The FID is a division of the Ministry of Finance and the Public Service
The Financial Investigations Division was formed on December 16, 2002, through the merger of the Financial Crimes Unit of the Director of Public Prosecution (DPP) and the Revenue Protection Division (RPD) of the Ministry of Finance and Planning (MOFP) as the investigating entity for both tax related and financial crimes matters including money laundering.
As stipulated in the Financial Investigations Division Act (FIDA) Section (8) ‘…..there shall be appointed – a Chief Technical Director (CTD) who shall be responsible for the day-to-day administration and operation of the Division….’
The main legislations which govern the operations of the Division are:
a. Proceeds of Crime Act(POCA), Regulations and (Money Laundering Prevention) Regulations, 2007
b. Financial Investigations Division Act (FIDA), 2010
c. Terrorism (Prevention) Act (TPA) and Regulations
d. Mutual Assistance (Criminal Matters)
Yes, there is. The RPD formed a part of FID’s Structure in 2002 however that merger came to an end in 2008.
In June 2008, the newly established FID came into being with an expanded mandate to counter corruption and fraud and benefits from unlawful conduct. Currently, FID and RPD operate as separate Divisions within the Ministry of Finance and the Public Service.
The Objectives of the FID are:
- To detect, deter and aid in the prosecution of offences committed under the various acts (namely the Proceeds of Crime Act (POCA), Terrorist (Prevention) Act (TPA)) dealing with financial crimes, by reducing the actual and expected profits that would evolve from such illegal practices.
- To collaborate with overseas bodies in fighting transnational crimes pursuant to the Mutual Assistance (Criminal Matters) Act.
The ARA as stated in Section (3) (1)(a) of the Proceeds of Crime Act (POCA) states “The Assets Recovery Agency (ARA) means – the Financial Investigations Division of the Ministry of Finance and the Public Service” or any other entity so designated by the Minister by Order. Further, section 3(2) of the POCA designated the Chief Technical Director of the FID as the head of the ARA.
The FID enjoys relations with a number of key private and public sector institutions including the Jamaica Constabulary Force (JCF) mainly through the following Divisions:
- Major Organized-Crime and Anti-Corruption Agency (MOCA)
- Counter-Terrorism and Organised Crime Investigation Branch (C-TOC)
- Fraud Squad
- Transnational Crime and Narcotics Division (TCND)
The FIU is a central national agency responsible for receiving – and as permitted – request, analyze and disseminate relevant information to the competent authorities on suspected proceeds of crime and potential financing of terrorism or Money laundering.
Note – As a means of combating money laundering and terrorist financing, Recommendation 23 of the Financial Action Task Force (FATF), states that “countries should establish a FIU that serves as a national centre for the receiving…, analysis and disseminating of Suspicious Transaction Reports (STR) and other information regarding potential money laundering or terrorist financing”
It is the responsibility of financial institutions to establish and promote programmes, policies, procedures, and controls that are necessary to prevent or detect money laundering. These include;
- The establishment of procedures to ensure high standards of integrity of employees
- Evaluation of employees’ personal employment and financial history
- Providing training for employees in the recognition and handling of transactions being conducted by persons believed to be engaged in money laundering
- Independent audits to ensure established programmes are being implemented
- The establishment of identification, transaction verification procedures, and record-keeping procedures in accordance with regulations under the Act.
- Appointing a Nominated Officer
- Identifying a Reporting Officer
- Instituting procedures to establish the risk of money laundering in products and business practices and developing technologies.
- A financial institution or a regulated business that fails to make a report or comply with a disclosure order commits an offence and is liable upon conviction before a Resident Magistrate Court (now Parish court) to a fine not exceeding $400,000.00
- A person commits an offence if he fails to disclose information regarding transactions believed to be related to money laundering and is liable on conviction before a parish Court to a fine not exceeding $1m, or imprisonment for a term not exceeding 12 months or both.
- On conviction in a Circuit Court to a fine or imprisonment for a term not exceeding 10 years or to both fine and imprisonment
Where a regulated entity has knowledge or reasonable grounds to believe that the funds involved in a transaction are criminal property, the regulated entity must obtain the appropriate consent of the designated authority before doing that transaction or otherwise decline to proceed with the transaction. Failing this, the regulated entity may be liable for engaging in a prohibited act. A prohibited act is defined as a money laundering offence under sections 92 and 93 of POCA.
At the time of making the appropriate disclosure of this suspicion to the FID, the nominated officer should apply for the appropriate consent to conduct the transaction.
Section 99 of POCA permits the nominated officer to consent to the doing of a prohibited act where the officer had made a disclosure to the designated authority that property is suspected to be criminal property, and any of the following occurs:
- the designated authority gives consent to the doing of the act
- having made the report, seven (7) working days have passed and the nominated officer has not received a response from the designated authority; or
- The nominated officer receives a notice before the seven (7) working days have elapsed that consent was refused, but ten (10) days have passed since the receipt of that refusal notice without any subsequent Court order.
Where an urgent response is required, the designated authority is permitted to provide a verbal notice of its consent or refusal, however, a written notice should be sent by the designated authority within five (5) days of that verbal response.
Threshold Transaction Reports (TTRs) Under POCA are to be submitted quarterly, within one month after the end of the quarter. The reporting periods and due dates are as follows:
| No | Quarter | Due Date on or Before |
|---|---|---|
| 1 | January – March | April 30 |
| 2 | April – June | July 31 |
| 3 | July – September | October 31 |
| 4 | October – December | January 31 |
Suspicious Transaction Reports (STRs) Under POCA
Suspicious Transaction Reports are to be made to the nominated officer or Designated Authority as soon as is reasonably practicable and in any event within fifteen days after the information or other matter came to the person in the regulated sector. The nominated officer should report to the designated authority as soon as is reasonably practicable and in any event within fifteen days after the information or other matter came to him.
Listed Entity Report (TPA) are to be submitted every four months, within one month after the end of the particular period. The reporting periods and due dates are as follows:
| No | Four Months Period | Due Date on or Before |
|---|---|---|
| 1 | January – April | May 31 |
| 2 | May – August | September 30 |
| 3 | September – December | January 31 |
Suspicious Transaction Reports (STRs) Under TPA
Suspicious transactions are to be reported promptly and in any event within fifteen (15) days after the suspicion or reasonable cause for suspicion arises.
Where a regulated entity has engaged in a transaction involving suspected criminal funds, without the consent of the designated authority, it should still make a disclosure of its suspicions to the designated authority.
Where such a disclosure is made on its own initiative, as soon as is reasonably practicable after doing the act, and the regulated entity had intended to make a prior disclosure but has a reasonable excuse for not doing so this may still provide the regulated entity with a defence to a charge of money laundering under sections 92 or 93 of POCA.
It is therefore critical that the institution set out the circumstances of the case in writing at the earliest opportunity and provide same to the FID on an urgent basis.
The designated authority, however, cannot grant consent to the doing of an act where the transaction involved has already been completed. As a consequence, such a disclosure would not constitute a request for appropriate consent under the Act.
It is not necessary to seek the consent of the designated authority to conduct another type of transaction with that customer where the funds involved appear to be from a legitimate source. This is because a transaction would only constitute a prohibited act if it involves the proceeds of criminal conduct.
The designated authority is not in a position to provide a general “blanket” consent to the conduct of all future transactions with a particular customer. The requirement for consent under sections 92 and 93 pre-suppose that consent is being sought in relation to a particular activity or transaction.
Nonetheless, where a regulated entity becomes concerned about the lawfulness of funds held on behalf of a customer, any further action/s with these funds would necessitate the consent of the designated authority. This means that in relation to each transaction that involves “suspicious funds” the consent of the designated authority must first be sought and obtained.
A decision to close an account is entirely a commercial one, informed by the financial institution’s assessment of the money laundering risk posed to it by that customer. The contract between the financial institution and customer is usually wide enough to permit the financial institution, on its own initiative, to close a customer’s account. If this is not currently the case, financial institutions should ensure that contracts make provisions for this.
Where a financial institution chooses to take such action, this would result in the withdrawal and consequential payment to the customer of all the funds in the closed account. As such, since this withdrawal would be a transaction on the account it may constitute a prohibited act. In this case, the consent of the designated authority to proceed with the withdrawal of all the funds in the account must first be obtained.
Where a disclosure has been made to the FID about a particular transaction involving suspected criminal property, any subsequent action to close the account would require consent from the designated authority.
Where financial institutions request consent from the designated authority to close an account, the balance in the account should be stated in the request.
As a general rule, the designated authority is not in a position to advise regulated entities about the precise language that should be used to inform customers when their transactions are either pending consent or denied consent. Any such communication would be dependent on the circumstances of the particular case.
We can advise that in corresponding with the customer, the financial institution must be conscious of the tipping-off provisions under the Act. This means that where the financial institution has made a disclosure under the Act, or is aware of an investigation related to that customer, any information about the investigation, or which is likely to prejudice an investigation should not be disclosed.
Section 97 (1) of POCA makes it an offence to make an unauthorized disclosure. A person commits an offence of tipping off if:
- knowing or having reasonable grounds to believe that an authorized disclosure has been made, he makes a disclosure which is likely to prejudice any investigation that might be conducted following the first mentioned disclosure.
- knowing or having reasonable grounds to believe that the enforcing authority is acting or proposing to act in connection with a money laundering investigation which is being, or is about to be, concluded, he discloses information or any other matter relating to the investigation to any other person.
This obviously means that the financial institution cannot tell the customer:
- during the notice period, that the transaction is being delayed because it is awaiting consent from the designated authority
- during the 10-day moratorium period, that consent to the transaction was refused by the designated authority
- at a later date, that the transaction was delayed because the consent of the designated authority was being sought or
- that law enforcement is conducting an investigation.
During the seven-day notice period, and subsequent ten-day moratorium period, regulated entity may simply choose to say nothing and give no reason for the delay.
Regulated entities are however free to advise customers that it is carrying out its required due diligence checks and procedures to comply with all applicable laws and its own internal procedures. It may be useful for regulated entities to make customers aware in the contracts that transactions may sometimes be delayed or refused because of the Financial Institutions obligations under the governing statutes. This would provide an explanation for the delay in processing a transaction without violating the tipping-off provisions.
Regulated entities should be aware that they are not being targeted for going about their lawful commercial business; it is the criminal that is under pursuit. Where there is a deliberate contravention of the law then the penalties would have to be applied.
All requests for consent must be placed in a sealed envelope stamped “confidential” and addressed to:-
Designated Authority
The Chief Technical Director
Financial Investigations Division
1 Shalimar Avenue
Kingston 3
Reminder:
Financial institutions are being reminded that all Suspicious and Threshold Transaction Reports submitted to the Financial Investigations Division must be sent in a sealed envelope and should be addressed as set out above.
Terrorist financing is the financial support in any form of terrorism or of those who encourage, plan or engage in terrorism. Terrorist financing may involve funds raised from legitimate sources such as personal donations and profits from businesses and charitable organizations, as well as from criminal sources such as the drug trade, smuggling of weapons and other goods, kidnapping, fraud and extortion. The Chief Technical Director of the FID was named as the Designated Authority under the Terrorism Prevention (Designated Authority) Act. This allows FID to receive and process reports on terrorist financing
Money laundering is the process of obtaining money derived from criminal activity (particularly drug offence, fraud, corruption, arms trafficking and other serious crimes) which appears to be from a legitimate source or, Money Laundering concerns any transaction or involvement in virtually any way whatsoever with criminal property. In short, making ‘dirty money’ seem clean.