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The report states:
“staff were unclear about the procedures to be followed in the event of a
‘suspicion’ of money laundering”.

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This puts the firm at risk of
employees being reluctant to or not reporting knowledge or suspicion of money
laundering and therefore at risk of non-compliance with AML Acts and
Regulations.

 

Employees must be taught that
procedures to be followed are the same whether there is knowledge of money
laundering or suspicion of money laundering.

 

Employees must be taught to
recognise transactions, activities and conduct that may be unusual and may
therefore give rise to knowledge or suspicion of money laundering. To
facilitate this, the firm must establish and communicate norms for lawful
transactions, activities and conduct. Business relationships with each customer
must be subject to ongoing monitoring to determine if any transactions,
activities or conduct fall outside the scope of established norms. Successful
ongoing monitoring requires employees be trained to identify “red flags”
related to possible money laundering such as a business relationship changing
significantly in relation to activity, the amount of a transaction being unusually
large for the customer, a transaction or pattern of transactions having no
apparent purpose or being unreasonably complex or unusual for the customer, or
a customer refusing to provide requested information or providing information
inconsistent with known facts.

 

An unusual transaction, activity or conduct does not
automatically translate into a suspicious one. Additional CCD measures must be
undertaken to determine if knowledge or suspicion is present. Additional CDD
measures create the risk of tipping-off the customer, which is a criminal
offence, and employees must be trained how to proceed with such enquiries
without tipping-off.

 

Where additional CDD measures result in a
satisfactory explanation of the unusual transaction, activity or conduct, the
employee should conclude there is no knowledge or suspicion present, document
the evidence collected, process followed and reasons leading to that
conclusion, and close the case. Where additional CCD measures result in an
unsatisfactory explanation, the employee must conclude, depending on the
evidence gathered, there is either knowledge or suspicion present and must file
a written internal suspicious activity report (ISAR) with the firm’s MLRO. The
employee may seek his manager’s input prior to submission. The ISAR must
include all known information relating to the knowledge or suspicion, the
process followed and the reasons for their conclusion.

 

The MLRO should acknowledge receipt of the ISAR. He
has sole authority to evaluate ISARs to determine whether or not there is
knowledge or suspicion present. He must have access to staff and all relevant
information relating to the firm and its customers. If the MLRO concludes that
there is knowledge or suspicion present then he must electronically file a suspicious
activity report (SAR) with the Financial Intelligence Agency. If he concludes
that there is no knowledge or suspicion present then he should document the
evidence collected, process followed and reasons leading to that conclusion,
and close the case.