AML-CFT Cooperation between Countries

AML/CFT Cooperation between Countries FATF Recommendations on Cooperation between Countries Practices that restrict international cooperation between supervisory authorities or FIUs when analyzing and investigating suspicious transactions and money laundering crimes, confiscating assets, and extraditing accused money launderers are serious obstacles to combating money laundering. Recommendations 36 through 40 of FATF’s 40 Recommendations on establishing and maintaining effective AML/CFT programs pertain specifically to the international aspects of money laundering and terrorist financing investigations. They address mutual legal assistance treaties, extradition, confiscation of assets, and mechanisms to exchange information internationally. International Money Laundering Information Network The International Money Laundering Information Network (IMoLIN) serves as a clearinghouse of money laundering information for the benefit of national and international AML agencies. It was developed and is administered by the Global Programme against Money Laundering, Proceeds of Crime, and the Financing of Terrorism of the United Nations Office on Drugs and Crimes on behalf of the UN and other international organizations, including Interpol. IMoLIN has five main features: 1. Anti-Money Laundering International Database (AMLID): A compendium and analysis of national AML laws and regulations, as well as information on national contacts and authorities (the database is password protected) 2. Reference data: Research and analysis, bibliography, conventions, legal instruments, and model laws 3. Country page: Full text of AML legislation, where available, and links to national FIUs 4. Calendar of events: Chronological listing of training events, conferences, seminars, workshops, and other meetings in the AML field 5. International norms and standards: Details UN conventions, model laws, and other international standards Mutual Legal Assistance Treaties When evidence is required from another jurisdiction, a request can be made for mutual legal assistance. Mutual legal assistance treaties (MLATs) provide a legal basis for transmitting evidence that can be used for prosecution and judicial proceedings. MLATs only involve two countries at a time. For example, the Treaty between Canada and the Kingdom of Spain on Mutual Assistance in Criminal Matters, which has been in force since March 3, 1995, defines criminal matters as “investigations or proceedings relating to offenses concerning taxation, duties, customs and international transfer of capital or payments.” Moreover, it defines assistance as the “taking of evidence and obtaining of statements of persons; provision of information, documents and other records, including criminal records, judicial records and government records; location of persons and objects, including their identification; search and seizure; delivery of property, including lending of exhibits; making detained persons and others available to give evidence or assist investigations; service of documents, including documents seeking the attendance of persons; measures to locate, restrain and forfeit the proceeds of crime; and other assistance consistent with the objects of this Treaty.” Procedures can vary, but the typical process for requesting evidence from another jurisdiction involves: • The central authority of the requesting country sends a commission rogatoire (letters rogatory, or letter of request) to the central authority of the other country. The letter includes the information sought, the nature of the request, the criminal charges in the requesting country, and the legal provision under which the request is made. • The central authority that receives the request sends it to a local financial investigator to determine if the information is available. • An investigator from the requesting country then visits the country from which the information is sought and accompanies the local investigator during visits or when statements are taken. • The investigator asks the central authority for permission to remove the evidence to the requesting country. • The central authority sends the evidence to the requesting central authority, thereby satisfying the request for mutual legal assistance. Local witnesses may need to attend court hearings in the requesting country. Financial Intelligence Units FIUs are mandatory national agencies that handle financial intelligence. They receive reports of suspicious transactions from financial organizations, other people, and entities, analyze them, and disseminate the resulting intelligence to local law enforcement agencies and foreign FIUs to combat money laundering. The first FIUs were established in the early 1990s in response to the need for a central agency to receive, analyze, and disseminate financial information to combat money laundering. The European FIUs established in the late 90s were predominantly domestically organized and focused. However, to fight the threat posed by criminals and terrorists exploiting the open borders of the EU, the FIUs of Luxembourg, UK, Italy, and France joined the Dutch FIU in its initiative to create a decentralized network for the FIUs to exchange information in a more sophisticated way. With the start of the pilot project in 2004, FIU.net was born. Starting in 2006, the former Directorate-General Justice, Freedom and Security (DG JLS), later Directorate-General for Migration and Home Affairs (DG HOME) of the European Commission, the Dutch Ministry of Justice and Security, and the participating FIUs funded the EU FIU.net project, which lasted a decade. During that period the FIU.net Bureau and the project support team, together with the FIUs, developed the FIU.net system into a sophisticated, effective tool in the fight against money laundering and terrorist financing. During those years, they added features to FIU.net, such as Ma3tch, a revolutionary way to match and detect common subjects without exposing information that is not relevant to others. In addition, the Templates feature makes it easy to adjust the system to the specific needs of an individual FIU. In 2012, FATF adopted a revised set of recommendations on combating money laundering that, for the first time, included explicit recommendations for the establishment and functioning of FIUs. Although the FIU members of the Egmont Group share the same core functions of receiving, analyzing, and disseminating financial information to combat money laundering and financing of terrorism, they often differ in how they are established and how they function. In 2016, the European Union initiated several measures to strengthen the role of FIUs and their ability to share information across Europe as part of its comprehensive action plan toward the fight against terrorism. Three basic functions of an FIU FIUs play an important role in the AML/CFT framework. FATF Recommendation 29 states that countries should establish an FIU that serves as a national center for the receipt and analysis of: (a) suspicious transaction reports and (b) other information relevant to money laundering, associated predicate offenses, and terrorist financing, and for the dissemination of the results of that analysis. FIUs should be able to obtain additional information from reporting entities and have access on a timely basis to the financial, administrative, and law enforcement information that it requires to undertake its functions properly. Articles 30 and 31 of the Recommendations outline the powers of FIUs and other competent authorities responsible for conducting investigations: • Responsibility for money laundering and terrorist financing investigations within the framework of national AML/CFT policies • At least in all cases related to major proceeds-generating offenses, developing a proactive parallel financial investigation when pursuing money laundering, associated predicate offenses, and terrorist financing, including cases in which the associated predicate offense occurs outside their jurisdictions • Expeditiously identifying, tracing, and initiating actions to freeze and seize property that is or might become subject to confiscation, or is suspected of being proceeds of crime • Access to all necessary documents and information for use in those investigations and in prosecutions and related actions, including powers to use compulsory measures for the production of records held by financial organizations, DNFBPs, and other natural or legal persons for the search of people and premises, taking witness statements, and seizing and obtaining evidence • Using a wide range of investigative techniques suitable for the investigation of money laundering, associated predicate offenses, and terrorist financing, including undercover operations, intercepting communications, accessing computer systems, and controlled delivery. The Australian Transaction Reports and Analysis Centre (AUSTRAC), founded in 1989, is Australia’s primary source for financial intelligence, which is used to fight serious and organized crime and terrorism financing. The UK’s FIU is part of the National Crime Agency (NCA). The NCA became operational in 2013 and leads UK law enforcement’s fight against serious and organized crime. In the US, FinCEN was established in 1990 with the mission to safeguard the financial system from illicit use, combat money laundering, and promote national security through the collection, analysis, and dissemination of financial intelligence and the strategic use of financial authorities. FIUs are tasked with receiving and analyzing SARs and maintaining close links with police and customs authorities. They share information among themselves informally in the context of investigations, usually on the basis of memoranda of understanding (MOU). The Egmont Group of FIUs has established a model for MOUs. Unlike the MLATs, MOUs are not typically used for obtaining evidence, but for obtaining intelligence that might lead to evidence. In June 2001, the members of the Egmont group adopted “Principles of Information Exchange between Financial Intelligence Units” and incorporated the document into its Statement of Purpose. Some countries can restrict the exchange of information with other FIUs or the access to information requested by an FIU. This document describes practices that maximize cooperation among FIUs and can be useful to government authorities when considering AML legislation. Furthermore, to address practical issues that impede mutual assistance, the document provides best practices for the exchange of information among FIUs. When handling international information requests, FIUs are urged to take these best practices into account. Key principles included in the document include: • The Egmont principle of free exchange of information at the FIU level should be possible on the basis of reciprocity, including spontaneous exchange. • Differences in the definition of offenses that fall under the competence of FIUs should not be an obstacle to the free exchange of information at the FIU level. To this end, the FIU’s competence should extend to all predicate offenses for money laundering, as well as terrorist financing. • The exchange of information among FIUs should take place as informally and as rapidly as possible and with no excessive formal prerequisites, while guaranteeing protection of privacy and confidentiality of the shared data. • When an FIU needs a memorandum of understanding to exchange information, it should be negotiated and signed by the FIU without undue delay. To that end, the FIU should have the authority to sign MOUs independently. • It should be possible for communication among FIUs to take place directly, without intermediaries. • Providing an FIU’s consent to disseminate the information for law enforcement or judicial purposes should be granted promptly and to the greatest extent possible. The FIU providing the information should not deny permission to disseminate the information unless doing so would fall beyond the scope of its AML/CFT provisions; could impair a criminal investigation; would be clearly disproportionate to the legitimate interests of an individual, legal person, or the country of the providing FIU; or would otherwise not be in accord with basic principles of national law. Any refusal to grant consent should be appropriately explained. The following practices should be observed by the FIU requesting the information: • All FIUs should submit requests for information in compliance with the Principles of Information Exchange established by the Egmont Group. When applicable, the provisions of information-sharing arrangements among FIUs should also be observed. • Requests for information should be submitted as soon as the precise assistance required is identified. • When an FIU has information that might be useful to another FIU, it should consider supplying it spontaneously as soon as the relevance of sharing this information is identified. • The exchange of information among Egmont FIUs should take place in a secure way. To this end, the Egmont FIUs should use the Egmont Secure Web (ESW) when appropriate. The Egmont Group released a revised charter that built on the original one and included updates to: • Unite efforts to improve an effective exchange of information upon request and spontaneously to combat money laundering and financing of terrorism. • Exchange information on their respective experiences to promote the development of effective FIUs. • Support the Egmont Group members to enhance their capacity by promoting operational independence of FIUs, offering training and technical assistance, promoting personnel exchanges, developing operational and strategic collaboration, and maintaining and granting access to a secure channel for information exchange among Egmont Group FIUs. An example of FIUs collaborating and utilizing MOUs was in October 2013, when FinCEN and Mexico’s National Banking and Securities Commission executed the first-ever MOU to facilitate the exchange of supervisory information in support of both agencies’ AML/CFT missions. Moreover, it provided for strict controls and safeguards to ensure that shared information is well protected and used in a confidential and authorized manner for AML/CFT supervision purposes only.