Money Laundering and Terrorist Financing
What is Money Laundering?
The act of disguising the origins of proceeds generated from criminal activity to make it appear as legitimate funds.
What is a suspicious transaction?
A transaction that raises suspicion of money laundering, terrorist financing, or other relevant illicit activity based on its circumstances.
What is KYC?
Know Your Customer is a mandatory identity verification process to confirm who the customer is before and during a business relationship.
CFT
Countering the Financing of Terrorism
What are the consequences of failing to comply with AML/CFT requirements?
Consequences may include regulatory sanctions, monetary penalties, disciplinary action, reputational damage, and, in certain circumstances, criminal liability, depending on the nature of the breach and applicable law.
What are the 3 stages of Money Laundering?
What is structuring, also called smurfing?
Breaking up a large amount of money into smaller transactions to avoid detection or reporting requirements.
What is Customer Due Diligence (CDD)?
The process of identifying and verifying a customer, understanding the purpose and intended nature of the business relationship, and assessing the associated money laundering and terrorist financing risks.
CPF
Countering Proliferation Financing
What is a Politically Exposed Person (PEP), and why can the relationship require additional scrutiny?
A PEP is someone who holds or has held a prominent public function. Their position may expose them to greater corruption or bribery risks.
What are two main features that differentiate 'terrorist activity financing' from 'money laundering'?
Funds can be obtained by both criminal and legitimate means; and
Money is the means, not the end — the goal is to use funds to facilitate or carry out terrorist activities.
How long does the Compliance Officer have to report a suspicious transaction?
Three days after the suspicion if formed.
What is Enhanced Due Diligence (EDD), and when is it required?
EDD involves additional checks and scrutiny for higher-risk customers or business relationships. The measures applied depend on the identified risks and applicable legal requirements.
MLTPA
Money Laundering and Terrorism (Prevention) Act
What are targeted financial sanctions?
Measures that require designated persons or entities to be subject to specific financial restrictions, such as freezing their assets and prohibiting funds or economic resources from being made available to them, as required by applicable law.
What is a Predicate offence? Name at least 3
A predicate offence is the underlying crime that generates illegal proceeds (dirty money), which criminals then attempt to disguise or legitimize through money laundering.
e.g. Drug trafficking, fraud & financial deception, corruption & bribery, tax evasion, human trafficking, organized crime & racketeering, illicit arms trafficking, environmental crime, insider trading
Can a transaction be suspicious even if it was never completed? Give an example.
An attempted or proposed transaction may still raise suspicion of money laundering or terrorist financing. For example, a customer may attempt to transfer funds but cancel the transaction after being asked to provide supporting documents.
Who is an Ultimate Beneficial Owner (UBO)?
The natural person who ultimately owns or controls a customer, or on whose behalf a transaction or activity is conducted.
CFATF
Caribbean Financial Action Task Force
What is the term for informing a customer that an STR has been filed about them?
Tipping off
What is Proliferation Financing?
Proliferation financing refers to the risk of raising, moving, or making available funds, other assets, or other economic resources, or financing, in whole or in part, to persons or entities for purposes of Weapons of Mass Destruction proliferation.
What protects you from civil or criminal liability, even if your suspicions leading to the filing of a Suspicious Transaction Report proves wrong?
The MLTPA
A customer is classified as low-risk when opening an account, but later becomes a politician. Can BCCU continue relying on the original CDD assessment?
No. BCCU must reassess the customer's risk profile and apply the appropriate risk-based measures. This shall include EDD measures.
DNFBP
Designated Non-Financial Businesses and Professions
Under Belize's MLTPA, who has the authority to freeze terrorist accounts?
The Director of the FIU