Frequently Asked Questions
1. What is Money laundering?
Money Laundering may be described as the process by which criminals hide, conceal or disguise the nature, source, location, disposition or movement of the proceeds of unlawful activities or any interest which anyone has in such proceeds. According to the MLPCA Money Laundering is committed:
a. If the person acquires, possesses or uses property; or
b. Converts or transfers property with the aim of concealing or disguising the illicit origin of that property or of aiding any person involved in the commission of an offence to evade the legal consequences thereof; or
c. Conceals or disguises the true nature, origin, location, disposition, movement or ownership of property
Knowing or having reason to believe that such property is derived directly or indirectly illegal from acts or omissions.
2. Why do people launder money?
In order for criminals to escape prosecution which usually culminates in confiscation of the ill-gotten funds, they would launder the money to prevent the authorities from detecting the origin of he funds.
3. How is Money Laundered?
There are generally 3 stages through which money is laundered:
a. The first is the placement stage, where the dirty money is introduced to a financial system.
b. The second, layering stage consists of a series of transactions designed to conceal the origin of the funds. These financial transactions resemble legitimate financial transactions designed to make tracing the funds as difficult as possible.
c. The last stage, integration involves return of money into the economy as “legitimate” funds. The funds return assimilated into the economy to create appearance of legality. This is because distinguishing between licit and illicit funds is extremely difficult at this stage.
4. What is Terrorist Financing?
Unlike in money laundering where funds involved are always ill-gotten, under terrorist financing any funds whether clean or dirty can be used to finance terrorism or terrorist institutions as the case may be.
5. What could raise a suspicion of money
Criminals are continually orchestrating ways in which they can conceal the origin of their illicit cash. Their tricks are ever changing and developing and raising a suspicion requires one to always be careful to properly scrutinise circumstances before making a decision whether or not to raise a suspicion.
Indicators of Suspicious Transactions provide guidance on what may raise a suspicion of money laundering
6. How can I protect my business from
being used by money launderers?
Accountable institutions, which are most vulnerable to being used to launder money can protect their businesses by implementing the controls required by the National anti-money laundering law and internationally accepted standards for prevention of money laundering.
7. What is the FIU and its role?
The Financial Intelligence Unit (FIU) is central institution in the fight against money laundering and terrorist financing. It is a national central agency that receives financial information from accountable institution for analyses. Where a money laundering or terrorist financing offence is suspected to have taken place then it disseminates the disclosure of information to law enforcement agencies or other relevant stakeholders for investigation and possible prosecution and/or regulatory/supervisory action.
8. Who has to report to the FIU?
Institutions listed under schedule 1 of the Money Laundering and proceeds of /crime Act of 2008 are responsible to report to the FIU.
9. Who are Accountable Institutions (AI's)?
These are defined as institutions referred to in Schedule 1 of the MLPCA. Thus any organization that carries on the business of any entity listed in Schedule 1 of the Act is regarded as an AI.
10. Can I disclose to anyone if I have
reported to the FIU?
Tipping-off is a crime under the MLPCA therefore one can not disclose the fact that hey have reported any suspicion about any person (natural or juristic).
11. What is a Suspicious Transaction
A suspicious transaction may be defined as one that, having performed a thorough Know Your Client (KYC) and Customer Due Diligence (CDD) on their client, and AI feels the transactions performed by such clients do not conform to their expectation thus raising a red flag to the AI to suspect Money Laundering.
The AI is obligated to then, through its Compliance Officer, report such suspicions of money laundering to the Unit. The AI is to file a Suspicious Transaction Report with the Unit immediately upon formulation of the suspicion using forms as prescribed by the Minister.
The Unit has issued Indicators, under the Money Laundering (Accountable Institutions) Guidelines, 2013, that may assist employees of an Accountable Institution pick up suspicion from a transaction. It must however be noted that these are but guidelines and are not necessarily binding. Each AI has its own unique modus operandi, and it's up to them to formulate their own indicators.
12. How do I report an STR?
An AI is to develop an internal Compliance Manual which will outline a reporting framework. The MLPCA prescribes that the line between an employee who has picked up suspicion and the Compliance/Reporting officer must kept as short as possible, without any hindrances. The compliance officer is to perform all the necessary Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD) to establish that there is indeed a suspicious transaction. Once suspicion has been established, they fill out an STR form provided by the Unit and hand delivers it to the Unit.
Tipping Off- Section 24 of the MLPCA prohibits tipping off and prescribes that "No accountable institution… shall disclose to their customer or a third party that information was provided to the Financial Intelligence Unit or that a report concerning suspected money laundering…will be, is being or has been submitted to the financial intelligence unit..".
13. 5) What is the difference between
an STR and a TTR?
A Threshold Transaction is one that, as prescribed by the Minister is a M100 000 and above, thus a TTR is a report detailing all transactions of an AI that amounted to M100 00 and above. Like an STR a TTR is compiled and submitted to the unit by a Compliance officer. However with a TTR, there is no need of a suspicion. Whenever the transaction is for a M100 000 and above, it is to be submitted to the unit.
For further enquiries/queries, kindly email the Compliance Office on firstname.lastname@example.org