Recognition and reporting

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Suspicious transactions recognition
As the types of transactions, which may be used by a money launderer, are almost unlimited, it is difficult to define a suspicious transaction. However, a suspicious transaction will often be one, which is inconsistent with a client’s known, legitimate business or personal activities or with the normal business for that type of client. Therefore, the first key to recognition is knowing enough about the Client’s business to recognize that a transaction, or series of transactions, is unusual.
Questions that member, participant, special purpose user, or trading house and their respective portfolio manager or custodian as appropriate might consider when determining whether an established client’s transaction might be suspicious are:
(a)
Is the size of the transaction consistent with the normal activities of the Client?
(b)
Is the transaction rational in the context of the Client’s business (strategy) or personal activities?
(c)
Has the pattern of transactions conducted by the Client changed?
Examples of what might constitute suspicious transactions are given in Appendix A to these Rules, Regulations, and Instructions. These are not intended to be exhaustive and only provide examples of the most basic way by which money may be laundered.
However, identification of any of the types of transactions listed in Appendix A should prompt further investigation and be a catalyst towards making at least initial enquiries about the source of funds.
Sufficient guidance must be given to Client Care Personnel to enable them to recognize suspicious transactions. The type of situations giving rise to suspicions will depend on a member, participant, special purpose user, or trading house’s client base and range of services and products. registered members, participants, special purpose users, and trading houses and their authorized agents, and/or portfolio managers as appropriate might also consider monitoring the types of transactions and circumstances that have given rise to suspicious transaction reports by Client Care Personnel, with a view to updating internal instructions and guidelines from time to time.
Suspicious transactions reporting
1.
Statutory requirements
 
ConscribNet™ requires that any knowledge or suspicion of money laundering should be promptly reported to a Police Officer or to the Money Laundering Combating Unit. ConscribNet™ also provides that such a disclosure cannot be treated as a breach of the duty of confidentiality owed by registered members, participants, special purpose users, and trading houses and their authorized agents, and/or portfolio managers as appropriate to their clients by virtue of the contractual relationship existing between them.
 
ConscribNet™ also recognizes that, in certain instances, the suspicions may be aroused after the transaction has been completed and, therefore, allows subsequent disclosure provided that such disclosure is made on the person’s concerned initiative and as soon as it is reasonable for him/her to make it.
 
ConscribNet™ requires registered members, participants, special purpose users, and trading houses that are financial institutions to establish internal reporting procedures and that they identify a person (hereinafter to be referred to as the “Money Laundering Compliance Officer”) to whom employees should report their knowledge or suspicion of transactions involving money laundering. In case of employees, the law recognizes that internal reporting to the Money Laundering Compliance section Officers will satisfy the reporting requirements imposed by virtue of once the employee has reported his or her suspicion to the Money Laundering Compliance Officer, he or her is considered to have fully satisfied his or her statutory requirements.
   
2. Appointment of Compliance Officer
 
In accordance with the provisions of ConscribNet’s rules, regulations, by-laws, all members, participants, special purpose users, and trading houses and their authorized agents, portfolio managers and respective directors, as appropriate should proceed with the appointment of a Money Laundering Compliance Officer. The person appointed as Money Laundering Compliance Officer should be sufficiently senior to command the necessary authority.
 
Registered members, participants, special purpose users, and trading houses and their authorized agents, and/or portfolio managers as appropriate should communicate to ConscribNet™ the names and positions of persons whom they appoint, from time to time, to act as Money Laundering Compliance Officers.
 
3.
Compliance Officers Duties
 
The role and responsibilities of Money Laundering Compliance Officers including those of Chief and Assistants, should be clearly specified by registered members, participants, special purpose users, and trading houses and their authorized agents, and/or portfolio managers as appropriate and documented in appropriate manuals and/or job descriptions.
 
As a minimum, the duties of a Money Laundering Compliance Officer should include the following:
 
(a)
To receive from the member, participant, special purpose user, or trading house’s its portfolio manager’s or custodian’s employees information which is considered by the latter to be knowledge of money laundering activities or which is cause for suspicion connected with money laundering.
 
(b)
To validate and consider the information received as per paragraph (a) above by reference to any other relevant information and discuss the circumstances of the case with the reporting employee concerned and, where appropriate, with the employee’s superior(s). The evaluation of the information reported to the Money Laundering Compliance Officer should be recorded and retained on file.
 
(c)
If following the evaluation described in paragraph (b) above, the Money Laundering Compliance Officer decides to notify the Unit, then he/she should complete a written report and submit it to the Unit the soonest possible. A specimen of such a report (hereinafter to be referred to as “Money Laundering Compliance Officer’s Report to the Money Laundering Combating Unit”) is attached, as Appendix B. All such reports should be kept on file.
 
(d)
If following the evaluation described in paragraph (b) above, the Money Laundering Compliance Officer decides not to notify the Unit then he/she should fully document the reasons for such a decision
 
(e)
The Money Laundering Compliance Officer acts as a first point of contact with the Unit, upon commencement of and during investigation as a result of filing a report to the Unit under (c) above.
 
(f)
The Money Laundering Compliance Officer responds to requests from the Unit and determines whether such requests are directly connected with the case reported and, if so, provides all the supplementary information requested and fully co-operates with the Unit.
 
(g)
The Money Laundering Compliance Officer provides advice and guidance to other employees of the member, participant, special purpose user, or trading house and its authorized agents, and/or portfolio managers as appropriate on money laundering matters.
 
(h)
The Money Laundering Compliance Officer acquires the knowledge and skills required which should be used to improve the member, participant, special purpose user, or trading house’s portfolio manager or custodian internal procedures for recognizing and reporting money-laundering suspicions.
 
(i)
The Money Laundering Compliance Officer determines whether the member, participant, special purpose user, or trading house’s portfolio manager or custodian’s employees need further training and/or knowledge for the purpose of learning to combat money laundering.
 
(j)
The Money Laundering Compliance Officer is primarily responsible, in consultation with the member, participant, special purpose user, or trading house’s portfolio manager’s or custodian’s senior management and Internal Audit Department (if any), towards ConscribNet™ in implementing the various Rules, Regulations, and Instructions issued by the Regulatory Authorities of the host country under the law as well as all other instructions/recommendations issued by ConscribNet™, from time to time, on the prevention of the criminal use of the financial system for the purpose of money laundering.
 
The Money Laundering Compliance Officer is expected to avoid errors and/or omissions in the course of discharging his or her duties and, most importantly, when validating the reports received on money laundering suspicions, as a result of which a report to the Unit may or may not be filed. He or she is also expected to act honestly and reasonably and to make his or her determination in good faith.
 
In this connection, it should be emphasized that the Money Laundering Compliance Officer’s decision may be subject to the subsequent review of the Regulatory Authorities of the host country which, in the course of examining and evaluating the anti-money laundering procedures of registered members, participants, special purpose users, and trading houses and their authorized agents, and/or portfolio managers as appropriate and their compliance with the provisions of the law, is legally empowered to report member, participant, special purpose user, or trading house and their respective portfolio manager or custodian as appropriate which, in their opinion, does not comply with the provisions of the law to the Attorney General or to the Combat Unit where it forms the opinion that actual money laundering has been carried out.
 
Provided that Money Laundering Compliance Officer acts in good faith in deciding not to report a suspicion to the Unit, no report will be made by ConscribNet™ to the Attorney General, if it is later found that his or her judgment in connection with the above suspicion was wrong.
 
4.
Internal Procedures
 
A member, participant, special purpose user, or trading house and their portfolio manager and/or custodian should make the necessary arrangements in order to introduce measures designed to assist the functions of the Money Laundering Compliance Officer and the reporting of suspicious transactions by employees. Registered members, participants, special purpose users, and trading houses and their authorized agents, and/or portfolio managers as appropriate have an obligation to ensure:
 
(a)
that all their employees know to whom they should be reporting money laundering knowledge or suspicion; and
 
(b)
that there is a clear reporting chain under which money laundering knowledge or suspicion is passed without delay to the Money Laundering Compliance Officer.
 
5.
Disclosure procedures
 
All Money Laundering Compliance Officers’ Reports to the Money Laundering Combating Unit should be sent or delivered at the following address:
 
(a)
Money Laundering Combating Unit, Office of the Attorney General of the host country,
 
(b)
ConscribNet Trading Network Association P.O. Box 11707, Toronto, Ontario M9C 2A5 Canada.
 
Unless otherwise instructed, the form located in section 8 of these Rules, Regulations, and Instructions should be used and followed at all times when submitting a report to the Money Laundering Combating Unit.
 
6.
Co-operation with the Unit
 
Having made a disclosure report, member, participant, special purpose user, or trading house and their respective portfolio manager or custodian as appropriate may subsequently wish to terminate their relationship with the Client concerned for commercial or risk avoidance reasons. In such an event, however, registered members, participants, special purpose users, and trading houses and their authorized agents, and/or portfolio managers as appropriate should exercise particular caution, pursuant to the law, not to alert the Client concerned that a disclosure report has been made. Close liaison with the Unit should, therefore, be maintained in an effort to avoid any frustration to the investigations conducted.
 
After making the disclosure, registered members, participants, special purpose users, and trading houses and their authorized agents, and/or portfolio managers as appropriate are expected to adhere to any instructions given by the Unit and, in particular, as to whether or not to continue a transaction or operate the suspected client’s account or other instructions as may be deemed necessary.

 

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