will notconstitute a breach of any restriction on the disclosure of information imposed bycontract or by law or similar provisions, and will not render the credit or financialinstitution, its directors or employees liable in any way .


All credit institutions and financial organisations must examine with special attention alltransactions which, by their nature, could be connected with the legalisation of proceedsderived from criminal activity.They are expected not to carry out transactions which they know or suspect to berelated to money laundering.

Should a notification be made to the competent Committee, the Committee must decidewithin five days whether a file should be forwarded to the judicial authorities or theinformation archived for future use.

Credit institutions must not tip-off the person concerned or third parties about any

disclosure or investigation under money laundering legislation. A prison sentence of upto two years or a fine will be imposed on those who do not comply with this obligation.

11. IDENTIFICATION

Under law 2331/1995, financial and credit institutions are obliged to demand proof ofthe identity of their customers in any business relationship, especially when customersopen deposit accounts, rent safe deposit boxes or take out loans.

a) Identification threshold amount

Identification is obligatory where there are serious suspicions of moneylaundering. Identification is also required for any transaction amounting to theequivalent of EUR15,000 or more. If the amount is not known at the time oftransaction, the identification must be completed as soon as the amount isknown.

The identification obligation exists for every transaction the amount of which isequal to EUR15,000 at least, either in one or several transactions, which arecarried out on the same day or as part of the same legal relationship.


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Iceland29

ICELAND


The Act on Measures to Counteract Money Laundering (N 80/1993) came into force in1993 and was amended in 1999 (by the laws N 38/1999). The last version took effect on

19 March 1999.


Any transaction suspected of being related to punishable offences as referred in the Actmust be notified to the National Commissioner of Police.


The Act applies to activities covered by one or more of the following:

Receiving funds for deposit and other repayable financial assets from thepublic;

Credit activities including consumer credits, mortgages, factoring andpurchases of debt instruments and commercial credits;

Leasing of assets; Clearing of payments; Issue and management of credits cards and other means of payment; Provision of guarantees or collateral for loans; Transactions, on own account or for customers, involving:

- Money market payment instruments (cheques, bills and other

comparable payment instruments, etc);- Foreign currency;- Futures and options;- Exchange rate linked bonds and interest-bearing debt instruments;- Securities;

Participation in issues of securities and related services; Taking delivery of financial assets in connection with the development of

equity capital of undertakings or in connection with the purchase, take-overor merger of business undertakings;

Money handling, including bureaux de change; Safekeeping, custody and management of securities, including electronic

securities; Rental of safety deposit boxes; Securities transactions in accordance with Act N 113/1996; Life assurance services and the activities of pension funds.

On the basis of Act N 6/1926, parties licensed for conducting lotteries and raffles andparties permitted by particular legislation to conduct fund-raising activities or lotterieswhere prizes are paid out are also concerned.The Act also applies to any activity which is likely to be used for money laundering.


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The National Commissioner of police must acknowledge receipt in writing of notifications.The Commissioner may, in cases of urgency, request that the transactions notified are notcarried out until the time limit specified in the notification has expired. If he decides thatthere are no grounds for stopping a transaction, the Commissioner must notify his decisionwithout delay.


The Act covers actions whereby an individual or a legal entity accepts or acquires, for itselfor others, gains by means of an offence, punishable under the General Penal Code (such asan acquisitive offence or a major tax violation), the Customs Act, the Alcoholic BeveragesAct or the Pharmaceuticals Act. It also applies to actions by which an individual or a legalentity undertakes to keep or transfer such gains, assist in their delivery, or attempts byother comparable means to ensure gain from such punishable offences for others.


a) DurationCopies of all materials used to establish identity must be kept for a period of atleast five years after the business relationship has ended.

b) Means of conservationPhotocopies of personal identification documents are required or adequateinformation recorded from them.


Individuals and legal entities authorised to provide services to the public in Iceland or

abroad pursuant to international agreements to which Iceland is party and their employeesmust nominate a specific individual with general responsibility for notifications and ensuringthe development of co-ordinated practices to support the implementation of the Act.If the Financial Supervisor Authority or other administrative agencies supervising activitiesenumerated in the Act obtain, in the course of their functions, knowledge of unlawfultransactions, they must notify such to the National Commissioner of Police.


When an individual or legal entity covered by the Act provides police, in good faith, with

information as provided for in the Act, this shall not be considered as being in breach ofany legal or other obligations of confidentiality. The provision of such information shall notmake the individuals, legal entities or employees in question criminally liable or liable forcivil damages.


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The Act establishes an obligation to notify any transactions suspected of being related toan offence. At the request of police investigating cases of money laundering, anyinformation deemed necessary must be provided.Transactions must not be executed if there are grounds for suspecting that they are relatedto an offence. If such a transaction cannot be prevented, or if its suspension could hinderthe prosecution of the parties benefiting from it, the National Commissioner of Police mustbe notified of the transaction as soon as it has been completed.

Individual persons, managers, employees and others working on behalf of a legal entity towhich the Act applies are obliged to ensure that the customer or other external party doesnot become aware that the National Commissioner of Police has been sent information orthat an investigation has been initiated in respect of a suspicious transaction.

Fines are imposed in the event of any failure to furnish information to the police.If a legal entity infringes the Act during the course of its operations, that legal entity maybe fined irrespective of whether the guilt of the persons in charge of its staff members hasbeen established. If a person in charge of a legal entity or its staff member is guilty of abreach of the Act, the legal entity may also be fined.

10. IDENTIFICATION

a) Identification threshold amountA customer who is not a regular customer must produce personal identificationdocuments for transactions involving a sum in excess of EUR 15,000, by referenceto the currently registered official exchange rate.If the amount is not known at the time of the transaction, or if the transaction iscarried out in one or more operations which appear to be connected, thepresentation of personal identification documents is required as soon as the amountis known and it becomes clear that it exceeds the above limit.

If there is suspicion that the origin of assets may be related to an infringement, thecustomer must present personal identification documents, even for transactionsinvolving amounts less than those referred above.

b) Means of identification-Individual and legal personsThe identification of customers (regular or not) must be based on personalidentification documents confirming the name, legal domicile and nationalregistry number in accordance with a certificate issued by the StatisticalBureau of Iceland.-Individual or legal persons acting for the account of a third person

If there is any reason to suspect that specific transactions are being carriedout for the benefit of a third party, the customer must disclose the identityof the third party in question.

c) Cases in which the identification requirement does not applyWhen the customer is a financial institution licensed for the provision of serviceswithin the European Economic Area, personal identification documents are notrequired. This also applies in cases where it is established that payment for atransaction is to be debited to an account opened in the customer's name in a


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Ireland33

IRELAND


The Criminal Justice Act 1994 was passed by both houses of the Oireachtas (Parliament)and signed by the President on 30 June 1994.

The 1994 Act makes provision for the recovery of the proceeds of drug trafficking andother offences, makes money laundering an offence and makes provision for internationalco-operation in respect of certain criminal law enforcement procedures and for theforfeiture of property used in crime and provides for related matters, such as imposing anobligation on designated bodies (banks and a wide range of financial institutions) to takemeasures to combat money laundering in line with the provisions of the EU MoneyLaundering Directive.

The provisions of the 1994 Act came into effect by means of Ministerial Orders. Moneylaundering was made an offence on 14 November 1994 and the remaining provisions inrelation to money laundering became effective on 2 May 1995.

The Act was amended by the Criminal Justice (Theft and Fraud Offences) Act 2001. In the2001 Act, the definition of Money Laundering is amended. The 2001 Act also gives theMinister for Justice the power to designate countries that do not have sufficient anti-moneylaundering measures in place. Any transactions involving such a designated country mustthereafter be reported to the Garda Siochana (Irish police). The relevant provisions of the2001 Act came into effect on August 1st2002.

The 1994 Act was also supplemented by a series of detailed guidance notes for the varioussectors of the financial services industry. The Central Bank of Ireland, the regulatory bodyfor banks and building societies, has stated that it will use the Guidance Notes for Credit

Institutions as criteria by which it will assess an institutions compliance with the provisionsand obligations under the Act. A review of the Money Laundering Guidance Notes for CreditInstitutions was completed in November 2001 and the new Guidance Notes for CreditInstitutions came into effect on 1stMay 2002.

In late 1996, Ireland ratified and fully implemented the 1988 Vienna Convention and the1959 and 1990 Council of Europe Conventions, thus allowing it to provide a full range ofmutual legal assistance to a wide range of countries.

In 1996 it also enacted the Proceed of Crime Act, 1996 and the Criminal Assets Bureau Act,1996. The former legislation provides for a process of civil forfeiture whereby property

which is the proceeds of crime can be frozen and ultimately confiscated, without any needfor criminal proceedings against any person. The latter legislation created the CriminalAssets Bureau, an independent statutory body comprised of staff from a number ofgovernment agencies and provided them with certain compulsory powers.

The enactment of the Disclosure of Certain Information for Taxation and Other PurposesAct,1996 provides for more effective exchange of information between the Garda (Police)and the Revenue Commissioners and enables the Revenue Commissioners to provideinformation to a senior Garda officer where there are reasonable grounds for suspectingthat the information relates to a person who has derived profits from an unlawful activity.


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The Money Laundering Investigation Unit in the Garda Siochana (Police) Fraud Section.


all banking-type activities (with the exception of credit reference services)which are included in the list annexed to Council Directive 89/646/EEC;

insurance-type activities to which Council Directive 79/267/EEC as amendedapplies; credit institutions and credit unions activities;

any other activity which may be prescribed by the Minister for Justice, whencarried out by:

. banks;

. building societies;

. money brokers;

. life assurance companies and intermediaries;

. financial futures and options exchanges;

. An Post (postal bank); credit unions; accountants; auctioneers; estate agents; solicitors;. stock brokers;. credit bureaux; and,. any other bodies prescribed by the Minister for Justice.


The Investigation Unit has undertaken to give feedback on a quarterly basis. A standardreport giving the current position of each case will be given.


All other criminal activity.


a) DurationCopies of all materials used to establish identity must be retained for a period of atleast five years after the relationship has ended.

b) Means of conservationThe Guidance Notes permit the retention of reference numbers of officially-issueddocuments instead of copies of the documents themselves.


The Money Laundering Reporting Officer, after reports have been channelled through anInternal Reporting Procedure.


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For the carrying out of investigations into possible money laundering offences and for theobtaining of court orders to make further relevant material available.


A disclosure made in good faith shall not be treated as a breach of any restriction upon thedisclosure of information imposed by statute or otherwise and shall not involve the person

or institution making the disclosure in liability of any kind.It should be noted however that failure to establish the identity of a customer whenrequired to do so, failure to retain records, failure to make a report when one should havebeen made and tipping off when a report has been made are considered to be an offencepunishable by a fine and/or jail sentence. The institution itself, its directors, managers andstaff are liable to be prosecuted.


The Act gives no direction as to what to do. The Guidance Notes state that where it isimpossible in the circumstances to refrain from executing a suspicious transaction beforereporting to the police or where reporting is likely to frustrate efforts to pursue thebeneficiaries of a suspected money laundering operation, the bank shall inform the policeimmediately afterwards. It is impossible to state in advance how to deal with every possiblecase, but in most cases common sense will suggest what course of action is appropriate.

The 2001 Act states that a person is guilty of money laundering if they acquire, use orpossess property that is or represents the proceeds of criminal conduct or if they arereckless as to whether it is such property. A person does not commit an offence under the2001 Act if a report is made to the Garda Siochana (Irish police) and the person complies

with the directions of the Garda Siochana in relation to the property.

11. IDENTIFICATION

a) Identification threshold amountIdentification required when a designated body proposes to provide a service on acontinuing basis or when it proposes to provide a service in respect of transactionsthat, either as a single transaction or a series of linked transactions, amount in theaggregate to EUR12,700 or when money laundering is suspected.

b) Means of identificationThe legislation states that reasonable measures shall be taken to establish theidentity of a person for whom it is proposed to provide a service but does not statewhat measures are considered to be reasonable.

The Guidance Notes define these measures as follows:- Natural persons

Irish residentsName to be verified by reference to a document obtained from a


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Refresher staff training programmes have taken place and will continue to do so on anannual basis.


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Italy38

ITALY


Law n 197 of 5 July 1991 recently amended by the decree n 153 of 26 May 1997 andsupplemented by Law 388/2000 (Articles 150 and 151) - and the decrees of 19 December

1991, 7 July 1992 and 29 October 1993, Legislative Decree 374 of 25 September 1999.


There is a central authority called Ufficio Italiano Cambi (UIC).


The legislation covers all credit and financial institutions, i.e.:

central and local government; post offices; stock brokerage firms and investment companies; leasing companies; collective investment funds (UCITS); (stock and insurance) brokers; foreign exchange dealers (agents de change); credit card companies, etc.; Monte titoli SpA; insurance companies;

financial companies which provide financing or which act as intermediariesfor foreign exchange or securities transactions.

Legislative Decree 374/1999 extends anti-laundering requirements to the followingbusinesses:

debt recovery firms; custody and transportation of cash, securities, or valuables by authorised

security guards; transportation of cash, securities or valuables without the employment of

authorised security guards; real estate brokerages; antique dealers; the management of auction houses or art galleries; trade, including exports and imports, in precious objects; manufacture, brokerage and trade, including exports and imports, in

precious objects; management of gambling houses; manufacture of precious objects by craft enterprises; credit intermediation; financial brokerage (however, the implementing regulations making anti-

money laundering requirements operational have not yet been issued).


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At present the Ufficio Italiano Cambi provides feedback to the credit and financialinstitutions (legislative decree n 153 of 26 May 1997 concerning reports in respect ofwhich the investigative police bodies have notified the Italian Foreign Exchange Office thatno further investigation has been conducted).


Law n 197/1991 is intended to cover organised crime.

In addition to drug-related crimes, the legislation has been extended to all serious crime(Article 648-bis of the Penal Code) (all penal offences).


a) Duration10 years.

b) Means of conservationOriginal (data file) and microfilm.Transaction records must be kept for 10 years from the date of execution (paper).


The branch manager reports to the Chairman at the bank head office - in practice to ahead office representative (head of the security or legal service) - who reports to theUfficio Italiano Cambi.


Law n 197/1991 allows the use of information in connection with penal offences.


Failure to report, provided that it is not in itself an offence, is punishable by a fine of up tohalf the value of the transaction.


The law establishes an obligation to disclose transactions which can reasonably or factuallybe linked to money laundering and to indicate whether the transaction was executed orwhether the bank refused to act.


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11. IDENTIFICATION

a) Identification threshold amountThere is a requirement to identify and record (in a specially created electronicarchive kept by every intermediary) the full identification details of persons whoeffect transactions in cash or other payment instruments for amounts in excess ofapprox. EUR 10,400.

b) Means of identification- Natural persons

Customer identification must be based on official identity documents andmust be detailed (family name, first name, address, tax code).- Legal persons

The original or a certified copy of any act or extract from an officialcommercial register showing the name, the legal status and the head officeas well as the powers of the person acting for the company.

c) Identification at a distanceThe Italian Foreign Exchange Office (UCI), the Italian institution responsible forimplementing the law against money laundering, issued in January 2000 operationalguidelines to intermediaries for the valid identification of customers at a distance,i.e. simultaneous physical presence of the customer and agent of the intermediary.

In Italy, the identification of customers my be effected either directly, in person, bythe staff responsible (not only persons who are employees of the intermediary butalso persons linked to the intermediary with a relationship defined in law or by aspecial contract) or else through the acquisition of identification details fromanother authorised intermediary, confirmed by a suitable attestation issued by thelatter.

The UCI has set out two possible suitable attestation procedures for purposes ofcustomer identification:

First procedure: this provides for implicit attestation in connection with theexecution of a credit transfer by the attesting intermediary to the intermediary thatmust make the distance identification. The procedure is as follows:

an initial payment in favour of the intermediary that intends to use the newidentification procedure is made by the potential customer drawing on aregistered bank account, for which the customer has already been identified.All subsequent transactions with the intermediary must also go through thisaccount;

beforehand, the intermediary intending to establish a distance relationshipassigns and notifies an identification code to the potential customer. The

customer himself must give this code to the bank where he has aregistered account when he makes the credit transfer to the aforementionedintermediary. The bank, in turn, together with the payment must alsotransmit the code in order to enable the beneficiary intermediary to verifythat the person with whom it has the distance contact is the same partyidentified by the bank where the registered account is held.

Banks have been instructed that it is essential that for these payments, in themessage information field, the code must precede all other payment details, inorder to make it easy for the beneficiary to pick up this information.


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Second procedure: this envisages suitable attestation for money launderinglegislation purposes by a form (which can be developed by the intermediary makingthe distance identification) filled out by an authorised intermediary, duly signed andsealed by the attesting intermediary, giving the identification details of the customerand the data concerning the identity document used to make the identification. Thiscertification can be supplied, on request, also directly by the potential customerhimself, who in this way can use a payment instrument other than a credit transferin order to initiate a continuing relationship or to make transactions for amounts inexcess of approximately EUR 10,400.

The UIC has recently issued an opinion (N18527 of 31 May 2001) confirming the validityof identification made by a digital signature certifier, providing that the operating manualprovides that the identification procedure takes place in the presence of the customer andcomplies with all the requirements of Law 197/1991, Article 2 (specified in the MinisterialDecree of 19 December 1991). This procedure starts from the assumption that a specialagreement between the intermediary and the certifier has been stipulated, in which thelatter undertakes to make the necessary identification checks in accordance with anti-money laundering requirements.


Due to the complexity of the law, the problem of training is crucial in Italy. The Associationhas organised numerous meetings with those responsible in banks. Some 20 trainingsessions have been held and seem to have been greatly appreciated. Working parties havebeen set up bringing together legal and administrative bank staff. Specialist seminars havebeen held comprising representatives from the Association, private banks, the central bank,the supervisory authorities, the Ministry of Finance and the judicial authorities.

The Bank of Italy has issued guidelines to help intermediaries to notify suspecttransactions. By establishing objective anomaly indicators, the guidelines lay downstandard procedures aimed at reducing margins of uncertainty and establishing objective

criteria. When, according to the indicators, a transaction is deemed to be anomalous, theintermediary must examine it carefully and decide whether it is in fact a suspect transactionthat has to be reported. In January 2001 the Bank of Italy issued a revised version of theoperating instructions for identifying suspicious transactions, which takes account of newoperational procedures at intermediaries (e.g. internet and phone banking) and extendsthe scope of the instructions to persons and types of activity not contemplated in theprevious version.

Furthermore, to help bank staff evaluate the transactions carried out for customers, thebanking sector has devised a system for the automatic analysis of transactions, based onthe above-mentioned indicators. The system, called GIANOS, analyses all transactions,

highlighting the ones that require closer examination. The procedure to be adopted bybank staff is then divided into two steps:

they are to examine carefully the anomalous transactions; if the examination of the anomalous transaction proves that it is indeed

suspect, the bank must report it to the Ufficio Italiano Cambi.


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- The law of 9 July 1989, which amends the amending law of 19 February 1973 on the Sale

of Medication and the Prevention of Drug Addiction. This law introduces the principle ofdrug-related money laundering as a criminal offence.

- The law of 5 April 1993 on the financial sector. This law transposes the European MoneyLaundering Directive into national law. The law sets out the behaviour to be adopted byfinancial sector professionals as regards money laundering.

- The grand-ducal decree of 6 January 1995 authorising the creation and operating of adatabase containing information and notifications from credit institutions and

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