Money Laundering Legislation National Measures

Money Laundering Legislation National Measures Fraud Working Group

Brussels - October 2002

European Banking Federation Rue Montoyer 10 B - 1000 Brussels www.fbe.be

TABLE OF CONTENTS

INTRODUCTION NATIONAL MEASURES IN THE HOME COUNTRIES OF THE FBE MEMBERS AUSTRIA

1

BELGIUM

4

DENMARK

9

FINLAND

12

FRANCE

15

GERMANY

20

GREECE

24

ICELAND

29

IRELAND

33

ITALY

38

LUXEMBOURG

42

THE NETHERLANDS

46

NORWAY

51

PORTUGAL

56

SPAIN

59

SWEDEN

63

SWITZERLAND

66

UNITED KINGDOM

71

NATIONAL MEASURES IN OTHER EUROPEAN COUNTRIES ANDORRA

75

BULGARIA

78

CROATIA

82

CYPRUS

86

CZECH REPUBLIC

89

ESTONIA

92

HUNGARY

96

LATVIA

102

LITHUANIA

107

MALTA

110

POLAND

114

SLOVAK REPUBLIC

117

SLOVENIA

120

TURKEY

124

NATIONAL MEASURES IN THIRD COUNTRIES AUSTRALIA

127

GIBRALTAR

131

JAPAN

134

MONACO

138

NEW ZEALAND

142

UNITED STATES OF AMERICA

146

ANNEX 1: IDENTIFICATION AT A DISTANCE (I-III)

150

ANNEX 2: TERRORIST FINANCING (I-XXVII)

154

LIST OF ADDRESSES

155

INTRODUCTION

NATIONAL MEASURES IN THE HOME COUNTRIES OF FBE MEMBERS

AUSTRIA

1.

2.

MONEY LAUNDERING LEGISLATION -

The Austrian Penal Code (Strafgezetzbuch) provides for a specific money laundering offence covering the proceeds of all serious crimes and deals with the confiscation of proceeds from crime and extradition. In August 2002 an amendment to the Penal Code widened the scope of money laundering to cover fully the requirements of the UN Convention on Organized Crime including the financing of terrorism.

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Banking Act (§ 40, 41): stipulates a mandatory system based on reporting suspicions (to the Austrian Financial Intelligence Unit), including inter alia enhanced customer identification and record-keeping requirements (for transactions in excess of EUR 15,000 or the equivalent amount in foreign currency). Amended in 2000.

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On 1 November 2000, the Austrian Banking Act was amended to prohibit the opening of so-called “anonymous” savings accounts; the provisions on the identification rules concerning depositing and withdrawing funds with regard to such savings accounts have been adapted accordingly. The transition period for existing anonymous accounts ended on 30 June 2002.

CENTRAL AUTHORITY FOR REPORTING The General Directorate for Public Security within the Federal Ministry of the Interior (Bundeskriminalamt – Geldwäschemeldestelle).

3.

BUSINESSES COVERED BY THE LEGISLATION Only financial institutions are covered by the Banking Law, however the provisions of the Penal Code relating to money laundering as an offence also concern individual persons and are not limited to specific businesses or institutions. The Austrian Industrial Code (Gewerbeordnung) will be amended to implement fully the 2nd Money Laundering Directive.

4.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION The Banking Law provides for feedback as a standard procedure. However, this is currently implemented in a pragmatic way through periodic direct contacts between banks (and/or their security officers) and the Unit for the Fight against Organised Crime set up within the General Directorate for Public Security.

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED The legislation covers all assets of criminal origin.

1

Austria

6.

CONSERVATION OF RECORDS AND DOCUMENTS Duration Identification documents: banking law obliges banks to keep evidence for at least 5 years after the end of the business relationship with the customer. Transaction documents: supporting evidence and records of all transactions for a period of at least five years following the execution of the transaction.

7.

PERSONS RESPONSIBLE FOR REPORTING In general a person is appointed to act as the central point for reporting suspicious operations for the bank as a whole. He/she is the point of contact with the money laundering authorities.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED Legislation only provides for the information collected to be used to combat criminal, not fiscal, offences.

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION Under the Banking Law (§ 40, 41), bank staff have no liability if the notifications are made in good faith; banks are prohibited from warning customers that notifications have been made.

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) Credit institutions and financial institutions have to inform the General Directorate for Public Security if there is reasonable suspicion that: 9 a transaction which has already been concluded, is in progress or is about to be concluded is for the purpose of money laundering; or, 9 a customer has breached his duty to disclose fiduciary relationships. In case of doubt, instructions regarding deposits may be executed, but withdrawals may not be made. If, within 24 hours (end of the following banking day) of the proposed transaction being notified, the competent authority has not prohibited the transaction, the transaction may then be executed.

11.

IDENTIFICATION a)

Identification threshold amount Under the Banking Law, there is a mandatory system for customer identification when a permanent business relationship is established or in the case of transactions amounting to at least EUR 15,000 or the equivalent amount in foreign currency, irrespective of whether the transaction is carried out in a single operation or in several operations which are obviously closely linked.

b)

Means of identification Banks are obliged to register the identity of their customers. In general, means of identification are: 2

Austria

9 Natural persons: an official identification document, e.g. passport, Austrian national identity card; (Austrian) driver’s license, a national identity card of a member state of the European Union; 9 Legal persons: extracts from the Commercial Register (which is a computerized official on-line database containing all relevant information on a company) or a certificate of incorporation or registration. Under the Foreign Exchange Law banks and financial institutions are obliged, when entering into a business relationship with a customer, to verify the customer's status with regard to foreign exchange regulations. 9 Natural or legal persons acting for the account of a third person: Insofar as a natural or legal person acts as trustee for funds from nonresidents, the depositor must inform the account holding institution of the beneficiary's identity (disclosure of the beneficiary's name and residence and the depositor must prove that he has the right under a power of attorney to act for the beneficiary). c)

12.

Identification at a distance In certain limited circumstances, an account may also be opened without the prospective account holder being obliged to go in person to the credit institution. In practice, banks also accept identification checks, but only through “reliable third parties” that carry out the identity checks on their behalf. Reliable third parties are, for instance, correspondent banks, which are also subject to the obligations of the EC Directive on money laundering, banks from countries that have comparable money laundering rules, such as US banks, or Austrian consulates abroad. A customer may not open an account if his or her identity cannot be established, i.e. in case of correspondence by letter or by telephone. Therefore, the opening of accounts by correspondence, telephone and, according to the jurisprudence of the Austrian Supreme Court, by fax, is not possible.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING The Association keeps its members informed of legislative developments. Audiovisual aids have been made available. Internal training is organised within banks.

3

Austria

BELGIUM

1.

MONEY LAUNDERING LEGISLATION The EC Directive has been transposed in various stages: -

Article 2 of the EC Directive (prohibition on money laundering) was transposed into the law of 17 July 1990. Under this law, moneylaundering constitutes the criminal offence of possession and handling of stolen goods (“recel”) "in the broad sense";

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The rules on banking practices laid down in the EC Directive (Articles 3, 4, 5 and 11) were first set out in a circular issued by the Banking and Finance Commission (BFC) on 17 July 1991 addressed to the credit sector. These standards have since been confirmed in the law of 11 January 1993 (the scope of which is broader as regards rationae personae). As far as substance is concerned, the circular and the law generally concur. However, there are some differences: 9

9 9

first, the obligations imposed under the circular are more detailed, and consequently more concrete, than those provided for under the law; secondly, the law sometimes proposes alternative solutions with regard to detailed implementation of ethical obligations; thirdly, in contrast with the law, the circular also imposes obligations on branches of Belgian banks established abroad.

The Banking and Finance Commission (BFC) published an update of its circular in September 1993 that took into account the conclusions which could be drawn from the law of 11 January 1993 (the circular has subsequently been updated following the adaptations made to the regulations; the latest circular dates from May 1999). -

The disclosure obligation was formalised in the law of 11 January 1993 and became applicable on 1 December 1993, with the setting up of the unit responsible for disclosures;

-

The law of 11 July 1994 extending the offences covered to illegal trafficking in hormones;

-

The law of 7 April 1995 extending the offences covered to illegal trafficking in human tissues and organs, fraud damaging the interests of the European Union, serious and organised tax fraud, corruption of public officials, investment irregularities, swindling, hostage taking, theft or extortion with violence and intimidation, and fraudulent bankruptcies;

-

The Royal Decree of 27 December 1994 concerning bureaux de change and foreign exchange dealing established an obligation for bureaux de change to be registered with the Banking and Finance Commission, to comply with money laundering regulations and to issue a transaction statement. A list of registered bureaux de change is published in the Belgian Official Gazette on a regular basis;

4

Belgium

-

2.

The law of 10 August 1998 amending the law of 11 January 1993 and extending the offences covered to public notaries, bailiffs, company auditors, independent auditors, casinos and estate agents.

CENTRAL AUTHORITY FOR REPORTING The "Cellule de Traitement des Informations Financières" (hereinafter the “Disclosure Unit”).

3.

BUSINESSES COVERED BY THE LEGISLATION A distinction must be made between: -

The Penal Code, which has general application: it is applicable to any offence; Recommended banking practice set out in the circular issued by the Banking and Finance Commission, which only applies to the credit sector; The law of 11 January 1993 which applies to financial institutions and the following parties:

4.

the Banque Nationale de Belgique; Belgian credit institutions (including public-sector credit institutions and businesses governed by Chapter I of the law of 10 June 1964); investment firms, and more specifically stockbrokers, investment managers and investment advisers; the branches in Belgium of foreign investment companies; Belgian insurance companies; the Belgian Post Office/Postbank, "La Poste"; savings banks; the "Caisse des Dépôts et Consignations" (the parapublic savings bank); mortgage and credit companies, credit card schemes and leasing companies (Royal Decree of 24 March 1995); all persons who undertake, for professional purposes, the purchase or sale of spot currencies in the form of cash or cheques denominated in foreign currencies or by using a credit card or a payment card; foreign exchange dealers and "bureaux de change"; notaries public; bailiffs; company auditors; independent auditors, casinos; security companies; estate agents.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION There is no provision for feedback (except as regards instructions by the Disclosure Unit concerning the execution of a notified transaction).

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED A distinction must be made between: 5

Belgium

The European Banking Federation∗ (FBE) is publishing a new version of its “Report on Money Laundering Legislation: National Measures”. This extensive document offers an inventory of national regulations on money laundering in more than 35 countries in Europe and beyond. National legislation are detailed and listed with identical headings (type of legislation, business covered, reporting procedures, identification requirements, etc.) which introduce some valuable elements of comparison among countries. Due to recent developments in this matter, we have also taken particular interest in more topical questions such as identification at a distance and terrorist financing (see the comparative tables in the Annexes). Please note that the Report is based on information collected from July to October 2002. The FBE cannot be held responsible or liable in any way for possible omissions or inaccuracies.

Catherine MARTY The FBE Secretariat, October 2002.

∗

The European Banking Federation is the united voice of some 3,000 banks of the European Union (EU) and the European Trade Association (EFTA) countries. The Fraud Working Group of the FBE is in charge of the money laundering issues. ∗

 Reproduction of this text or any part thereof without mention of the European Banking Federation as the author is totally prohibited.

-

-

6.

the Penal Code, which has general application and covers the possession and handling of stolen goods per se, no matter what the underlying offence. This means that it covers even the most minor of offences; the Banking and Finance Commission circular, which only relates to the laundering of money derived from major criminal activities prohibited by the international community and more specifically those related to drug trafficking; the law of 11 January 1993, which covers capital and assets derived from offences linked to terrorism, organised crime, illegal drug trafficking, illegal dealing in arms, goods or merchandise, trafficking in human beings or procuring and living off immoral earnings; the law of 11 July 1994 extending the offences covered to illegal trafficking in hormones; the law of 7 April 1995 extending the offences covered to illegal trafficking in human tissues and organs, fraud damaging to the interests of the European Union, serious and organised tax fraud, corruption of public officials, investment irregularities, swindling, hostage taking, theft or extortion with violence and intimidation, and fraudulent bankruptcies.

CONSERVATION OF RECORDS AND DOCUMENTS Duration 9 A copy of all documents (or the references for such documents) which, under the terms of the EC Directive, constitute evidence for the purposes of identifying the originator or beneficiary of an order must be kept for at least 5 years after the relationship with the party concerned has been terminated. 9 A copy of all documents (or the references for such documents) used for identification purposes must be kept for 5 years following termination of the relationship. 9 Transaction documents (or a copy thereof) must be kept for at least 5 years from the date on which the transaction was executed. 9 The written disclosure report concerning notification of suspicious operations must be kept for at least five years from the date of the operation.

7.

PERSONS RESPONSIBLE FOR REPORTING Under the provisions of the law of 11 January 1993, financial institutions must appoint one or more persons responsible for setting up internal supervisory procedures, notification and the centralisation of data.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED If the Disclosure Unit, after examining the information which has been communicated to it, reaches the conclusion that there are serious grounds for suspecting money laundering (as defined in the law of 11 January 1993), it will communicate this information to the Ministry. Apart from this, members of the Unit are bound by professional secrecy; if it reaches the conclusion that the information communicated to it is not linked to offences covered by the law of 11 January 1993, but relates for example to tax fraud, the courts are not notified. The law does not make express provision for the information to be used for other purposes.

6

Belgium

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION Under Article 20 of the law of 11 January 1993 on the Prevention of the Use of the Financial Systems for Money Laundering, “no civil, penal or disciplinary action, or professional sanction can be taken against bodies or persons covered by Article 2, their employees or representatives who have communicated information in good faith, in accordance with Articles 12 to 15”.

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) In principle, the operation to be performed must first be notified to the Disclosure Unit; the latter must be informed at the same time of the deadline for execution of the operation. The Unit may then, prior to the expiry of the deadline, prohibit execution of the operation; this prohibition is valid only for 24 hours, unless it is extended. But when it is impossible to postpone execution due to the nature of the operation, or if postponement would impede prosecution of the beneficiaries, the operation may be executed. The Unit must however be informed immediately afterwards; it must also be informed of the reasons why prior notification was not made. It is also possible for a credit institution confronted with a suspect operation to decide to refuse the order. This would appear to be permitted under Belgian legislation provided, however, that the credit institution takes the initiative of informing the Unit of the grounds for suspecting money laundering.

11.

IDENTIFICATION The regulations have been drafted in very general terms to enable businesses to tailor solutions to specific cases, in line with the company’s recommendations and practices. a)

Identification threshold amount Identification of customers is required in the case of transactions, including foreign exchange transactions, of EUR 10,000.

b)

Means of identification Under the provisions of the law of 11 January 1993, financial institutions must check the identity of customers by means of documents constituting evidence: Natural persons Identification of their surname, first name and address. Legal persons Identification of their corporate name, address or, as appropriate, the head office. Natural or legal persons acting on behalf of a third person The circular of the Banking and Financial Commission states moreover that when there are grounds for ascertaining the identity of a beneficiary of an operation but the identity of the beneficiary cannot be determined sufficiently clearly, credit institutions must obtain from the customer a signed declaration confirming that he is acting on his own or on behalf of another person and that, insofar as he is aware, the funds are not derived from major criminal activities prohibited by the international community and more specifically those related to drug trafficking.

7

Belgium

12.

c)

Cases in which the identification requirement does not apply In accordance with the EC directive, Belgian regulations impose no identification requirements if the customer is a credit institution. Following the Royal Decree of 27 December 1994 concerning Bureaux de Change and Foreign Exchange transactions, the same rule also applies if the counterparty is a bureau de change - provided that it is registered with the Banking and Financial Commission or subject to the obligations and sanctions imposed under the Money Laundering Directive.

d)

Identification at a distance The BFC circular states that credit institutions must establish adequate customer identification procedures and internal control procedures for distance transactions. These procedures must enable credit institutions to comply with all their legal obligations and the principles set out in the circular.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING In December 1992 and January 1993, the Association provided training in technical and legal aspects of money laundering to bank units responsible for training employees with regard to money laundering. At the same time, the units in question were shown how to use the training kit for training their employees in customer awareness. This kit consists of a manual containing the full text of a half-day seminar that they will be required to organise, as well as a set of slides for use in the seminar and reference brochures for the participants. In addition there is a diskette containing examples of money laundering tailored to the specific needs of the participants. On request, the Belgian Association will provide training to all the bank's staff, determining the content of practical examples in consultation with the bank’s management. Each year, the Association tries to organise an information meeting with the competent authorities. Part of this meeting is devoted to examining the most important aspects and ways of laundering money.

8

Belgium

DENMARK

1.

MONEY LAUNDERING LEGISLATION The Danish law implementing the 1991 EC Directive came into force on 1 July 1993. The Danish system is the so-called mandatory system. Banks and other financial institutions are under an obligation to report any suspicions that they may have about money laundering under Danish criminal law.

2.

CENTRAL AUTHORITY FOR REPORTING A special branch of the Danish police (Department for Special Crime).

3.

BUSINESSES COVERED BY THE LEGISLATION The law covers the financial sector, i.e.: commercial banks; savings banks; mortgage lenders; brokerage companies; credit card companies; leasing companies; factoring companies; life-insurance companies; pension funds; bureaux de change; casinos.

4.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION Practical procedures for feedback from the police have not yet been finalised.

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED The money laundering legislation covers any punishable offence, not just those linked to drug trafficking.

6.

CONSERVATION OF RECORDS AND DOCUMENTS a)

Duration Evidence must be kept for at least five years after termination of the customer relationship or the execution of the transaction.

9

Denmark

b)

7.

Means of conservation Records may be stored photographically, in data form or on microfilm.

PERSONS RESPONSIBLE FOR REPORTING The Danish Bankers Association has recommended that member banks establish reporting procedures in departments and branches for suspicious operations to be notified to a central body within the bank (e.g. the legal department) which would be responsible for reporting to the police.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED The Danish law does not make provision for the information to be used for purposes other than combating money laundering.

9.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) If there is suspicion that a transaction is associated with money laundering, the bank must investigate it. If the suspicion cannot be disproved, the transaction must be suspended until the police have been informed. Where it is impossible to prevent the transaction being carried out, or this might hinder prosecution of those benefiting from the suspected money laundering transaction, the police must be informed as soon as the transaction has been completed.

10.

IDENTIFICATION a)

Identification threshold amount The identity of occasional customers must always be checked when the amount of the transaction exceeds EUR15,000. Identification is required in all cases where there are suspicions of money laundering.

b)

Means of identification The law requires a new customer’s name, address and personal or corporate registration number to be checked. The following means of identifying customers are recommended: - Natural persons Passport, driving license, joint cash card and ID card of the Danish banks and savings banks and other official ID cards. - Legal persons Publicly registered companies: a copy of the relevant register showing name, management, registration number, etc. Other legal persons (societies, etc.): the requirements for identification vary. In all categories the address must be checked.

10

Denmark

c)

Identification at a distance In case of home banking, customers, who wish to open an account, are required to present the same identification documents as mentioned in 11 b) above; they can do this by going in person to a branch or by sending photocopies by mail. The correctness of the name, address and personal or corporate registration number will then be checked at the Danish register. For international customers, the same identification documents are required and the customers will be asked to go in person to a correspondent bank or the local consulate. Again the correctness of the information will be checked. The identification requirements are under consideration.

11.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING Training along the lines recommended in the directive is an integral part of the Danish banking college programmes for bank employees. The Association has incorporated the money laundering issue into the banking college's curriculum. The Association has set up a working group comprising representatives from the major banks, the Money Laundering Secretariat and the Danish Financial Supervisory Authority. The group has prepared guidelines for action to be taken by the banks in cases of suspicions of money laundering. The guidelines are based on the guidance notes issued by the European Banking Federation, and are in line with the Danish Act. Finally, the Association has produced a video based on that of the British Bankers' Association. A large number of videos have been sold to member banks.

11

Denmark

FINLAND

1.

2.


An amendment to the Penal Code came into force on 1 January 1994.

-

The new law: Act on Preventing and Combating Money Laundering (68/98), came into force on 1 March 1998. (The new law partly repeals the previous laws: the Credit Institution Act of 1 January 1997 and The Insurance Intermediary Act of 1 January 1994). Some minor changes after that; a couple of initiatives to change the law, one in the Parliament and one bill in Ministry.

-

Under the new law, the Ministry of the Interior issued on 1 March 1998 new regulations to prevent and combat money laundering. A new one came into force on 15 February 2002.

CENTRAL AUTHORITY FOR REPORTING -

3.

The Money Laundering Clearing Unit (MLCU) established at the National Bureau of Investigation (NBI).

BUSINESSES COVERED BY THE LEGISLATION -

The Criminal Code has general application. The Act on Preventing and Combating Money laundering covers:

4.

credit institutions and financial institutions; bureaux de change; branches and agencies of foreign credit institutions and foreign financial institutions; branches and agencies of foreign investment companies; co-operative societies engaged in savings fund activities; insurance companies; agencies of foreign insurance companies; insurance brokers; pawnshops; casinos; lottery; real estate agents.

A few other businesses will be covered after the planned changes.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION No regular feedback from the NBI Money Laundering Clearance Unit (except in the case of an order by NBI to suspend a transaction for five banking days).

12

Finland

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED The legislation covers all crimes, including tax offences.

6.

7.


Duration Identification documents must be kept for 5 years.

b)

Means of conservation Any reliable manner.

PERSONS RESPONSIBLE FOR REPORTING A bank clerk who has grounds for suspicion must contact his/her superior. The superior will notify the contact person at the bank's head office. The contact person will notify the National Bureau of Investigation.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED The information may only be used to combat money laundering.

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION The bank is liable for damages for any financial loss caused to a customer due to clearing a transaction, reporting a suspicious transaction or suspending or refusing to execute a transaction only if the bank fails to exercise due diligence in a manner that, in the circumstances, could have been expected of the bank. Persons who fail to comply with the obligation to identify a customer are liable to a fine or imprisonment of maximum six months, unless a more severe punishment is stipulated elsewhere in the law.

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) When money laundering is suspected, the bank may:

refuse to execute the transaction, in which case the bank must make a notification to MLCU/NBI; execute the transaction but make a notification to MLCU/NBI.

MLCU/NBI can instruct the bank to suspend a transaction for five banking days. If the police does not intervene during that period, the bank has the right and obligation to complete the transaction.

13

Finland

11.

IDENTIFICATION a)

Identification threshold amount Customers must always be identified when the transaction exceeds EUR 15,000. The customer must always be identified at the start of a permanent business relationship (e.g. opening of an account, rental of a safe-deposit box, etc). In the event of any suspicions regarding a transaction, identification is always required. Details of the background and purpose of the transaction are required.

b)

Means of identification Valid identification documents are: Natural persons identity card issued by the police; driver's licence; passport; bankcard with photo; health insurance card with photo. -

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c)

Legal

persons extract from trade register; articles of association; extract from the minutes which include the decision to open the account. Natural or legal persons acting for the account of a third person Banks ask for identification of any "middlemen" when the person carrying out the operation is not acting on his own behalf. The middleman’s identification is checked by all appropriate means.

Cases in which the identification requirement does not apply For transactions carried out in the framework of a permanent business relationship, not exceeding EUR 15,000 and when there is no suspicion of money laundering. The identity of a customer does not need to be checked if the payment included in a transaction is made from a customer’s account with a credit institution or financial institution authorised in a Member State of the European Economic Area or with the branch operating in a Member State of the European Economic Area of a credit institution or financial institution not authorised in a Member State of the European Economic Area. The identity of a customer does not need to be checked if the customer is a credit institution, financial institution, investment company or life insurance company or a branch operating in a Member State of the European Economic Area of Economic Area.

12.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING The Finnish Bankers’ Association has produced new guidelines for banks; these are based on the new law and form the basis of new training material. The banks are responsible for training their own staff.

14

Finland

FRANCE

1.

MONEY LAUNDERING LEGISLATION 1.1 -

Banks’ obligations with regard to combating money laundering Act no. 90-614 of 12 July 1990, supplemented by decree no. 91-160 of 13 February 1991 and Banking and Financial Regulations Committee regulation no. 91-07 of 15 February 1991. Banks must report to TRACFIN [the French body for action against clandestine financial channels] all amounts and transactions that appear to be derived from drug trafficking. These reports are known as suspicious transaction reports. The banks also have vigilance obligations: - customer identification obligation (see point 11); - obligation to monitor specifically transactions over EUR 150,000 which have unusually complex conditions and do not seem to have any economic justification or lawful purpose. Banks must ask the customer to provide information about the transaction’s characteristics and record these in writing.

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Act no. 93-122 of 29 July 1993, amending the Act of 12 July 1990. Suspicious transaction reports are extended to cover amounts and transactions that appear to be derived from the activities of criminal organisations.

-

Act no. 2001-420 of 15 May 2001. This Act imposes new obligations on financial institutions in addition to the existing suspicious transaction reporting obligation. The following must be reported automatically to TRACFIN: - any transaction where the identity of the principal or beneficiary remains doubtful despite the identity checks that financial institutions have to carry out,, - any transaction involving a foundation (and in particular a trust) where the identity of the principal or beneficiaries is unknown. - transactions of a certain amount, carried out with certain countries or territories, whose legislation or practices are considered by the FATF as insufficient or an obstacle to combating money laundering. These reporting obligations are specified on a case-by-case basis by decree (the first decree to be adopted on the basis of this provision was decree no. 2002-145 of 7 February 2002, which made it obligatory for financial institutions to report to TRACFIN any transactions carried out on behalf of a customer or a customer’s principal in an amount greater than 8,000 euros, with persons resident, registered or established in Nauru).

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The Act of 15 May 2001 also amended the scope of the suspicious transaction report, which now covers amounts and transactions that “could” (instead of “appear to”) be derived from drug trafficking or “organised criminal activity” (instead of “the activities of criminal organisations”). These new expressions significantly extend the scope of the suspicious transaction report insofar as:

15

France

- with regard to the first, a report must now be filed if there is a mere doubt about the possibility of drug trafficking or organised criminal activity, even in the absence of specific or conclusive evidence, - with regard to the second, the aim now is for the law to take into account criminal behaviour rather than criminal structures. -

The Acts of 1990, 1993 and 2001 are encoded in the legislative section of the French Monetary and Financial Code in articles L.561-1 et seq.

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Regulation no. 2002-01 of 18 April 2002 relating to vigilance obligations with regard to cheques for the purpose of combating money laundering imposes specific obligations on banks with regard to cheque monitoring. 1.2

The offence of money laundering

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Act of 31 December 1987. This made the act of laundering funds derived from drug trafficking a criminal offence for the first time.

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Act no. 96-392 of 13 May 1996. This established a general offence of money laundering (in that it covers the proceeds of any crime or offence) in the French Penal Code (article 3241), with the following definition:

“Money laundering is the act of facilitating, by any means, the false justification of the origin of the property or income of the perpetrator of a crime or offence that has resulted in a direct or indirect profit for such perpetrator. The act of providing assistance in a transaction to invest, conceal or convert the direct or indirect proceeds of a crime or offence also constitutes money laundering. […]” 2.

CENTRAL AUTHORITY FOR REPORTING TRACFIN, under the auspices of the Finance Ministry.

3.

BUSINESSES COVERED BY THE LEGISLATION The following are subject to the suspicious transaction reporting obligation (articles L 562-1 and L 562-2 of the Monetary and Financial Code): -

Financial institutions (establishments in the banking sector, Banque de France, insurance companies and insurance brokers, investment companies, bureaux de change, etc.). They are also subject to other reporting obligations and vigilance obligations;

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Persons who carry out, monitor or advise on transactions relating to the purchase, sale, transfer or rental of real estate (since an act of 1998);

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Legal representatives and directors responsible for casinos (since the act of 15 May 2001);

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Persons who normally engage in the trading of or organise the sale of precious stones, precious materials, antiques and works of art (since the act of 15 May 2001).

16

France

In addition, persons other than those mentioned above who, in the performance of their profession, carry out, monitor or advise on transactions resulting in the movement of capital are obliged to report to the Public Prosecutor any transactions of which they are aware that relate to sums that they know are derived from drug trafficking or organised criminal activities (article L 561-1 of the Monetary and Financial Code). 4.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION There is limited provision for feedback from TRACFIN. TRACFIN centralises the intelligence gathering and analyses the information. It forwards the information, if necessary, to the legal authorities and informs the notifying party that this has been done. It is then subject to the official secrecy covering all legal proceedings.

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED The general offence of money laundering, created by the aforementioned act of 1996, covers the proceeds of all crimes and offences. However, the suspicious transaction reports that the institutions to which the obligations apply have to make only relate to transactions or amounts that could be derived from drug trafficking or organised criminal activity. The scope of the offence of money laundering and the scope of the suspicious transaction report are therefore not the same.

6.

7.


Duration Probative evidence is kept for 5 - 10 - 30 years (depending on the relevant statutory provisions).

b)

Means of conservation Original documents are required, but in practice banks only keep cheques for large amounts. Other documents are placed on microfilm after 4 years, with insurance being taken out against the risk of losing a case or against being obliged to pay compensation for non-compliance in this area.

PERSONS RESPONSIBLE FOR REPORTING There is a designated correspondent in each bank.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED The information passed on to TRACFIN in this connection cannot be used for any purpose other than combating the laundering of money derived from drug trafficking and organised criminal activity.

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France

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION Article L 562-8 of the Monetary and Financial Code provides that for amounts or transactions for which the required reports have been made, proceedings on the grounds of breach of professional secrecy (articles 226-13 and 226-14 of the Penal Code) cannot be brought against the directors and employees of the financial institution or against the other persons mentioned in the legislation who made the reports in good faith. It also specifies that no action for damages in civil proceedings can be taken nor any professional sanction be imposed on a financial institution, its directors or employees or on any of the persons mentioned in the legislation who made the required reports in good faith. If any loss results directly from these reports, the State assumes liability for the loss suffered . These provisions apply even if no proof is given of the criminal nature of the acts on which the report is based, and also if a court terminates proceedings or discharges or acquits the accused. When the transaction has been executed after a report has been made, in accordance with TRACFIN’s instructions, and unless there is fraudulent collaboration with the owner of the funds or the principal of the transaction, the financial institution has no liability, and its directors or employees cannot be prosecuted on this grounds by application of articles 22234 to 222-41 (drug trafficking), 321-1, 2, and 3 (offence of handling stolen goods or concealing objects obtained through crime) and 324-1 (offence of money laundering) of the Penal Code. The other persons subject to the suspicious transaction reporting obligation also have no liability. In the event of a serious lack of due care or any failure in its internal control procedures, a credit institution may be subject to sanctions imposed by the Banking Commission (warning, fine, etc). However, these are professional, not penal sanctions.

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) Unless it is impossible to defer the execution of the transaction, any bank that reports a transaction to TRACFIN must suspend the transaction and await TRACFIN’s instructions. If TRACFIN does not give any instructions, the transaction may be executed. If TRACFIN opposes the execution of the transaction (it can only do this within a very short space of time), the bank must defer the execution of the transaction for the period specified. After this period, if the bank does not receive any instructions from TRACFIN or from the courts, the bank can carry out the transaction. In the case of regular customers, the bank has the freedom to terminate the relationship after a certain period of time, unless instructed otherwise by TRACFIN or by the legal authorities.

11.

IDENTIFICATION a)

Identification threshold amount Before opening an account, financial institutions must check the identity of the party to the contract based on the presentation of any written documentary evidence. They must also check the identity of occasional customers who ask them to carry out transactions over EUR 8,000 or to hire a safe. Occasional customers are defined as persons who are neither customers of the branch they approach, nor of any branch of the bank. Persons who go to a branch where they are not known, but 18

France

who have an account at another branch of the same bank, are not considered as occasional customers. b)

Means of identification Before opening an account, financial organisations must check the identity of their customer using documentary evidence. Natural persons An official identification document with a photo of the person concerned. Legal persons The original or a certified copy of any act or extract from an official commercial register showing the name, legal form and head office, together with the powers of persons acting on behalf of the company. Natural or legal persons acting for the account of a third person They must ascertain the real identity of the persons on whose behalf an account is being opened or an operation is being performed when they suspect that the persons opening an account, or initiating an operation, are not acting on their own behalf. They can rely on any document which they feel is necessary.

c)

Cases in which the identification requirement does not apply The identification of occasional customers is not required for any transaction they carry out under EUR 8,000. Moreover, the decree of 1991 provides that: “When it appears to the

financial institution that the person asking to open an account or carry out a transaction could be acting on behalf of someone else, apart from in cases where the person is a financial institution itself, it must ascertain the true identity of the person or persons on whose behalf the account would be opened or the transaction carried out.” 12.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING In 2002 the French Banking Federation started work on updating and modernising training with regard to combating money laundering, aimed at the entire banking profession.

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France

GERMANY

1.

2.


The Act on the Detection of Proceeds from Serious Crimes (hereinafter the Money Laundering Act) was adopted on 24 September 1993 and came into force on 29 November 1993. There have been two major amendments: first by the Act on Improving Measures to Combat Organised Crime of 4 May 1998, which came into force on 9 May 1998 and second by the Act on the Suppression of Money Laundering and Combating the Financing of Terrorism of 8 August 2002, which entered into force on 15 August 2002.

-

Administrative offences are deemed to have been committed and fines may be imposed for failure to comply, or to comply correctly, with the Money Laundering Act. Additionally Section 261 (Money Laundering, concealing illegal assets) of the Criminal Code (StGB) envisages criminal sanctions imposed on persons who knowingly or through acts of gross negligence participate in money laundering. Section 261 StGB came into force on 22 September 1992 and has been amended several times since. Among other things, the list of offences was extended by each of these amendments.

CENTRAL AUTHORITY FOR NOTIFICATIONS The Money Laundering Act provides that suspicious transaction reports (STR) must be passed on by the addressees to the competent prosecution authorities. Due to Germany’s federal structure, STR must be transmitted to police or prosecution authorities in the federal states. A copy of each STR has to be sent to the Federal Office of Criminal Investigation (Bundeskriminalamt) where a Central Unit for Suspicious Transaction Reports (Financial Intelligence Unit - FIU) has been set up as a consequence of the 2002 amendments of the Money Laundering Act.

3.

BUSINESSES COVERED BY THE LEGISLATION Following the 2002 amendments the Money Laundering Act now covers:

credit institutions, financial services institutions and financial enterprises as defined by Section 1 of the German Banking Act (i.e. financial services in a broad sense); branches of foreign institutions are covered as well insurance companies which offer life insurance policies and/or accident insurance policies with premium redemption; for most of the obligations, insurance brokers are deemed to be insurance companies lawyers, legal advisers who are members of a chamber of lawyers, patent lawyers and notaries when they work towards the planning or execution of specific financial transactions for their clients

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Germany

4.

qualified auditors, certified accountants, tax consultants and agents in tax matters real estate brokers gambling casinos bullion dealers auctioneers other business persons carrying out their trade or business, as well as persons who administer another person’s assets against payment for the fulfilment of their administrative duties; also persons acting on behalf of those enterprises.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION The 1999 Act on the Amendment of Criminal Proceedings amended Section 475 of the Code of Criminal Procedure. This Section entitles private individuals to request information from the files of the investigating authorities under certain conditions. It is also intended by legislators to provide for feedback. Banks do not, however, believe that this Section is an adequate basis for continuous case-by-case feedback. The demand for more and better general feedback is strengthened by an obligation of the FIU to “regularly inform the persons obliged to report, on types and methods of money laundering” (Section 5 para 1 number 5 Money Laundering Act).

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED The Money Laundering Act covers not only drug-related offences but also all serious crime pursuant to Section 261 StGB. Serious tax-related crimes are included. Pursuant to the 2002 amendments the Money Laundering Act now explicitly covers crimes related to the financing of terrorists.

6.

7.


Duration The Money Laundering Act obliges banks to keep probative evidence for 6 years from the end of the calendar year in which the information was obtained.

b)

Means of conservation Records may be stored by way of photocopies or other data media (especially electronically).

PERSONS RESPONSIBLE FOR REPORTING Internal procedures and control measures must be put in place, i.e. designation of a Money Laundering Compliance Officer (MLCO); internal rules, procedures and controls to prevent money laundering and to ensure that employees involved in such financial transactions are reliable; the provision of regular information to employees on money laundering methods. Additionally Section 25a Banking Act obliges banks to investigate transactions before a suspicion has arisen if they – based on relevant experience or information – have grounds for doing so (“account-screening”).

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED

21

Germany

The Money Laundering Act provides for the information collected to be used for prosecuting criminal offences mentioned in Section 261 StGB. Furthermore, the information given in STR may be used for prosecuting other serious crimes. Public prosecutors are obliged to give the information they have at their disposal to the tax authorities when information obtained in connection with criminal proceedings is believed to be valuable for an action by the tax authorities. In this case, the information may be used for tax proceedings and for the criminal prosecution of tax offences. 9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION No person who reports facts suggesting a criminal offence to the appropriate authority canbe held responsible for his or her actions unless the report has been made untruthfully or involves gross negligence.

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) A notified transaction must not be executed before the public prosecutor's office has given its approval to the institution or before two working days following the transmission of the report have elapsed without the transaction having been prohibited under the Code of Criminal Procedure. If it is not possible to postpone the transaction, it may be executed but the report must be made without delay.

11.

IDENTIFICATION a)

Identification threshold amount Irrespective of any threshold, there is a requirement for systematic identification when a contract establishing a business relationship intended to operate on a permanent basis is concluded. Before accepting or issuing cash, securities or precious metals which amount to EUR 15,000 or more the person presenting himself/herself to the institution has to be identified. The obligation also applies to transactions below this threshold if there are facts indicating that there is a connection between these transactions (smurfing).

b)

Means of identification • Natural persons: Identification documents must include an identity card or passport, as well as the customer’s name, date and place of birth, nationality, address, and type, number and issuing authority of their official identity document. • Legal persons: Extracts from official registers (Commercial Register, association register etc.) • Natural or legal persons acting for a third person: After identification, the identified person must be asked whether or not he is acting for his own account; if the identified person declares that he is not acting for his own account, then the bank must ask for the name and address of the person for whom he is acting. In cases of doubt, the bank must take appropriate measures to establish the economic beneficiary.

c)

Cases in which the identification requirement does not apply The obligations to identify customers and establish the economic beneficiary basically do not apply to relationships between institutions.

22

Germany

However, the Federal Ministries of Interior and of Finance may provide exceptions to this principle in respect of institutions in such third countries which do not impose requirements on institutions equivalent to the German Money Laundering Act. Identification is not necessary when the person is well known to the bank, has been identified on an earlier occasion or represents a money transport business. d)

12.

Identification at a distance Under the guidelines issued by the Financial Service Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BAFin), banks are generally allowed to instruct socalled “trustworthy third parties” to identify customers. Certain institutions (i.e. other banks, insurance firms, notaries public, the German Post Office [“PostIdent” system] as well as embassies and consulates of EU Member States) are automatically regarded as trustworthy third parties. Other trustworthy third parties may also be instructed to identify customers, provided that their trustworthiness has been checked separately beforehand by banks. In addition, ways of using digital signatures to identify customers who open accounts via the Internet are being discussed.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING Information about money laundering is exchanged in a contact group operated by the Ministry of the Interior. Furthermore, there are round tables with the BAFin and the associations of the banking industry. The Association of German Banks keeps its members informed about legislative developments and other trends. In addition, a working group within the Association deals with money laundering issues. The Association organises conferences on the subject and publishes the “Guide to Combating Money Laundering”, which complements the BAFin guidelines. Banks organise their own training programmes. In 1998, an extensive computer-based training programme for bank employees was developed by some major banks and given approval by the BAFin. The training programme is kept up to date and thus has been amended pursuant to recent legal changes.

13.

SPECIFIC MEASURES TO COMBAT THE FINANCING OF TERRORISTS In addition to the requirements of the Money Laundering Act and the embargo regulations German banks are obliged by Section 24c of the Banking Act to install databases which contain information about accounts and accountholders. The BAFin has automated access to these databases and can use the information for its proceedings (especially suppression of Money Laundering and unlicensed offering of banking services). Furthermore law enforcement authorities are entitled to request information from the BAFin about data contained in the databases.

23

Germany

GREECE

1.


Law 2331/1995 on Prevention and Combating the Legalisation of Income from Criminal Activities was adopted on 24 August 1995. It transposes the provisions of the Community Directive and imposes heavy penalties, including the seizure and confiscation of property.

-

A text, with the force of law, was adopted at the beginning of June 1993: an amendment to the Penal Code, making money laundering a criminal offence and amending banking secrecy legislation. It came into force in mid-July 1993.

-

Bank of Greece (Supervisory Authority for Banks) Guidelines: N°2 dated 18 February 1997 as amended with Guidelines 566/23.10.97, 510/18.9.97, 132/14.4.99 and 14/18.1.99; N°355 dated 7 August 2000; N°144 dated 9 February 2000. These Guidelines do not have force of law and are only directed towards banks and bureaux de change. Other financial institutions, insurance companies and stock exchange members, are covered by guidelines of their Supervisory Authorities.

2.

CENTRAL AUTHORITY FOR REPORTING A special Committee was established under Presidential decree N°401/10.12.96 in order to collect, assess and investigate the information reported to it in relation to transactions suspected of being linked to money laundering. It will forward the relevant file to the public prosecutor, if there are reasons for believing that a transaction is suspicious. Where suspicions are believed to be unfounded, the cases are kept in the Committee’s archives for possible use in other domestic or international investigations. The Committee must complete its investigations within five days of receipt of the report or other information concerning a possible breach of money laundering legislation. The Committee also evaluates and investigates information on income derived from criminal activities which it receives from similar foreign organisations, to which it provides every possible assistance.

3.

BUSINESSES COVERED BY THE LEGISLATION Law 2331/1995 covers enterprises, legal and natural persons in the financial sector in the broad sense, i.e.: credit institutions: - Greek banks and other specialised national credit institutions, including the postal bank; - branches of credit institutions from the EU and third countries, as well as representative offices; 24

Greece

financial organisations: - all enterprises covered by the term “financial institution” in the EU Second Banking Directive; - insurance companies; - bureaux de change; - credit card companies; - members of the Athens Stock Exchange; - casinos. There is a provision which would enable other measures to be enacted with respect to other professions and activities. In addition, the competent supervisory authorities (the Bank of Greece for credit institutions and certain financial institutions; the Capital Market Committee for investment firms, stock exchange companies, mutual funds and other collective investments; the Ministry of Commerce for insurance companies) have a duty to report to the Committee all facts which, in the course of their inspections, etc. may constitute evidence of money laundering. Every employee of the competent authority is covered this obligation. This also applies to any other person who is entrusted with supervising or controlling credits institution or financial organisations if, during the exercise of his duties, he observes any facts which could be an indication of money laundering. Credit institutions which have their central office in Greece are responsible for doing everything possible to ensure that their branches operating abroad comply with the provisions of the Greek law on money laundering, especially as regards vigilance and procedures for internal audit and communication. 4.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION Law 2331/1995 provides for feedback to the person who provided the information on the outcome of all reports submitted by credit and financial institutions as to the result of investigations carried out by the Committee.

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED Law 2331/95 extends the scope of existing legislation since the term “criminal activity” covers, in addition to drug trafficking, the following: crimes covered by the law regarding the traffic of drugs; crimes of Para. I or Article 15L. 2168/93 “about guns etc”; robbery (Article 380 of Penal Code); blackmail (Article 385 of Penal Code); kidnapping (Article 322 of Penal Code); larceny involving especially high amounts (Article 372, Para. 1, Section b of Penal Code) and special cases or Article 374, points a-f of Penal Code; embezzlement if the amount involved is particularly high (Article 375, Para. 1b of Penal Code) or if the action involves abuse of special trust or if the remaining circumstances of Article 375 Para. 2 of Penal Code coincide;

25

Greece

fraud, if the resulting loss is particularly high (Article 386, Par. 1, Section b of Penal Code) or if the person liable commits fraud professionally or is an habitual offender or if the circumstances surrounding the case indicate that the offender is especially dangerous (Article 386 Para. 3 of Penal Code); illegal trade in antiques ; theft of cargo or vessel, if its object is of a particularly high value (Article 217. Para. 1 section b, Code of Public Maritime Law); the crimes covered by points c and d of Section 2, Para. 2 and 3 of Article 10, L1383/83 “removals and transplantations of tissues and organs”; the crimes of Para. 1 of Article 1 of L. 1608/50 “about increase of penalties foreseen for the embezzlers of the State”, as in force; contraband, within the meaning of Article 102 Para. 1 B of the Customs Code (L. 1165/18, as in force); crimes covered by L. D. 187/74 “about protection from ion radiation”, crimes covered and punished by Article 349, Para. 3 of Penal Code (prostitution and exploitation of women); crimes covered and punished by Royal Decree 29/1971 regarding the codification of rules about games and gambling; crimes covered and punished by Articles 235, 236 and 237 of Penal Code (Bribery); usury (Article 404 Para. 3 of Penal Code); smuggling illegal immigrants (Article 19 of L. 1941/1991); illegal traffic in nuclear material; crimes covered and punished by Article 3 of L. 2656/1998 “on combating Bribery of Foreign Public Officials in International Business Transactions”; crimes covered and punished by Articles 3, 4 and 6 of L. 2803/2000 that implement the convention on the protection of the economic interests of the European Communities. 6.


Duration Under law 2331/1995 all information and documents regarding the identification of customers must be kept for at least five years from the termination of the relationship. A record must also be kept of transactions for at least five years after the execution of the last transaction. This obligation to identify customers and keep the required files for five years does not apply when the customer is a credit or financial institution.

b)

7.

Means of conservation The law does not specify the means. Depending on the bank, the records are kept as originals, in electronic form or on microfilms.

PERSONS RESPONSIBLE FOR REPORTING Credit and financial institutions are required to establish adequate internal control and communication procedures in order to forestall and prevent operations relating to money laundering. They must also designate a management executive who will be responsible for the administration and execution of all the requirements pursuant to the relevant legislation.

26

Greece

More specifically, he will receive reports from branch managers, other executives and employees of his institution on suspicious transactions or on any event which might be an indication of criminal activity. He will then report accordingly to the Committee. 8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED Information supplied to the Committee can only be used in relation to money laundering.

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION Disclosure in good faith to the Committee or any other competent body will not constitute a breach of any restriction on the disclosure of information imposed by contract or by law or similar provisions, and will not render the credit or financial institution, its directors or employees liable in any way .

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) All credit institutions and financial organisations must examine with special attention all transactions which, by their nature, could be connected with the legalisation of proceeds derived from criminal activity. They are expected not to carry out transactions which they know or suspect to be related to money laundering. Should a notification be made to the competent Committee, the Committee must decide within five days whether a file should be forwarded to the judicial authorities or the information archived for future use. Credit institutions must not tip-off the person concerned or third parties about any disclosure or investigation under money laundering legislation. A prison sentence of up to two years or a fine will be imposed on those who do not comply with this obligation.

11.

IDENTIFICATION Under law 2331/1995, financial and credit institutions are obliged to demand proof of the identity of their customers in any business relationship, especially when customers open deposit accounts, rent safe deposit boxes or take out loans. a)

Identification threshold amount Identification is obligatory where there are serious suspicions of money laundering. Identification is also required for any transaction amounting to the equivalent of EUR15,000 or more. If the amount is not known at the time of transaction, the identification must be completed as soon as the amount is known. The identification obligation exists for every transaction the amount of which is equal to EUR15,000 at least, either in one or several transactions, which are carried out on the same day or as part of the same legal relationship.

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Greece

12.

b)

Means of identification Natural persons Identity card issued by competent authorities (police) Passport Work permit issued by competent Greek authorities (for non EUresidents) Greek resident permit (for non EU-residents) Certificate issued by Tax Authorities. Legal persons Legal Persons established in Greece: Limited liability companies: copy of the Official Gazette, in which an extract of its articles of association has been published, in addition to the trade name (title), the registered (head) office, the purpose, the number of Directors and the way in which the company is legally represented. Sole proprietorships and associations: extracts from public registers of the initial agreement as filed with the court of first instance. Legal persons established outside Greece must provide certified true copies of: the charter document, the minutes of the Board of Directors; the power of attorney, a certificate issued by the Tax Authorities. Natural or legal persons acting for the account of a third person The identity of the beneficial owner must be established.

c)

Cases in which the identification requirement does not apply Credit institutions and financial organisations are not obliged to carry out identification checks if the contracting or transacting person is a credit institution, a financial organisation, a legal person under public law or an organisation in which the State has at least a 51% holding.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING The Association has prepared and organised a special training programme which was attended by a large number of bank staff.

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Greece

ICELAND

1.

MONEY LAUNDERING LEGISLATION The Act on Measures to Counteract Money Laundering (N° 80/1993) came into force in 1993 and was amended in 1999 (by the laws N° 38/1999). The last version took effect on 19 March 1999.

2.

CENTRAL AUTHORITY FOR REPORTING Any transaction suspected of being related to punishable offences as referred in the Act must be notified to the National Commissioner of Police.

3.

BUSINESSES COVERED BY THE LEGISLATION The Act applies to activities covered by one or more of the following:

Receiving funds for deposit and other repayable financial assets from the public; Credit activities including consumer credits, mortgages, factoring and purchases of debt instruments and commercial credits; Leasing of assets; Clearing of payments; Issue and management of credits cards and other means of payment; Provision of guarantees or collateral for loans; Transactions, on own account or for customers, involving: Money market payment instruments (cheques, bills and other comparable payment instruments, etc); Foreign currency; Futures and options; Exchange rate linked bonds and interest-bearing debt instruments; Securities; Participation in issues of securities and related services; Taking delivery of financial assets in connection with the development of equity capital of undertakings or in connection with the purchase, take-over or merger of business undertakings; Money handling, including bureaux de change; Safekeeping, custody and management of securities, including electronic securities; Rental of safety deposit boxes; Securities transactions in accordance with Act N° 113/1996; Life assurance services and the activities of pension funds.

On the basis of Act N° 6/1926, parties licensed for conducting lotteries and raffles and parties permitted by particular legislation to conduct fund-raising activities or lotteries where prizes are paid out are also concerned. The Act also applies to any activity which is likely to be used for money laundering.

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Iceland

4.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION The National Commissioner of police must acknowledge receipt in writing of notifications. The Commissioner may, in cases of urgency, request that the transactions notified are not carried out until the time limit specified in the notification has expired. If he decides that there are no grounds for stopping a transaction, the Commissioner must notify his decision without delay.

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED The Act covers actions whereby an individual or a legal entity accepts or acquires, for itself or others, gains by means of an offence, punishable under the General Penal Code (such as an acquisitive offence or a major tax violation), the Customs Act, the Alcoholic Beverages Act or the Pharmaceuticals Act. It also applies to actions by which an individual or a legal entity undertakes to keep or transfer such gains, assist in their delivery, or attempts by other comparable means to ensure gain from such punishable offences for others.

6.

7.


Duration Copies of all materials used to establish identity must be kept for a period of at least five years after the business relationship has ended.

b)

Means of conservation Photocopies of personal identification documents are required or adequate information recorded from them.

PERSONS RESPONSIBLE FOR REPORTING Individuals and legal entities authorised to provide services to the public in Iceland or abroad pursuant to international agreements to which Iceland is party and their employees must nominate a specific individual with general responsibility for notifications and ensuring the development of co-ordinated practices to support the implementation of the Act. If the Financial Supervisor Authority or other administrative agencies supervising activities enumerated in the Act obtain, in the course of their functions, knowledge of unlawful transactions, they must notify such to the National Commissioner of Police.

8.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION When an individual or legal entity covered by the Act provides police, in good faith, with information as provided for in the Act, this shall not be considered as being in breach of any legal or other obligations of confidentiality. The provision of such information shall not make the individuals, legal entities or employees in question criminally liable or liable for civil damages.

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Iceland

9.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) The Act establishes an obligation to notify any transactions suspected of being related to an offence. At the request of police investigating cases of money laundering, any information deemed necessary must be provided. Transactions must not be executed if there are grounds for suspecting that they are related to an offence. If such a transaction cannot be prevented, or if its suspension could hinder the prosecution of the parties benefiting from it, the National Commissioner of Police must be notified of the transaction as soon as it has been completed. Individual persons, managers, employees and others working on behalf of a legal entity to which the Act applies are obliged to ensure that the customer or other external party does not become aware that the National Commissioner of Police has been sent information or that an investigation has been initiated in respect of a suspicious transaction. Fines are imposed in the event of any failure to furnish information to the police. If a legal entity infringes the Act during the course of its operations, that legal entity may be fined irrespective of whether the guilt of the persons in charge of its staff members has been established. If a person in charge of a legal entity or its staff member is guilty of a breach of the Act, the legal entity may also be fined.

10.

IDENTIFICATION a)

Identification threshold amount A customer who is not a regular customer must produce personal identification documents for transactions involving a sum in excess of EUR 15,000, by reference to the currently registered official exchange rate. If the amount is not known at the time of the transaction, or if the transaction is carried out in one or more operations which appear to be connected, the presentation of personal identification documents is required as soon as the amount is known and it becomes clear that it exceeds the above limit. If there is suspicion that the origin of assets may be related to an infringement, the customer must present personal identification documents, even for transactions involving amounts less than those referred above.

b)

Means of identification -Individual and legal persons The identification of customers (regular or not) must be based on personal identification documents confirming the name, legal domicile and national registry number in accordance with a certificate issued by the Statistical Bureau of Iceland. -Individual or legal persons acting for the account of a third person If there is any reason to suspect that specific transactions are being carried out for the benefit of a third party, the customer must disclose the identity of the third party in question.

c)

Cases in which the identification requirement does not apply When the customer is a financial institution licensed for the provision of services within the European Economic Area, personal identification documents are not required. This also applies in cases where it is established that payment for a transaction is to be debited to an account opened in the customer's name in a

31

Iceland

similar institution operating within the European Economic Area, unless there are suspicions that the transaction is connected with an infringement within the meaning of the Act. 11.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING Individuals or legal entities concerned must operate an internal control system designed to prevent unlawful transactions. Training sessions must be organised for employees.

32

Iceland

IRELAND

1.

MONEY LAUNDERING LEGISLATION The Criminal Justice Act 1994 was passed by both houses of the Oireachtas (Parliament) and signed by the President on 30 June 1994. The 1994 Act makes provision for the recovery of the proceeds of drug trafficking and other offences, makes money laundering an offence and makes provision for international co-operation in respect of certain criminal law enforcement procedures and for the forfeiture of property used in crime and provides for related matters, such as imposing an obligation on designated bodies (banks and a wide range of financial institutions) to take measures to combat money laundering in line with the provisions of the EU Money Laundering Directive. The provisions of the 1994 Act came into effect by means of Ministerial Orders. Money laundering was made an offence on 14 November 1994 and the remaining provisions in relation to money laundering became effective on 2 May 1995. The Act was amended by the Criminal Justice (Theft and Fraud Offences) Act 2001. In the 2001 Act, the definition of Money Laundering is amended. The 2001 Act also gives the Minister for Justice the power to designate countries that do not have sufficient anti-money laundering measures in place. Any transactions involving such a designated country must thereafter be reported to the Garda Siochana (Irish police). The relevant provisions of the 2001 Act came into effect on August 1st 2002. The 1994 Act was also supplemented by a series of detailed guidance notes for the various sectors of the financial services industry. The Central Bank of Ireland, the regulatory body for banks and building societies, has stated that it will use the Guidance Notes for Credit Institutions as criteria by which it will assess an institution’s compliance with the provisions and obligations under the Act. A review of the Money Laundering Guidance Notes for Credit Institutions was completed in November 2001 and the new Guidance Notes for Credit Institutions came into effect on 1st May 2002. In late 1996, Ireland ratified and fully implemented the 1988 Vienna Convention and the 1959 and 1990 Council of Europe Conventions, thus allowing it to provide a full range of mutual legal assistance to a wide range of countries. In 1996 it also enacted the Proceed of Crime Act, 1996 and the Criminal Assets Bureau Act, 1996. The former legislation provides for a process of civil forfeiture whereby property which is the proceeds of crime can be frozen and ultimately confiscated, without any need for criminal proceedings against any person. The latter legislation created the Criminal Assets Bureau, an independent statutory body comprised of staff from a number of government agencies and provided them with certain compulsory powers. The enactment of the Disclosure of Certain Information for Taxation and Other Purposes Act,1996 provides for more effective exchange of information between the Garda (Police) and the Revenue Commissioners and enables the Revenue Commissioners to provide information to a senior Garda officer where there are reasonable grounds for suspecting that the information relates to a person who has derived profits from an unlawful activity.

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Ireland

2.

CENTRAL AUTHORITY FOR REPORTING The Money Laundering Investigation Unit in the Garda Siochana (Police) Fraud Section.

3.

BUSINESSES COVERED BY THE LEGISLATION

4.

all banking-type activities (with the exception of credit reference services) which are included in the list annexed to Council Directive 89/646/EEC; insurance-type activities to which Council Directive 79/267/EEC as amended applies; credit institutions and credit unions activities; any other activity which may be prescribed by the Minister for Justice, when carried out by: . banks; . building societies; . money brokers; . life assurance companies and intermediaries; . financial futures and options exchanges; . An Post (postal bank); · credit unions; · accountants; · auctioneers; · estate agents; · solicitors; . stock brokers; . credit bureaux; and, . any other bodies prescribed by the Minister for Justice.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION The Investigation Unit has undertaken to give feedback on a quarterly basis. A standard report giving the current position of each case will be given.

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED All other criminal activity.

6.

7.


Duration Copies of all materials used to establish identity must be retained for a period of at least five years after the relationship has ended.

b)

Means of conservation The Guidance Notes permit the retention of reference numbers of officially-issued documents instead of copies of the documents themselves.

PERSONS RESPONSIBLE FOR REPORTING The Money Laundering Reporting Officer, after reports have been channelled through an Internal Reporting Procedure.

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Ireland

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED For the carrying out of investigations into possible money laundering offences and for the obtaining of court orders to make further relevant material available.

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION A disclosure made in good faith shall not be treated as a breach of any restriction upon the disclosure of information imposed by statute or otherwise and shall not involve the person or institution making the disclosure in liability of any kind. It should be noted however that failure to establish the identity of a customer when required to do so, failure to retain records, failure to make a report when one should have been made and tipping off when a report has been made are considered to be an offence punishable by a fine and/or jail sentence. The institution itself, its directors, managers and staff are liable to be prosecuted.

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) The Act gives no direction as to what to do. The Guidance Notes state that where it is impossible in the circumstances to refrain from executing a suspicious transaction before reporting to the police or where reporting is likely to frustrate efforts to pursue the beneficiaries of a suspected money laundering operation, the bank shall inform the police immediately afterwards. It is impossible to state in advance how to deal with every possible case, but in most cases common sense will suggest what course of action is appropriate. The 2001 Act states that a person is guilty of money laundering if they acquire, use or possess property that is or represents the proceeds of criminal conduct or if they are reckless as to whether it is such property. A person does not commit an offence under the 2001 Act if a report is made to the Garda Siochana (Irish police) and the person complies with the directions of the Garda Siochana in relation to the property.

11.

IDENTIFICATION a)

Identification threshold amount Identification required when a designated body proposes to provide a service on a continuing basis or when it proposes to provide a service in respect of transactions that, either as a single transaction or a series of linked transactions, amount in the aggregate to EUR12,700 or when money laundering is suspected.

b)

Means of identification The legislation states that reasonable measures shall be taken to establish the identity of a person for whom it is proposed to provide a service but does not state what measures are considered to be reasonable. The Guidance Notes define these measures as follows: Natural persons Irish residents Name to be verified by reference to a document obtained from a

35

Ireland

reputable source which bears a photograph and signature. Wherever possible a current valid full passport should be requested. A current driving licence is also acceptable. A separate verification of the current permanent address is also required. The 2001 Guidance Notes also set out alternative arrangements for satisfying the identification requirements.

-

Non-residents Passports, national identity cards or other documents containing a photograph and signature issued by a reliable source. In addition, a verification from a reputable credit or financial institution in the country of residence of the customer may be sought.

Legal persons

Irish residents

All companies: certificate of incorporation; memorandum and Articles

of Association; list of directors giving occupations, residential and business addresses and dates of birth; properly authorised mandate to operate the account.

Private or unquoted public companies where the majority of the directors are not known to the bank: the identity of at least two

c)

12.

directors and of all persons authorised to operate the account should be established; a list of all shareholders holding 10% or more of the issued share capital should be obtained. Further information may be requested where a significant shareholder is a body corporate which appears to be a nominee or “front” company. Non-residents As for Irish residents but with company registration documents equivalent to those for Irish residents being sought. In the case of bodies incorporated in non-EU and non-FATF countries, the reason for transacting business in Ireland may be sought. Natural or legal persons acting for the account of a third person The identities of all parties must be established.

Cases in which the identification requirement does not apply Irish-designated bodies and bodies in other EU countries and in countries (mainly FATF) to be prescribed by the Ministry of Justice, which correspond to Irishdesignated bodies (i.e. banks; building societies; money brokers; life assurance companies; financial futures and options exchanges; An Post (postal bank); credit unions; stock brokers; bureaux de change).

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING Staff training material has been prepared and training programmes are ongoing. Workshops and seminars organised by the Irish Bankers’ Federation have been held for executives and staff having a responsibility for implementing the money laundering provisions in their institutions. The public were alerted to the implications of the Act by: a Government announcement; material on display in credit institutions; a press notice issued by the credit institutions. 36

Ireland

Refresher staff training programmes have taken place and will continue to do so on an annual basis.

37

Ireland

ITALY

1.

MONEY LAUNDERING LEGISLATION Law n° 197 of 5 July 1991 – recently amended by the decree n° 153 of 26 May 1997 and supplemented by Law 388/2000 (Articles 150 and 151) - and the decrees of 19 December 1991, 7 July 1992 and 29 October 1993, Legislative Decree 374 of 25 September 1999.

2.

CENTRAL AUTHORITY FOR REPORTING There is a central authority called Ufficio Italiano Cambi (UIC).

3.

BUSINESSES COVERED BY THE LEGISLATION The legislation covers all credit and financial institutions, i.e.:

central and local government; post offices; stock brokerage firms and investment companies; leasing companies; collective investment funds (UCITS); (stock and insurance) brokers; foreign exchange dealers (agents de change); credit card companies, etc.; Monte titoli SpA; insurance companies; financial companies which provide financing or which act as intermediaries for foreign exchange or securities transactions.

Legislative Decree 374/1999 extends anti-laundering requirements to the following businesses:

debt recovery firms; custody and transportation of cash, securities, or valuables by authorised security guards; transportation of cash, securities or valuables without the employment of authorised security guards; real estate brokerages; antique dealers; the management of auction houses or art galleries; trade, including exports and imports, in precious objects; manufacture, brokerage and trade, including exports and imports, in precious objects; management of gambling houses; manufacture of precious objects by craft enterprises; credit intermediation; financial brokerage (however, the implementing regulations making antimoney laundering requirements operational have not yet been issued). 38

Italy

4.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION At present the Ufficio Italiano Cambi provides feedback to the credit and financial institutions (legislative decree n° 153 of 26 May 1997 concerning reports in respect of which the investigative police bodies have notified the Italian Foreign Exchange Office that no further investigation has been conducted).

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED Law n° 197/1991 is intended to cover organised crime. In addition to drug-related crimes, the legislation has been extended to all serious crime (Article 648-bis of the Penal Code) (all penal offences).

6.

7.


Duration 10 years.

b)

Means of conservation Original (data file) and microfilm. Transaction records must be kept for 10 years from the date of execution (paper).

PERSONS RESPONSIBLE FOR REPORTING The branch manager reports to the Chairman at the bank head office - in practice to a head office representative (head of the security or legal service) - who reports to the Ufficio Italiano Cambi.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED Law n° 197/1991 allows the use of information in connection with penal offences.

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION Failure to report, provided that it is not in itself an offence, is punishable by a fine of up to half the value of the transaction.

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) The law establishes an obligation to disclose transactions which can reasonably or factually be linked to money laundering and to indicate whether the transaction was executed or whether the bank refused to act.

39

Italy

11.

IDENTIFICATION a)

Identification threshold amount There is a requirement to identify and record (in a specially created electronic archive kept by every intermediary) the full identification details of persons who effect transactions in cash or other payment instruments for amounts in excess of approx. EUR 10,400.

b)

Means of identification Natural persons Customer identification must be based on official identity documents and must be detailed (family name, first name, address, tax code). Legal persons The original or a certified copy of any act or extract from an official commercial register showing the name, the legal status and the head office as well as the powers of the person acting for the company.

c)

Identification at a distance The Italian Foreign Exchange Office (UCI), the Italian institution responsible for implementing the law against money laundering, issued in January 2000 operational guidelines to intermediaries for the valid identification of customers at a distance, i.e. simultaneous physical presence of the customer and agent of the intermediary. In Italy, the identification of customers my be effected either directly, in person, by the “staff responsible” (not only persons who are employees of the intermediary but also persons linked to the intermediary with a relationship defined in law or by a special contract) or else through the acquisition of identification details from another authorised intermediary, confirmed by a “suitable attestation” issued by the latter. The UCI has set out two possible “suitable attestation” procedures for purposes of customer identification:

First procedure: this provides for “implicit” attestation in connection with the

execution of a credit transfer by the attesting intermediary to the intermediary that must make the distance identification. The procedure is as follows:

an initial payment in favour of the intermediary that intends to use the new identification procedure is made by the potential customer drawing on a registered bank account, for which the customer has already been identified. All subsequent transactions with the intermediary must also go through this account ; beforehand, the intermediary intending to establish a distance relationship assigns and notifies an identification code to the potential customer. The customer himself must give this “code” to the bank where he has a registered account when he makes the credit transfer to the aforementioned intermediary. The bank, in turn, together with the payment must also transmit the “code” in order to enable the beneficiary intermediary to verify that the person with whom it has the distance contact is the same party identified by the bank where the registered account is held.

Banks have been instructed that it is essential that for these payments, in the message information field, the “code” must precede all other payment details, in order to make it easy for the beneficiary to pick up this information.

40

Italy

Second procedure: this envisages “suitable attestation” for money laundering legislation purposes by a form (which can be developed by the intermediary making the distance identification) filled out by an authorised intermediary, duly signed and sealed by the attesting intermediary, giving the identification details of the customer and the data concerning the identity document used to make the identification. This “certification” can be supplied, on request, also directly by the potential customer himself, who in this way can use a payment instrument other than a credit transfer in order to initiate a continuing relationship or to make transactions for amounts in excess of approximately EUR 10,400. The UIC has recently issued an opinion (N°18527 of 31 May 2001) confirming the validity of identification made by a digital signature certifier, providing that the operating manual provides that the identification procedure takes place in the presence of the customer and complies with all the requirements of Law 197/1991, Article 2 (specified in the Ministerial Decree of 19 December 1991). This procedure starts from the assumption that a special agreement between the intermediary and the certifier has been stipulated, in which the latter undertakes to make the necessary identification checks in accordance with antimoney laundering requirements. 12.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING Due to the complexity of the law, the problem of training is crucial in Italy. The Association has organised numerous meetings with those responsible in banks. Some 20 training sessions have been held and seem to have been greatly appreciated. Working parties have been set up bringing together legal and administrative bank staff. Specialist seminars have been held comprising representatives from the Association, private banks, the central bank, the supervisory authorities, the Ministry of Finance and the judicial authorities. The Bank of Italy has issued guidelines to help intermediaries to notify suspect transactions. By establishing objective anomaly indicators, the guidelines lay down standard procedures aimed at reducing margins of uncertainty and establishing objective criteria. When, according to the indicators, a transaction is deemed to be anomalous, the intermediary must examine it carefully and decide whether it is in fact a suspect transaction that has to be reported. In January 2001 the Bank of Italy issued a revised version of the operating instructions for identifying suspicious transactions, which takes account of new operational procedures at intermediaries (e.g. internet and phone banking) and extends the scope of the instructions to persons and types of activity not contemplated in the previous version. Furthermore, to help bank staff evaluate the transactions carried out for customers, the banking sector has devised a system for the automatic analysis of transactions, based on the above-mentioned indicators. The system, called GIANOS, analyses all transactions, highlighting the ones that require closer examination. The procedure to be adopted by bank staff is then divided into two steps:

they are to examine carefully the anomalous transactions; if the examination of the anomalous transaction proves that it is indeed suspect, the bank must report it to the Ufficio Italiano Cambi.

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Italy

LUXEMBOURG

1. MONEY LAUNDERING LEGISLATION -

The law of 9 July 1989, which amends the amending law of 19 February 1973 on the Sale of Medication and the Prevention of Drug Addiction. This law introduces the principle of drug-related money laundering as a criminal offence.

-

The law of 5 April 1993 on the financial sector. This law transposes the European Money Laundering Directive into national law. The law sets out the behaviour to be adopted by financial sector professionals as regards money laundering.

-

The grand-ducal decree of 6 January 1995 authorising the creation and operating of a database containing information and notifications from credit institutions and other financial sector professionals, as well as from life insurance companies and insurance brokers on facts and transactions likely to be related to money laundering resulting from drug trafficking.

-

The law of 11 August 1998 introducing the incrimination of criminal organisations and the offence of money laundering into the Penal Code and amending: the amended law of 19 February 1973 concerning the sale of medicinal substances and the fight against drug addiction; the amended law of 5 April 1993 relative to the financial sector; the amended law of 6 December 1991 relative to the insurance sector; the amended law of 9 December 1976 relative to the organisation of notaries public; the law of 20 April 1977 relative to games of chance and betting on sports events; the law of 28 June 1984 regulating the profession of company auditors; the rules of criminal procedure. This law introduces the prohibition of money laundering into a new section of the Penal Code. It has a twofold objective: to extend the scope of application of the offence of money laundering to offences other than those related to drug trafficking (criminal organisations, arm trafficking etc.); to extend the system concerning the prevention and detection of money laundering, hitherto limited to the financial sector, to other sectors likely to be involved in money laundering operations or confronted with such operations.

-

The law of 31 May 1999 governing the domiciliation of companies and: amending and completing certain provisions of the amended law of 10 August 1915 concerning trading companies; amending and completing certain provisions of the amended law of 23 December 1909 concerning the creation of a trade and company register; 42

Luxembourg

amending and completing the amended law of 28 December 1988 regulating access to professions in the craft industries, the professions of merchant and industrialist as well as to other professions; completing the law of 12 July 1977 relative to holding companies; amending and completing certain provisions of the law of 5 April 1993 relative to the financial sector; completing the amended law of 6 December 1991 on the insurance sector. -

The law of 10 June 1999 governing the organisation of the profession of chartered accountant.

-

The law of 15 January 2001 transposing the OECD Convention of 21 November 1997 on combating bribery of foreign public officials in international business transactions.

-

The law of 14 June 2001 transposing the Convention on laundering, search, seizure and confiscation of the proceeds from crime, signed in Strasbourg on 8 November 1990.

-

The law of 1 August 2001 concerning the euro changeover on 1 January 2002 and amending certain provisions laid down by law.

2. CENTRAL AUTHORITY FOR REPORTING The Public Prosecutor for the Luxembourg Court must be informed of any fact that could be an indication of money laundering. 3. BUSINESSES COVERED BY THE LEGISLATION The obligation to inform the authorities of any suspicions of possible money laundering transactions now extends to the following sectors:

credit institutions; financial advisers; brokers and agents; fund managers; professionals acting for their own account; distributors of shares in undertakings for collective investment; professional custodians of securities and other financial instruments; market-makers; bureaux de change; debt collectors; life insurance companies and insurance brokers; public notaries; casinos and gambling houses; company auditors; companies providing domiciliation services for other companies; chartered accountants.

4. FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION In principle, no feedback.

43

Luxembourg

5. OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED The main offences targeted in addition to those linked to drugs are the following: crimes or offences as part of or in relation to a criminal conspiracy or a criminal organisation; offences relative to the kidnapping of minors; bribery offences; procuring; bribery; breaches of the legislation relating to arms and munitions. 6. CONSERVATION OF RECORDS AND DOCUMENTS a) Duration Commercial documents and accounting records must be conserved for 10 years. The law of 5 April 1993 states more specifically that, with regard to identification, a copy of, or the references to, documents produced must be conserved by financial sector professionals for at least 5 years after the relationship with a customer has been terminated, without prejudice to longer periods of conservation imposed under other laws. b) Means of conservation Microfilm is admitted as evidence provided that certain conditions regarding its use are satisfied. 7. PERSONS RESPONSIBLE FOR REPORTING Data are in practice communicated by one or more persons designated for this purpose by financial sector professionals. 8. PURPOSES FOR WHICH THE INFORMATION MAY BE USED The Public Prosecutor may use the information transmitted to him in the exercise of his general mission of combating crime and offences committed in Luxembourg. Any information provided to authorities other than the judicial authorities may only be used for the purposes of preventing money laundering. 9. LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION Under Articles 41(2) and 41(6) of the law of 5 April 1993 on the financial sector, banking secrecy no longer applies when authorisation is given to reveal information or is required under the law. Hence, anyone who reveals information in the context of money laundering incurs no penal or civil liability. 10. REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) Financial sector professionals are required to refrain from executing a transaction if they know, or suspect, that it is linked to money laundering prior to informing the Public Prosecutor, who may issue instructions not to execute the transactions. 44

Luxembourg

Where the transaction in question is suspected of being a money laundering operation, but where it is impossible to refrain from performing it or where this is likely to prevent the beneficiaries of the suspected money laundering operation from being pursued, financial sector professionals must execute the operation immediately after notification. In addition, the bank may refuse to open an account if the customer appears suspicious. 11. IDENTIFICATION a) Identification threshold amount With regard to occasional customers (where there is no account relationship) identification procedures must be carried out for any operation which amounts to or exceeds EUR 10,000. Financial sector professionals are obliged to demand identification, even where the amount of the transaction is below the EUR 10,000 threshold, where there is suspicion of money laundering. b) Means of identification Natural persons Customer identification must be based on official identity documents and must be detailed (surname, first name, address). Legal persons Appropriate officially-approved identification documents (Commercial Register, articles of association, published accounts, etc). - Natural or legal persons acting for the account of a third person Where there is doubt, or uncertainty, as to whether a natural person is acting for his own account, financial sector professionals must take reasonable steps to obtain information on the true identity of the persons for whom the customer is acting. c) Cases in which the identification requirement does not apply Identification is not required if the customer is a credit institution or another financial sector professional subject to equivalent identification requirements. d) Identification at a distance If an account is opened on the basis of correspondence, the financial sector professional must ensure that the copies of identity papers provided - together with all the information which must be recorded on the account opening documents - must be certified true copies (certified by a competent authority, e.g. embassy, consulate, notary, police officer). Generally speaking, financial sector professionals must apply the same level of identification controls as banks at their counters. 12. STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING By the Bankers’ Association:

programmes to increase employee awareness with regard to new money laundering techniques and including in particular training courses, seminars (notably in co-operation with other professional organisations), providing audio-visual aids; preparing guidelines for members.

Banks provide internal training for their employees. 45

Luxembourg

THE NETHERLANDS

1.

2.


The Disclosure of Unusual Transactions (Financial Services) Act came into force on 1 February 1994.

-

In 2002 a new law has been implemented which makes money laundering an independent criminal offence.

-

The Identification (Financial Services) Act came into force on 1 February 1994. Money laundering and complicity in it are both criminal offences. The law was amended by the Act of 2 November 2000.

-

In 2002 a new Identification Services Act came into force.

CENTRAL AUTHORITY FOR REPORTING The Disclosures Office. It is independent of the police and judicial authorities. The Disclosures Office staff process disclosures and may conduct further inquiries; if necessary, they will then make the information available to the appropriate authorities. Another of its tasks is to collect and provide information on patterns in money laundering and to pass that information on to the economic sectors concerned, thereby preventing money laundering as far as possible. A Supervisory Committee for the Disclosure Office has also been set up and comprises: Government officials, representatives of the relevant economic sectors and the supervisory authorities. Its tasks are, inter alia, to monitor the way in which the Disclosure Office carries out its work, to provide expert advice and to ensure that the list of indicators of unusual transactions to be completed by banks in carrying out customer transactions is sufficiently clear for financial institutions. The main indicator for all types of transactions is the one which obliges institutions to report all transactions where there are grounds to believe that the transaction is connected with money laundering. In addition, there are objective and subjective indicators for a number of specific cash and giro transactions.

3.

BUSINESSES COVERED BY THE LEGISLATION The Disclosure of Unusual Transactions (Financial Services) Act covers the following activities:

providing custody services for money, securities, precious metals or other assets; opening accounts in which a balance may be held in the form of money, securities, precious metals or other assets; crediting or debiting such accounts; hiring out safe deposit boxes; cashing share coupons, bond certificates, and similar negotiable instruments; concluding life assurance agreements and brokering such agreements;

46

The Netherlands

making payments in connection with life insurance agreements; exchanging foreign currency; issuing credit cards; performing duties at casino; carrying out money transfer transactions; stock brokerage.

Clearly this affects the following types of enterprises and professions:

banks and other credit institutions; bureaux de change; investment firms and institutions; life assurance companies; insurance brokers working in the life assurance field or performing one of the other financial services listed; credit card companies; casinos; money transfer companies.

Similar reporting obligations are being prepared for other professions, including :

notaries public; dealers in precious/luxury goods; real estate agents; tax advisors; dealers in precious stones and metals; within a couple of months the scope will be extended to lawyers and notaries.

Other professions and types of enterprises may also carry out the financial services listed. If they do so on a professional or commercial basis, they will also fall within the scope of the Act. With regard to bureaux de change, as a result of the Exchange Offices Act of 1 January 1995, not only are they obliged to report unusual transactions but financial institutions are also prohibited from extending financial services to exchange offices not registered as such with the Dutch Central Bank. A dispensation is granted to hotels, which are allowed to change up to EUR400 per guest/per overnight stay. In relation to casinos and credit card organisations, the lists of indicators for reporting unusual transactions were implemented on 1 January 1995. In 1998 a list of indicators for reporting unusual money transfer transactions was implemented. There is a disclosure obligation for all MT-transactions exceeding EUR 2,000 in which funds are made available by way of notes and coins or by means of a credit or debit card, or are made payable in the form of notes and coins, cheques or via a deposit into an account. 4.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION The Unusual Disclosures (Financial Services) Act provides for limited feedback as a standard procedure (i.e. restricted to a form which acknowledges receipt of the notification). Additional feedback is provided in the form of analysis of reported transactions and cases published in newsletters. 47

The Netherlands

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED The Disclosure of Unusual Transactions (Financial Services) Act covers the laundering of the proceeds from any form of serious crime.

6.

CONSERVATION OF RECORDS AND DOCUMENTS a) Duration Identification evidence must be kept for a period of 5 years after the provision of the financial services concerned or, in the case of agreements, up to 5 years after the agreement has expired. Other statutory provisions may make longer storage periods compulsory (i.e. 10 - 30 years). b) Means of conservation Original paper or/and microfilm.

7.

PERSONS RESPONSIBLE FOR REPORTING A central or co-ordination point in each bank, which then reports to the Disclosures Office.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED The information can be used for combating offences other than money laundering. With regard to tax offences, such information may only be used in the event of prosecution.

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION The Disclosure of Unusual Transactions (Financial Services) Act does not allow the prosecution of persons on the basis of information they have disclosed under the Act. This safeguard applies to financial enterprises, and to all persons working in the financial sector who are party to a disclosure. There is also a safeguard in Civil law. A person may not be held responsible for the prejudice suffered by another person as a result of a disclosure, unless it can be shown that, given all the facts and circumstances, such disclosure should not have been made.

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) It is left to the branch to decide whether or not to execute a transaction. If the transaction is undoubtedly money laundering related, it will not be executed. If the transaction is unusual, it should be verified against a checklist and reported, if appropriate.

11.

IDENTIFICATION a) Identification threshold amount A threshold of EUR 10,000 has been set for compulsory notification. However it is not true to say that only transactions involving more than this amount or all transactions

48

The Netherlands

involving more than this amount must be disclosed. Transactions involving EUR 10,000 or more must be disclosed if the checklist of indicators indicates that they are unusual; for example, all foreign currency transactions involving EUR 10.000 or its equivalent in cash must be disclosed. Transactions involving less than EUR 10,000 must be disclosed if there is a suspicion that the customer is trying to evade the threshold by performing a series of smaller transactions. With regard to identification, the basic principle is that a financial enterprise may only provide certain financial services once it has established the customers' identity. There is a distinction between situations in which identification may be compulsory, i.e. if a transaction exceeds a certain amount, and those in which identification is always compulsory. In the following situations, the customer must show identification only if the transaction or series of transactions concerned exceeds the amount stated: any cash transaction involving more than EUR 10,000; all of a series of related cash transactions if, in total, they involve more than EUR 10,000; transactions exceeding EUR 15,000 involving the sale or brokerage of sale of large value items; the conclusion of a life insurance agreement or brokering of such an agreement (if the premium amounts to more than EUR 2,000 per payment or more than EUR 10.000 per year); payments made in connection with a life insurance contract amounting to more than EUR 10,000; if the transaction concerned is unusual within the meaning of the Disclosure of Unusual Transactions (Financial Services) Act.

b) Means of identification Under the Disclosure of Unusual Transactions (Financial Services) Act, the following documents are recommended for identification purposes: -

-

Natural persons: A valid travel document (Passport/tourist card/European identity card); a valid Dutch driving licence (not a foreign driving licence); travel documents for Refugees and Aliens, documents issued to alien residents of the Netherlands. Legal persons: Established in the Netherlands: an authenticated extract from the Register of the Chamber of Commerce and Industry with which it is registered or, a deed drawn up by a Dutch notary public; Not Established in The Netherlands: an authenticated extract from the official trade register of the country where the legal person’s registered office is located, or a certificate drawn up by a notary public or another official independent of the legal person in that State, who can provide an adequate guarantee of the reliability of the certificate on the basis of his function; For legal persons governed by public law: - For Dutch legal persons: a statement from a governing body, in the case of a public law legal entity, such as a State school, embassy or Europol.

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The Netherlands

- For non-Dutch legal persons: a certificate from the competent foreign authority or a certificate drawn up by a notary public or another official independent of the legal person in that State who can provide an adequate guarantee of the reliability of the certificate on the basis of his function.

For religious associations, independent parts thereof or bodies to which they are affiliated, without prejudice to b: a certificate, issued by the organisation of which the religious association, independent part thereof or body is a member, or a certificate issued by the religious association or body, if the religious association, independent part thereof or body is not a member of any organisation. 12.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING Videos and brochures have been produced. Interbank training has been developed (to educate instructors) by the Dutch Banking Association. Every bank has its own training programme (sometimes e-learning) for staff-members. The media are alert to the position of banks as regards money laundering and a number of cases have been published in the press. The Office for the Disclosure of Unusual Transactions in co-operation with the Dutch Bankers Association publishes every two months a newsletter in which the latest trends, a couple of actual cases and feedback on previous cases are described.

50

The Netherlands

NORWAY

1.


The Penal Code: An amendment to Section 317 of the Penal Code was passed on

-

The Financial Services Act: in order to meet the requirements of the Money Laundering Directive (91/308/EEC) and recommendations issued by FATF, a new Section 2-17 in the Act on Financing Activity and Financial Institutions (Financial Services Act) was passed in December 1992 and came into force on 1 January 1994. The Section allows the Ministry of Finance to issue further regulations regarding the obligation for financial institutions to establish customer identity. Sections 2-17 and 2-1 were amended on 7 June 1996. The amendments extend the range of institutions covered by the money laundering legislation and establish an obligation to report to the Central Authority any suspicions of a crime punishable by more than six months imprisonment.

-

Regulations: The Ministry of Finance on 7 February 1994 established regulations

-

2.

11 June 1993 and entered into force the same date. The amended Section penalises any form of intended or negligent concealment, transport, etc, of the proceeds of crime. Attempted money laundering is also penalised.

which set out further rules on the obligation for financial institutions to establish customer identity and the procedures for notifying suspicious transactions to the Central Authority. The regulations were amended on 9th September 1998 to provide an exemption from the strict identification rules for special situations.

Circulars: The Banking, Insurance and Securities Commission – which is the

supervisory authority for financial institutions - has issued several circulars regarding customer identification and procedures for notifying the Central Authority. The latest version, which replaces several earlier circulars, is dated 1st June 1999.

CENTRAL AUTHORITY FOR REPORTING The ØKOKRIM - the Central Unit for Investigation and Prosecution of Economic and Environmental Crime. The Unit is a department of the Public Prosecution Authority and is based in Oslo. The Unit has established a Money Laundering Section, which is headed up by a Senior Public Prosecutor. This section presently has a total staff of 21, with 15 special investigators and 2 consultants.

3.


financial institutions; the Central Bank of Norway (Norges Bank); the Post Office Bank; several types of stock brokerage firms; insurance brokers; project brokers; foreign exchange brokers. 51

Norway

The Penal Code naturally covers all professions and citizens. 4.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION Under the regulations laid down by the Ministry of Finance, the Central Authority for reporting (ØKOKRIM) is obliged to keep financial institutions informed; they receive an automatic confirmation of receipt and are informed when a decision is made whether to launch an investigation or not. Every six months, the institutions receive a report showing the status of the notifications submitted by that institution. The institution will also receive a copy of the judgement if the case goes to Court. In addition the ØKOKRIM provides general feedback in the form of an annual report, information letters and seminars.

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED According to the latest amendment of section 2-17, institutions are obliged to notify the Central Authority if they suspect that a transaction may be related to the proceeds of any crime punishable by more than six months imprisonment.

6.

7.


Duration Identification documents: for a period of at least 5 years following the termination of a customer relationship. Transaction documents: 10 years.

b)

Means of conservation Identification documents: copies or references for the original document. Transaction documents: records may be stored photographically, in data form or on microfilm.

PERSONS RESPONSIBLE FOR REPORTING There is a specially appointed person within each organisation.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED The information received can be used in the investigation of any crime punishable by more than six months imprisonment.

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION Banking secrecy may be breached without the bank, its management or its personnel being held liable, provided that notification is made in good faith.

52

Norway

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) Initially, the suspicious operation must be investigated by the bank, to confirm or disprove the suspicions. If the suspicions cannot be disproved, the financial institution is obliged to forward, on its own initiative, information to the Central Authority - ÚKOKRIM – concerning the circumstances which point towards a crime. The transaction must be suspended until the Central Authority is informed. The Central Authority may, in special cases, order the institution not to carry out the transaction. The transaction may nevertheless be carried out before the Central Authority is informed if it is not possible to refrain from so doing, or if a failure to carry out transactions would impede the investigation. In this case the Central Authority must be notified immediately after the transaction has been carried out.

11.

IDENTIFICATION a)

Identification threshold amount The requirement concerning proof of identity applies to occasional customers where the transaction involves an amount of EUR 12,000 or more. This applies whether the transaction is carried out as a single operation or as several operations which seem to be linked. Section 2-17 of the Financial Services Act and the regulations require financial institutions to oblige new customers to provide documentary proof of their identity (by "acceptable" documents) when establishing business relationships with them, e.g. the opening of accounts or the offer of safe custody facilities. Regardless of the sum involved in the transaction, the financial institution is required to demand proof of identity whenever the transaction is regarded as suspicious.

b)

Means of identification The following information should be contained in the documents: Natural persons a picture of the customer; signature; date of birth and national registration number; nationality; date of issue; validity; issuing authority; identification number. Legal persons Should be identified in an official company registration document. Natural or legal persons acting for the account of a third person Proof of identity is also required for other persons if they have powers over an account or safe deposit.

c)

Cases in which the identification requirement does not apply Banks and financial institutions subject to regulations which contain the same requirements in respect of proof of identity as the EU Directive. In practice, this includes banks and financial institutions from EU/EEA and FATF member countries.

d)

Identification at a distance According to Norwegian legislation, identification must in principle be made face-toface. Exemptions can be made only if personal appearance at the institution would constitute a substantial disadvantage for the customer. Examples given by the 53

Norway

supervisory authority, Kredittilsynet, in a circular on the application of the money laundering regulations, include: persons who are unable to move on account of illness, handicap, etc.; persons in prison, or cases where the geographical distance to the financial institution is considerable. In such cases, the institution must use other means to ensure an adequate identity check is made. It is generally accepted that an institution can arrange for another institution or body subject to money laundering requirements to carry out the identity-check for them. 12.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING 1991

A money laundering report, "Money Laundering Nationally and Internationally - Preventive measures - Criminalization", was drawn up by a member bank in co-operation with the Association and presented to the Ministry of Justice and Finance. The Association established a Money Laundering Working Group with representatives from member banks and the Association. The Association published a "Know You Customer" report – with recommendations to the member banks concerning customer identification procedures and conservation of documents.

1992

The Association distributed a brochure drafted by the Money Laundering Working Group to employees in all member banks (definition, examples of suspicious transactions, new legislation, "know your customer", etc). The Association (Money Laundering Working Group) arranged a seminar for bank executives and key personnel in member banks.

1994

The Association distributed an educational video intended for bank staff. The Money Laundering Working Group drew up an information-leaflet intended for banks customers (Norwegian and English version), which was published by the Association.

1995

The Association (Money laundering Working Group) arranged a seminar for employees in the member institutions.

1998

The Association published an educational program (Booklet and CD) on fraud and money laundering.

2000

The Association produced a leaflet explaining in short the identification requirements of our money-laundering legislation, aimed at bank customers who question these procedures.

2001

The Association has published a CD-ROM with a web-based “guidance” on customer identification; this contains the relevant money laundering legislation and gives guidelines for various practical situations that may arise regarding different types of customers. There is also a section in which the 54

Norway

identification documents that are acceptable under our legislation are presented by way of a picture and a list of security features. The Association furthermore arranged a seminar for employees in its member banks and insurance companies focusing on different security aspects within financial institutions. One of the topics on the agenda was practical issues related to money laundering. 2002

The Association has established a working group to develop a system for supervision of electronic transactions. This working group delivered a Report in 2002.

55

Norway

PORTUGAL

1.

2.


Decree n° 15/93 of 22 January 1993 makes drug trafficking a punishable offence and money laundering a criminal activity.

-

Decree n° 313/93 of 15 September 1993 transposes the Money Laundering Directive into Portuguese law.

-

Decree n° 325/95, of 2 December 1995, extends the rules on money laundering to activities other than those undertaken by financial institutions and to offences other than those linked to drugs.

CENTRAL AUTHORITY FOR REPORTING There is no central authority. Notifications are sent to the nearest judicial authority directly or through the Prosecutor General (the latter being the procedure normally adopted).

3.

BUSINESSES COVERED BY THE LEGISLATION The law covers financial institutions, i.e.:

credit institutions and financial institutions (both those with their head office in Portugal and branches located in Portugal which have their head office elsewhere); finance companies; life insurance companies; pension fund management companies; post banks.

The law also covers non-financial institutions, including: 4.

casinos: estate agents; real-estate management companies; companies which organise gambling or lotteries; dealers in antiques or works of art; jewellers; aircraft, boat and car dealers; auditors and external accountants; cash and value carriers; notaries and registry officers.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION There is no provision for feedback. 56

Portugal

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED The offences covered are those relating to drug trafficking, terrorism, arms and nuclear devices trafficking, extortion, kidnapping, procuring, human organs trafficking, child pornography, corruption and economic and financial crimes.

6.

7.


Duration Documents relating to the identification of customers must be kept for 5 years after termination of the relationship between the bank and the customers concerned. Documents relating to operations must be kept for 10 years from the date of their execution.

b)

Means of conservation The documents may be originals, photocopies or on microfilm provided their authenticity can be certified.

PERSONS RESPONSIBLE FOR REPORTING Each financial institution must set up suitable procedures and a Rapporteur for internal supervision and communication in order to prevent money laundering operations. It is left to individual financial institutions to decide how to organise these procedures. In the case of non-financial institutions, the executives of the companies concerned are responsible for reporting.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED The information cannot be used for purposes other than investigations into offences covered by the law. They cannot therefore be used for investigations into tax fraud.

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION The identity of those making notifications may not be revealed under any circumstances.

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) Financial institutions should not execute suspicious operations before notifying the Director of Public Prosecutions, or a magistrate appointed by him. A magistrate may decide to suspend the operation. Nevertheless, financial institutions may execute the operation if the magistrate's order is not confirmed by a criminal court judge within 24 hours of notification being made. Under exceptional circumstances this period may be extended to 48 hours. Where it proves impossible not to execute the operation, or where the Public Prosecution Service feels that it would be likely to prevent prosecution, the financial institution may execute the operation and make notification afterwards.

57

Portugal

11.

IDENTIFICATION a)

Identification threshold amount For banks: Customers must be identified when they initiate operations for amounts in excess of EUR 12,470.

b)

For non-financial institutions, the identification thresholds are the following: - for casinos, antique and art dealers, jewellers, aircraft, boat and car dealers: EUR 2,494 for each cash transaction; - for gambling or lottery companies: EUR 24,988 for each transaction; - for estate agents: EUR 124,700 for each transaction; - for real-estate management companies: they must always identify their customers; - auditors, external accountants, cash and value carriers, notaries and registry officers: EUR 124,700 for each transaction.

Means of identification Customer identification must be made by a valid probative document. Current means of customer identification are the following: Natural persons Portuguese citizen: national identity card Foreign resident: residence permit Non-EC residents: passport; EC residents: national identity card. Natural or legal persons acting for the account of a third person Natural person: the identity card of the person holding the power of attorney and of the third party, together with the power of attorney itself. Legal person: the corporate registration card of the legal person holding the power of attorney and the power of attorney itself. For non-financial institutions, identification must be based on a document containing a photo which indicates the name, age and place of birth of the person concerned.

12.

c)

Cases in which the identification requirement does not apply Identification is not required when the counterpart is a financial institution, credit institution or insurance company with its head office in a EU Member State or an EU branch of a third-country institution or insurance company.

d)

Identification at a distance Customers must go to a bank branch in person to produce the necessary probative identification document.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING Numerous training sessions have been held and are still underway, either within each bank or at sectoral level, organised by the Bank Training Institute, which is part of the Portuguese Banking Association.

58

Portugal

SPAIN

1.

2.


Law 19/1993 transposing the Community Directive came into force on 1 January 1994.

-

Royal Decree 925/1995 was passed in June 1995 and completes the Spanish money laundering legislation.

CENTRAL AUTHORITY FOR REPORTING The Commission for the Prevention of Money Laundering and Monetary Offences (hereinafter the Prevention Commission). Its powers, inter alia, are the following:

to promote and direct activities to prevent the use of the financial system, or undertakings of a different nature, for the purposes of money laundering or other administrative offences relating to foreign trade; to co-ordinate the investigations and preventive activities of the various public authorities competent in this field; to direct co-operation between the public authorities and bodies representing financial institutions and other businesses subject to this legislation; to ensure effective assistance is provided to the legal bodies; to circulate draft proposals in relation to this legislation; to provide the Minister of Economy and Finance with proposals for penalties to be approved by him or by the Cabinet.

Members of the Committee include representatives of the Ministry of Public Affairs and ministries and institutions competent in this field. It is chaired by the Secretary of State for the Economy. An Executive Service, which reports to the Commission and is attached to the Bank of Spain, is responsible for all matters concerning reporting, investigation and prevention in respect of money laundering. 3.

BUSINESSES COVERED BY THE LEGISLATION The law and the Royal decree cover all forms of financial institutions:

credit institutions; insurance companies; investment firms; undertakings for collective investment; portfolio management companies; stockbrokers; companies issuing credit cards; companies and natural persons carrying on foreign exchange business and also non-financial enterprises, i.e. expressly including: casinos;

59

Spain

4.

real-estate management companies; estate agents; jewellers; antique shops; institutions involved in numismatics and philately.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION The Executive Service of the Prevention Commission informs regularly institutions, with some restrictions, on the situation with regard to transactions which they have notified as being suspected money laundering transactions. The Annual Report of the Executive Service represents an interesting, although responding to a general approach, way of feedback.

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED The law covers offences relating to illegal drug trafficking, terrorism and clandestine activities carried out in an organised manner by illegal associations.

6.

7.


Duration Documents serving as evidence of operations carried out (and where appropriate, computer records) and copy of those relating to identity must be retained for a period of at least 6 years.

b)

Means of conservation There are no specific provisions in this matter.

PERSONS RESPONSIBLE FOR REPORTING Each credit institution can organise itself internally in the way it feels is the most appropriate in order to collect information from branches, to analyse evidence of offences or suspect operations, and to communicate it to the competent authority. In any event, it must establish the necessary communication channels and designate a permanent representative as a contact point for dealings with the Executive Service of the Prevention Commission. The latter authority should assess the system put in place.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED In accordance with Spanish legislation, the information communicated on money laundering only can be used for investigating money laundering or other offences and/ or prosecuting for such crimes.

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION The law expressly excludes the liability of bank staff in the event of notification, provided that they have acted in good faith. Any bank employee or executive who has suspicions

60

Spain

that an operation may be related to money laundering must notify his company’s verification and reporting body, thus ensuring continued exemption from liability. The verification and reporting body will analyse the information received, decide whether or not it is related to money laundering and act accordingly. Irrespective of the decision taken, the bank employee or executive who made the notification must be informed of the decision taken. 10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) The law imposes an obligation to report facts or operations which, rationally or with certainty, are linked to money laundering related to drug trafficking, terrorism or clandestine activities carried out by illegal association. Institutions should not execute operations deemed to be suspect before communicating their suspicions. The Royal Decree sets out exceptions to this requirement, which are the same as those in the Community Directive. There is an obligation to notify transactions to the Executive Service of the Prevention Commission: when, following examination of the operations concerned, there are indications or proof of money laundering activities, in which case notification must be made immediately; systematically, where the transactions do not relate to regular customers about whom there is sufficient knowledge of the lawfulness of their activities: - when they involve transactions in cash, traveller’s cheques, bearer bank cheques which are not paid into a current account, in excess of EUR 30,050 or the equivalent in foreign currency; - when they involve transactions for an amount exceeding EUR 30,050 or the equivalent in foreign currency involving a natural or legal person resident in a tax paradise or in a non co-operative country or territory (FATF list); - at the request of the Prevention Commission. Under no circumstances should a customer or a third party be informed of the fact that a the Executive Service of the Prevention Commission has been notified, nor that certain operations have been investigated in order to determine whether or not they are related to money laundering.

11.

IDENTIFICATION a)

Identification threshold amount Credit and financial institutions: EUR 16,234. Casinos, estate agents, jewellers, antique dealers, etc.: EUR 6,494.

b)

Means of identification Under the Royal decree, the means of customer identification are the following:

61

Spain

-

Natural persons Spanish citizen: national identity card; Foreign resident: residence permit Non-resident foreigner: passport or national identity card

-

Legal persons Spanish legal persons: Tax Registration Number; official articles of association and statutes; Foreign legal persons: documents proving that they have been validly constituted, in accordance with the legislation applicable to their status; Non-commercial communities, associations and other bodies: documents proving their legal constitution.

c)

Cases in which the identification requirement does not apply Customers that are financial entities and are in turn subject to the legislation.

d)

Identification at a distance There is not yet any specific legal provision on identification at a distance.

12.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING Credit institutions develop regularly training programmes, aimed in particular at employees in direct contact with customers, internal seminars, etc. Some of those programmes make use of videos. Other than information measures the following very important points should be stressed:

the existence of a body responsible for control and communication, the obligation to co-operate with the authorities, the duty to respect confidentiality that applies in this area.

62

Spain

SWEDEN

1.

2.


The Penal Code was amended in accordance with the UN Vienna Convention on Illegal Trade in Narcotic Drugs. On 1 July 1999 a special money laundering offence was introduced in the Penal Code.

-

The law transposing into Swedish legislation the obligations established under the EC Money Laundering Directive came into force on 1 January 1994 (the Measures against Money Laundering Act, 1993:768). Amendments to the law entered into force on 1 July 1999, 1 January 2001 and 24 April 2002. Concurrently, the Financial Supervisory Authority has issued guidelines on the application of the law.

CENTRAL AUTHORITY FOR REPORTING The Financial Intelligence Police (FIPO), a part of the National Police Board.

3.

BUSINESSES COVERED BY THE LEGISLATION The legislation covers:

4.

banks; securities companies; credit market companies; companies administering trusts; mortgage companies; life insurance companies; bureaux de change; insurance brokers; money transmitters; electronic money institutions.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION The FIPO acknowledges receipt of every bank notification and gives more detailed feedback at regular meetings with the banks.

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED The legislation extends to all major criminal offences (handling of stolen goods) and from 1 July 1999 also breaches of tax and customs legislation.

63

Sweden

6.

7.


Duration Information on identity must be kept for 5 years from the termination of the relationship with the customer. Information on operations must be kept for 10 years from the end of the financial year following the operation.

b)

Means of conservation Microfilm and electronic forms are allowed.

PERSONS RESPONSIBLE FOR REPORTING There are designated persons within the Security or Legal Department of the banks. A member of the bank’s top management must have the overall responsibility for the bank’s anti money laundering activities.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED The information may only be used for criminal investigations and for prosecutions, not for tax offences.

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION Banking secrecy may be breached without the bank, its management or its staff being held liable, provided that notification has been made in good faith.

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) Suspicious transactions must not be executed. Information must be communicated to the FIPO. The customer must not be informed.

11.

IDENTIFICATION a)

Identification threshold amount One or more transactions totalling EUR 12,000. Different banks can have individual thresholds at a lower level. No threshold at all when opening a "business relationship".

b)

Means of identification Natural persons Swedish citizens: driver's licence, Certified Identity Card and the new form of passport issued in 1998 or later. Non-residents: an official travel document, normally a passport. Legal persons An official certificate of registration/incorporation plus an official identity document for the person representing the company. Natural or legal persons acting for the account of a third person As above, and additionally an "appropriate" check of the identity of the third party. 64

Sweden

c)

Cases in which the identification requirement does not apply The requirement is not applicable when the company is a bank within EU and FATF countries.

d)

Identification at distance For matters handled without the customer being present, the identity control can be carried out with the aid of details concerning the company, in writing or otherwise, from the customer or another party and from internal registers or external registers accessible through card issuers/manufacturers and public authorities. In cases of distance communication, for example, by mail, telephone, fax or computer, the identity control should be made through a suitable combination of checks of:

signature against a photocopy of ID document; particulars concerning national registration or corporate registration number, signatories and Board of Directors; address; charge card number, number of ID document against the particulars in the company’s own register or other registers.

In IT systems, a personal code with or without charge card information, other verification methods using so-called electronic ID cards, telephone verification and electronic tampering safeguards are valid aids for checking the customer’s identity. 12.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING The Association has, together with the leading banks, produced an interactive computer based educational programme for employees. The Association has, in co-operation with the Financial Supervisor Authority, produced a brochure intended for customers so that they can be informed about the obligations imposed on banks in order to combat money laundering. The banks themselves monitor individual training on a continuous basis. The banks must have internal rules on how to deal with suspicious transactions.

65

Sweden

SWITZERLAND

1.

2.


Article 305 (a) (Money Laundering) and Article 305 (b) (negligence in relation to financial transactions) of the Penal Code have been in force since 1 August 1990.

-

Article 305 (b) paragraph 2 of the Penal Code (right of communication of financial institutions) came into force on 1 August 1994.

-

Federal law concerning the fight against money laundering in the financial sector (Money Laundering Law), in force since 1 August 1998.

-

Government ordinance on the Money Laundering Reporting Office (MROS), in force since 1 April 1998.

-

Directives relating to the prevention of and fight against money laundering, issued by the Swiss Federal Banking Commission; came into force on 1 July 1998 (scheduled to be replaced by a SFBC Money Laundering Ordinance on 1 July 2002).

-

Swiss Banks' Code of Conduct with regard to the exercise of due diligence, came into force on 1 July 1977 (current version CDB 98; 1.07.1998, a new version is scheduled to enter into force on 1 July 2002).

-

Ordinance of the Federal Casino Commission on the diligence duties of casinos in combating money laundering, of 28 February 2000.

CENTRAL AUTHORITY FOR REPORTING Since 1 April 1998, Article 9 of the Federal Law on money laundering makes it compulsory for financial institutions to give notification when they have justified suspicions that the assets involved in a business relationship are connected to an infraction as defined in Article 305 (a) of the Penal Code (money laundering), are the proceeds of serious crime or are controlled by a criminal organisation. This notification must be made to the Money Laundering Reporting Office (MROS), an administrative body (Financial intelligence unit) which reports to the Federal Office for Police. However and in accordance with Article 305 (b) paragraph 2 of the Penal Code, financial intermediaries still have the possibility to exercise their right of communication with regard to the Swiss criminal authorities and/or the MROS when they believe that assets may originate from serious crime.

3.

BUSINESSES COVERED BY THE LEGISLATION Article 305 (b) of the Penal Code covers all financial transactions executed by professionals, without highlighting any specific professions. 66

Switzerland

The Money Laundering law covers anti-money laundering measures and the vigilance to be exercised with regard to financial transactions. Article 2 of that law defines the scope of application of the law as follows: This law applies to financial intermediaries. The following are considered as financial intermediaries (Article 2 paragraph 2):

banks as defined in the law on banks;

fund managers as defined in the Federal law of 18 March 1994 on undertakings for collective investment in transferable securities if they manage unit accounts or if they offer or distribute units in undertakings for collective investment in transferable securities;

insurance companies as defined in the law on the supervision of insurance if their business includes life insurance, or if they offer or distribute units in undertakings for collective investment in transferable securities;

stockbrokers as defined in the law of 24 March 1995 on stock exchanges.

casinos as defined in the law of 18 December 1998 on casinos.

The following are also considered as financial intermediaries (Article 2 paragraph 3): persons who, professionally, accept, hold as custodians or help to invest or invest assets belonging to third parties, in particular persons who:

carry out credit transactions (in particular consumer or mortgage credits, factoring, trade finance or financial leasing);

provide payment services, notably as regards electronic transfers for the account of third parties, or who issue or administer payment means such as credit cards and travellers cheques;

trade in, for their own account or for the account of third parties, bank notes, money market instruments, currencies, precious metals, commodities or securities (physical instruments and rights) and their derivatives;

offer or distribute units in undertakings for collective investment in transferable securities, as distributors of foreign or Swiss undertakings for collective investment in transferable securities as defined in the Federal law of 18 March 1994 on undertakings for collective investment in transferable securities or as representatives of a foreign undertaking for collective investment in transferable securities, provided that they are not subject to a supervisory body set up by a special law;

carry out asset management business (includes attorneys and notaries public active in that kind of business);

make investments as investment advisers (includes attorneys and notaries public active in that kind of business);

act as custodians for or manage securities (includes attorneys and notaries public active in that kind of business);

67

Switzerland

The following are not covered by this law (Article 2 paragraph 4):

4.

the Swiss National Bank;

tax exempt occupational pension plans;

persons providing services exclusively to tax exempt occupational pension plans;

the financial intermediaries covered under paragraph 3 as providing services exclusively, to the financial intermediaries listed in paragraph 2 or to foreign financial intermediaries subject to similar supervision.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION There are no legal provisions for feedback. In practice, however, banks can deduce from the behaviour of the authorities whether or not the information communicated will lead to criminal proceedings. Since the introduction of the reporting obligation, two thirds of the notifications have been transferred to the criminal prosecution authorities.

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED The legislation covers all assets originating from serious crime (offences punished by penitentiary) or controlled by criminal organisations.

6.

CONSERVATION OF RECORDS AND DOCUMENTS a) Duration Documents must be kept for 10 years after they become obsolete (10 years after the transaction for transactional documents; 10 years after the end of the business relationship for customer documentation). b) Means of conservation Financial intermediaries must put on record documents relative to transactions carried out as well as customer documentation required pursuant to the Money Laundering Law so as to ensure that third party experts can obtain an objective idea concerning the transactions and business relationships.

7.

PERSONS RESPONSIBLE FOR REPORTING The Money Laundering law and the Penal Code oblige all financial intermediaries to respect the obligation or right of communication when the relevant conditions apply. As regards the banking sector, generally this will involve one or more persons, even possibly a specific department ("Compliance" department) specialising in all matters pertaining to the fight against money laundering. In the case of a small bank, it may outsource this task (for example to its parent company or a firm of authorised auditors).

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED The information may only be used for police investigations and legal proceedings directly connected with money laundering and organised crime, but not with tax fraud. 68

Switzerland

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION Financial intermediaries making a notification pursuant to Article 9 of the Money Laundering law or in accordance with Article 305 (b) paragraph 2 of the Penal Code and blocking the relative assets cannot be pursued for an infringement of financial privacy laws, nor held liable for breach of contract if they are acting with due diligence.

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) The obligation to notify suspicious transactions leads to the assets linked to the information communicated by the financial intermediary being blocked for 5 business days. During the full period when the assets are blocked, the financial intermediary must inform neither the persons involved nor third parties of the notification made. If no decision is taken by the competent authorities during that period, the financial intermediary is free to decide to what extent it wishes to continue its business relationship with the customer.

11.

IDENTIFICATION a)

Identification threshold amount When a business relationship is being established, financial intermediaries must verify the identity of the contracting party and identify the beneficial owner in case of doubt, whatever the amount involved. The Money Laundering law sets no express limit above which cash transactions require an identification procedure. It is up to self-regulatory bodies implementing this law to fix such limits. For banks, the Due-Diligence Convention CDB 98 fixes this threshold at EUR 16,000.

b)

Means of identification The identification procedure includes checking the identity of the contracting party (which is a formal procedure based on official identity papers) and the identification of the beneficial owner in case of doubt (which is based on a declaration by the contracting party).

Verifying the contracting party's identity

-

Natural persons: an official document; Legal persons: extract from the Commercial Register or other official document (documents used for identification are photocopied; copies are to be filed by the financial intermediary.)

Identification of the beneficial owner

The contracting party has to disclose the beneficial owner on Form A (full name, address and country of domicile): in case of doubt whether the contracting party is himself the beneficial owner of the funds or in the event of unusual circumstances; in the event of a power of attorney given to an unrelated third party; in the event of a business relationship established by correspondence with a natural person; in the case of a shell company/personal investment company/trust;

69

Switzerland

-

attorneys and notaries: if their financial business is clearly connected to well defined legal mandates, they have to indicate to the bank the legal character of their mandate on a no-name base; if their financial business is not clearly connected to well defined legal business, they have to indicate the beneficial owner on Form A. Exception: between recognised financial intermediaries (for example subject to banking supervision).

A declaration on Form A is a legal document. False declarations are punishable as a crime. 12.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING The Federal Banking Commission's Money Laundering Guidelines require banks to issue internal instructions in order to train personnel on how to react when faced with suspicious transactions.

70

Switzerland

UNITED KINGDOM

1.

2.


Drug Trafficking Act 1994, Prevention of Terrorism Act 1989.

-

Criminal Justice Act 1993, the Money Laundering Regulations 1993 (effective date: 1 April 1994) provide detailed requirements for identification, record keeping, recognition and reporting of suspicions, and education and training.

-

Financial Services and Markets Act 2000 (effective date 30 November 2001) provides the UK financial services regulator (the Financial Services Authority (FSA)) with the statutory objective of reducing financial crime, in particular money laundering. The FSA is responsible for ensuring that UK financial services firms comply with their money laundering legal and regulatory obligations.

CENTRAL AUTHORITY FOR REPORTING The Economic Crime Unit of the National Criminal Intelligence Service (NCIS). It is mainly staffed by officers from the Police and HM Customs and Excise.

3.

BUSINESSES COVERED BY THE LEGISLATION The principal legislation covers all persons. The money laundering regulations cover all persons and institutions (including lawyers and accountants) when undertaking banking, investment or insurance-related business. In detail the regulations apply to:

4.

all banks, building societies and other credit institutions; all individuals and firms engaging in investment business within the meaning of the Financial Services and Markets Act 2000; all insurance companies undertaking long term life business, including the life business of Lloyd's of London; Bureaux de change, cheque encashment centres and money transmission services, etc.; any firm undertaking as its principle business any of the financial activities listed in the schedule to the regulations.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION The provision of feedback by NCIS to financial sector firms that report suspicious is linked to service level agreements with the Association of Chief Police Officers. Feedback is provided by the investigating unit to the firm making the disclosure identifying the status of the case. In addition, NCIS will continue to provide information on request to a disclosing institution in order to establish the current status of a specific investigation.

71

United Kingdom

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED The legislation extends to all serious crime including terrorism and fiscal offences (both direct and indirect).

6.


Duration Records evidencing that identity has been verified must be kept for at least 5 years after the relationship with the customer has ended. Transaction records must be kept for at least 5 years after completion of the transaction.

b)

7.

Means of conservation Original documents may be kept or copy documents including those recorded on microfilm or in electronic form.

PERSONS RESPONSIBLE FOR REPORTING The institution must appoint a Money Laundering Reporting Office (MLRO) to receive reports of suspicions within the bank. He/she is the point of contact with the money laundering authorities. The Act requires the Reporting Officer to consider any reports made to him in the light of other available information, and, if appropriate, pass it on to the authorities. The MLRO is required to be approved by the FSA prior to taking up his/her appointment.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED The information is only used in criminal investigations. Fiscal authorities have access to the information disclosed for use in criminal proceedings. An Inland Revenue Investigation Officer is located within the Economic Crime Unit of the National Criminal Intelligence Service.

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION Knowledge or suspicion of drug or terrorist-related funds must be reported. For other serious crime, it is a defence against handling a money laundering transaction if a report has been made. Sections 50(3) and 51(5) of the Drug Trafficking Act of 1994 state that notification of suspicion will not be treated as a breach of any restrictions on the disclosure of information, nor will any act taken in this connection be deemed to be an offence as long as the disclosure is made in good faith.

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) The institution can refuse to handle a suspicious transaction but must avoid tipping-off the customer.

72

United Kingdom

When banks make suspicious transaction disclosures to the National Criminal Intelligence Service (NCIS) confirmation of receipt is provided. This confirmation notice will identify whether or not NCIS is content for the transaction/business relationship to continue. In practice, this confirmation is received 3 to 4 weeks after the disclosure has been sent. Therefore, freezing of the transaction or relationship on disclosure is not generally practicable and urgent cases (where money is about to be paid away) are dealt with by telephone notification. 11.

IDENTIFICATION a)

Identification threshold amount Identification must be verified at the start of a business relationship or where no continuing business relationship is intended, when the sum involved is EUR 15,000 or more, or whenever money laundering is suspected regardless of the amount involved.

b)

Means of identification The legislation does not specify what constitutes adequate evidence of identity but the official interpretation of the requirements of the Money Laundering Regulations is contained in guidance notes for the financial sector issued by the banking and other trade associations.

73

United Kingdom

NATIONAL MEASURES IN OTHER EUROPEAN COUNTRIES

ANDORRA

1.

2.


Changes were made in 1990 to the Penal Code, making money laundering a criminal offence. Further amendments were introduced in 1995 making it a penal offence to commit any act aimed at concealing the origin or knowingly making use of money or assets deriving from drug trafficking, terrorism and procuring. The last change was the law approved on 29 December 2000, which substitutes the law adopted on 11 May 1995 for the Protection of banking secrecy and prevention of money laundering or assets deriving from criminal activities, relating to the international legal cooperation for criminal matters and the creation of the Money Laundering Prevention Commission (Unitat de Prevenció del Blanqueig – UPB).

-

The law of international legal co-operation and fight against money laundering or securities from criminal activities, approved on 29 December 2000, organises the international legal co-operation for criminal matters, rearranging and extending the fight against money laundering with the UPB.

-

Chapter I of the law of 29 December 2000 establishes the organisation of international legal co-operation in criminal matters, irrespective of the offences. Chapter II deals with the fight against money laundering in respects of assets derived from international criminality and the creation of the Money Laundering Prevention Commission (UPB).

CENTRAL AUTHORITY FOR REPORTING There is a central authority for reporting.

3.

BUSINESSES COVERED BY THE LEGISLATION All persons and institutions are covered. Fiduciaries must also obtain information about the source of funds and the identity of the rightful owner. Subsidiaries, branches or delegations of Andorran companies are called upon to prevent the laundering of money and assets. This is also true for companies having their address in a foreign country but run by natural or legal persons of Andorran nationality or residents in Andorra.

4.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION There is no provision for feedback.

75

Andorra

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED Terrorism, kidnapping, drug trafficking and procuring.

6.

7.


Duration 5 years from the end of the customer relationship.

b)

Means of conservation Paper and microfilm.

PERSONS RESPONSIBLE FOR REPORTING Each financial institution must name a person or persons responsible for reporting and acting as its representative(s) vis-à-vis the central authority.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED Money laundering only. The law of 29 December 2000 also provides that information may not be provided to foreign authorities for purposes other than the prevention of money laundering.

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION Bank staff have no liability provided they have acted in good faith.

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) The central authority must be notified and will order the transaction to be blocked if there are sufficient grounds.

11.

IDENTIFICATION The law of 29 December 2000 establishes identification requirements for the opening of accounts, the purchase of securities, depositing or transferring funds, renting safe deposit boxes and with regard to occasional customers. a)

Identification threshold amount None

b)

Means of identification Natural persons An official identification document containing a photo of the person concerned. The address and professional activity must also be ascertained . Legal persons Certificate of registration in the Register of Companies;

76

Andorra

-

c)

12.

An official identification document containing a photo of the person acting as Chairman or holding a similar position in the company; An official identification document containing a photo of the persons authorised to act on behalf of the company; Proof of the powers of the persons authorised to act on the company’s behalf.

Natural or legal persons acting for the account of a third person Banks must verify, as far as possible, the identity of the real beneficiary or beneficiaries of the transaction.

Cases in which the identification requirement does not apply None.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUDERING For banks: specific external and internal bank staff training; internal instructions and processes to detect suspicious operations; external audits.

77

Andorra

BULGARIA

1.

2.


New law on measures against money laundering, adopted by the National Assembly on 9 July 1998, in force since 24 July 1998, amended on 1 January 2001.

-

Rules for the implementation of the law on the measures against money laundering, adopted by the Council of Ministers/Decree N°223/in force since 14 October 1998, amended 18 February 2000, on 20 February and 28 December 2001.

CENTRAL AUTHORITY FOR REPORTING The Financial Intelligence Bureau under the auspices of the Ministry of Finance. It was constituted in September 1998. Its main tasks are to store, analyse and disclose information concerning possible money laundering, in order to prevent and detect the use of the financial system, or undertakings of a different nature for the purposes of money laundering and other related offences. This unit acts in co-operation with the Bulgarian National Bank, the Ministry of Internal Affairs, the Ministry of Justice and Legal Eurointegration, and the independent legal authorities in Bulgaria.

3.

BUSINESSES COVERED BY THE LEGISLATION The measures for prevention and disclosure of activities for the purposes of money laundering and related ones, stipulated in the law on measures against money laundering, are mandatory for:

The Bulgarian National Bank, banks and non-bank financial institutions in the meaning of article 1, para 5 of the Law on Banks; insurance companies; investment societies and investment intermediaries and management companies in the meaning of the Law on Publicly Offered Securities; pension funds; privatisation authorities; persons organising tenders for public procurement contracts; persons involved in gambling businesses; legal persons with established mutual aid fund; pawnbrokers; post offices dealing with money and other valuables; notaries public; stock exchanges and stockbrokers; leasing companies; state and municipal authorities, involved in concluding concessionaire contracts; political parties; trade unions and professional organisations; non-profit organisations;

certified public accountants and specialised audit companies;

78

Bulgaria

4.

tax authorities; customs authorities; card traders by profession; sport organisations; the Central Depositary; persons professionally engaged in trade with precious metals and precious stones; weapon traders and traders with oil and oil products; alcohol and tobacco traders; wholesale traders.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION There is no legal provision for feedback. The Financial Intelligence Bureau collects and centralises the information and analyses it before forwarding it, when necessary, to the competent legal authorities. There is a provision in the rules for implementation of the law stipulating secrecy covering the information at all stages of its conservation and transmission, and preventing the use of such information for purposes other than those set out in this law.

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED The amendments in the Penal Code/Chapter "Offences against the Financial System"/of 1997 and 1998 cover a wide range of offences relating to capital derived from criminal activities.

6.

CONSERVATION OF RECORDS AND DOCUMENTS a) b)

7.

Duration Records on clients and documents on suspicious operations and transactions have to be kept for a period of five years. Means of conservation All data and documents stored must be originals; should this be impossible – in a certified copy. Upon request they must be submitted to the competent authorities according to an established procedure.

PERSONS RESPONSIBLE FOR REPORTING Special services or responsible officials must be nominated at the organisations and persons – subjects to the provisions of the law on measures against money laundering. Each specific person’s tasks and functions are stipulated in special internal rules on money laundering control and prevention; these rules have to be approved by the Director of the Financial Intelligence Bureau.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED The information collected may be used only for the purposes of the law on measures against money laundering.

79

Bulgaria

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION Should any money laundering activity be detected or suspected, the disclosure of information does not presume liability for breach of other laws, including the law on banking secrecy. The bank staff is held liable in the event of any tipping-of, even when such is done in good faith. This act constitutes an offence of aiding and abetting according to a new '98 amendment of the Penal Code.

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) Suspicious transactions should be suspended promptly. Information should immediately be communicated to the Intelligence Financial Bureau. Should it be impossible to suspend suspicious transactions, the bank must inform the Bureau immediately after the transaction has been executed. The Minister of Finance, on a proposal by the Bureau, is entitled to block, by means of a written order, any suspicious transaction for a period of three-days. If, at the end of that period, no criminal precautions are initiated or distraint either foreclosure is imposed, the transaction may be completed. The customer must not be tipped off.

11.

IDENTIFICATION a)

Identification threshold amount One or more obviously connected transactions totalling EUR 15,000.

b) -

Means of identification Natural persons official identity document / passport, identity card – registering its type, number and issuer, name and address of the natural person/ and Unified Registration Number /EΓH/. natural persons operating as a sole trader must present the same documents as in the case of legal persons below. Legal persons official extract from the trade or other relevant register, including the actual data for the legal person; should the person be not subject to registration – by presenting a certified copy of the instrument of association, and registering the type, headquarters, address and the proxy thereof; persons having united identification code conforming to the United State Register of Economic Subjects must present a copy of the relevant identity card or certified notification; All persons legally bound to register with tax or customs authorities must present a copy of their tax or customs registration. Natural or legal persons acting for the account of a third person should the operation or transaction be made by proxy or in favour of a third person without the power of proxy, the identification of the represented person and the "middleman" must be verified by all available means.

-

-

80

Bulgaria

c)

12.

Cases in which the identification requirement does not apply Identification is not required if a particular transaction or the related transactions are below the amount of the above-mentioned identification threshold.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING The Financial Intelligence Bureau has produced special guidelines, based on the law and the implementation rules. These guidelines have been used as the basis for preparing internal rules on money laundering control and prevention by the banks and the other relevant institutions, as well as for staff training material. The Association of Commercial Banks in Bulgaria, the Bulgarian National Bank, the Financial Intelligence Bureau and the Centre for Qualification and Development have organised for the banks a seminar on the implementation of the law on measures against money laundering. The Association of Commercial Banks have also organised several meetings on the problems raised by the practical implementation of the Law on measures against money laundering and discussions on the drafts for amendments of money laundering legislation.

81

Bulgaria

CROATIA

1.

2.


The law on the prevention of money laundering (hereinafter the Law) came effect on 1 November 1997 (NN 69/97). Regulations regarding methods deadlines for informing the Anti-Money Laundering Department (hereinafter Department) and the method by which lists of collected data are stored (came effect on 15 November 1997 - N 114/97).

into and the into

-

The Law includes basic precepts of modern legislation, such as: client identification, cash-usage limit, recognition of suspicious transactions, and responsibility for maintaining a list of collected data, methods of informing the Department, the Department’s work and international co-operation.

CENTRAL AUTHORITY FOR REPORTING The Anti-Money Laundering Department (AMLD) is a financial informative unit within the Ministry of Finance whose primary duty is the prevention of money laundering by collecting data regarding transactions from those parties with a duty of notification, sorting data, cooperating with similar institutions abroad and reporting to authorised government bodies when there are suspicions of money laundering.

3.

BUSINESSES AFFECTED BY THE LEGISLATION Those responsible for implementing the Law cover all targeted sectors of the economy, taking into consideration all international references and guidelines of the financial sector, including banking, non-banking and non-financial sectors, notably:

banks and savings banks; investment funds, investment associations and other financial institutions; organisations empowered to conduct traffic of payment transactions; Croatian Privatisation Fund; insurance companies; stock markets and other legal parties empowered to conduct securities transactions; exchange offices; pawn-shops; gaming-houses, coin-operated machines, clubs, organisers of games related to chance, lotteries, raffles and other games of chance.

Other parties with a legal notification obligation include shopkeepers, merchants and persons whose activities involve cash deposit transactions, buying and selling receivables, property transactions for third parties, issuing payment and credit cards and doing business with those cards, leasing, organising travel, transactions involving real estate, objects of art, antiques, all other objects of high value and dealing in treatment of valuable metals and stones and related transactions.

82

Croatia

4.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION The Law does not impose any obligation on the Department to provide feedback concerning data collected regarding transactions. Nevertheless, the Department considers feedback necessary in order to foster good relations between the Department and the parties responsible for making notification, to increase motivation for better and more efficient reporting systems and to increase awareness regarding different types of money laundering. The Department has yet to provide feedback, however it is currently preparing such information for banks. The Attorney General, Ministry of Internal Affairs and other government bodies inform the Department of the flow and development of cases, which the Department has submitted to the appropriate government bodies once a suspicion of money laundering in the form of suspicious transactions, has been established.

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED The criminal act of concealing illegally received money is regulated by the Criminal Law of the Republic of Croatia in Chapter XXI entitled Offences against Security of Payment System Traffic, Article 279. A predicate offence of money laundering can be any criminal offence irrespective of the seriousness of the underlying offence.

6.

7.


Duration Those responsible for reporting suspicious operations must keep data and the underlying documentation for a minimum of five years from the date of its issue. The Department stores the data collected for a period of ten years.

b)

Means of archiving Data concerning transactions are stored chronologically, while data of suspicious transactions are stored as separate evidence. The method and place of storage of data is designated by those responsible for making notification according to the general Act so as to ensure efficient surveillance.

PERSONS RESPONSIBLE FOR REPORTING All parties responsible for reporting must delegate a person to execute the Law; they can delegate one or more authorised employees.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED Data collected on the basis of the Law are confidential and can be used only for uncovering and preventing money laundering or criminal activity related to money laundering.

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION The Law on Banks stipulates that the delivery of data to the Department is not considered a breach of banking confidentiality.

83

Croatia

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) Banks can refuse to execute suspicious transactions. However they must inform the Department about the parties attempting to initiate such transactions. If the nature of the transaction is such that the bank can delay its execution, it must inform the Department immediately and the Department may order the bank to postpone the execution of suspicious transactions for a period of two hours.

11.

IDENTIFICATION a)

Identification threshold amount The identity of customers is verified for all transactions involving cash, foreign currency, securities, precious metals and stones if the transaction value is approx. EUR 14,000 or higher or with related transactions which jointly reach a value of EUR 14,000 or higher, for life insurance contracts if the yearly premium is or exceeds approx. EUR 5,300, and during instances of legal or attempted illegal transfers of cash or cheques in domestic or foreign currency of a value of EUR 5,300 or higher.

b)

Means of identification The identity of the natural persons is established by means of personal documents (personal identification card or passport, or other suitable ID , including: first name and surname, address of residence, JMBG - citizen’s ID number, with the title, number and issuer of identification document). If a transaction is completed for a legal person, that person’s identity must be established, as well as the title, place and identification number.

c)

Cases in which the identification requirement does not apply Identification is not necessary in the following cases: when transactions are completed between banks, insurance companies and organisations for completing payment transfers ; when transactions are completed between banks and exchange offices which relate to the purchase of foreign currency and cheques and the encashment of foreign cheques; when a transaction is completed amongst banks, which relate to transactions with cash and cheques payable abroad, if the host bank has permission from the Croatian National Bank for such a transfer; when cashing cheques for residents of Croatia in respect of the sale of goods or services on behalf of foreign legal parties or independent entrepreneurs or tradesmen in favour of their accounts at banks and payment clearing organisations; when transactions are completed at banks, saving banks or payment clearing organisations which is based on debiting cash to deposit or savings accounts of the same client, and with the purchase of foreign currency placed immediately on foreign currency accounts, or the foreign currency account of the same customer.

-

-

-

-

12.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING The Department co-operates with financial institutions, primarily banks, organises seminars at which they meet those with legal responsibilities for reporting, to keep them informed about suspicious transactions such as money laundering with regard to international directives and references, trends in discovering and preventing money laundering. 84

Croatia

Seminars are organised, references are distributed to financial institutions in relation to certain questions in the field of money laundering, etc. Other relevant ministries, institutions and associations also contribute, through different activities, to increasing awareness of prevention of money laundering and banks provide internal training. There is a Working Group for the Prevention of Money Laundering within the Croatian Banking Association which works closely with the Anti-Money Laundering Department.

85

Croatia

CYPRUS

1.

2.


The Confiscation of Proceeds of Trafficking of Narcotic Drugs and Psychotropic Substances law n° 39(I) 1992 was enacted in 1992 in order to comply with the Vienna Convention.

-

The Prevention and Suppression of Money Laundering Activities law, n° 61(1), was enacted in May 1996. The law supersedes the 1992 law and covers money laundering related to various types of illicit activity and provides for the confiscation of proceeds generated from money laundering. It also redefines the offence of money laundering in order to bring it within the ambit of serious crimes other than drug offences.

CENTRAL AUTHORITY FOR REPORTING The 1996 law provides for the establishment of a Unit for Combating money laundering, which is composed of representatives of the Attorney General, the Chief of Police and the Director of Customs and Excise. The Unit receives and investigate reports of suspicious transactions. The law also provides for the setting up of several supervisory authorities, whose job is to ensure compliance with the law by persons within each authority’s sphere of responsibility. The Central Bank of Cyprus is specifically designated by the law as the supervisory authority for banks. In addition, the Council of Ministers under the same legislation has designated the following additional supervisory authorities.

3.

The Superintendent of Insurances for the Insurance Companies; The Registrar for Cooperative Societies and Cooperative Development for the Cooperative Banks; The Securities Commission for the Stock Exchange; The Association of Certified Public Accountants of Cyprus, for the Accountants; The Cyprus Bar Association for Lawyers.

BUSINESSES COVERED BY THE LEGISLATION All businesses are covered by the legislation, but there are special provisions applicable to those involved in financial business. These cover activities traditionally performed by banks, insurance companies, brokerage companies and other financial institutions.

86

Cyprus

4.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION The Unit acknowledges receipt of reports of a suspicious transaction to the reporting financial institution. Feedback continues throughout the investigation of suspect transactions as information is exchanged between the Unit and the financial institutions.

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED Any criminal offence punishable by more than one year of imprisonment as a result of which offence proceeds are generated, which may constitute the object of a Money Laundering offence.

6.

7.


Duration Five years after the termination of the customer’s relationship or the execution of the transaction.

b)

Means of conservation Hard copies, computer print-outs and other modern data recording methods.

PERSONS RESPONSIBLE FOR REPORTING Each bank has a designated person, the Compliance Officer, to whom suspicious transactions are reported. The Compliance Officer evaluates the information and decides whether to report the case to the Unit.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED The information provided to the Unit can be used for the purpose of investigation if there are reasonable grounds for believing that a money laundering offence has been committed.

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION There is no civil or criminal liability for the bank or its employees in reporting suspicious transactions to the Police Unit, provided they act within the law.

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) The bank may either decline to handle a suspicious transaction or it may decide to accept it, in which case the operation must be reported.

11.

IDENTIFICATION The customer’s identity must be determined when a business relationship is established between a bank and a customer.

87

Cyprus

12.

a)

Identification threshold amount In the case of one-off transactions, identification must be carried out if the transaction is over EUR 13,820.

b)

Means of identification Natural persons The name, permanent address, date of birth and profession must be verified by original documents. Legal persons In addition to verification of the name, permanent address, date of birth and profession of shareholders, beneficial owners and officers of the company, the following documents must be obtained: certificate of incorporation; certificate of registered office; certificate of the listed directors and secretary; certificate of the listed shareholders; memorandum and articles of association; a resolution by the Board of Directors to open an account and conferring authority on those who will operate it. Natural or legal persons acting for the account of a third person Reasonable measures must be taken to establish the identity of such person and also the party on whose behalf the customer is acting.

c)

Identification at a distance For prospective non-resident customers who wish to open bank accounts by post, extra care should be placed in customer identification procedures. Clearly in such situations photographic evidence of identity is inappropriate. In these cases, verification of identity should be sought from a reputable credit or financial institution in the applicant’s country or residence. Verification details should cover the true name or names used, current permanent address and verification of signature.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING Under the law, banks are obliged to educate and increase the awareness of their employees through seminars and training on issues related to money laundering.

88

Cyprus

CZECH REPUBLIC

1.

2.


The Act N°61/1996 concerning some measures against legalisation of proceeds of criminal activity and amending legislation relating thereto was passed on 15 February 1996 and entered into force on 1 July 1996.

-

This Act was amended twice: by the Act N°15/1998 and by the Act N° 159/2000 Coll. that came into effect on August 1, 2000.

-

A supplementing law, introducing a limitation of approx. EUR 29,000 on a single cash payment both in local and foreign currency, was drafted by the government and is still debated in the Parliament.

CENTRAL AUTHORITY FOR REPORTING The Ministry of Finance acts as the central reporting authority and a department to act on its behalf in implementing money laundering legislation was established on 1 July 1996. The Ministry is also charged with gathering data and its analysis. It has investigative powers and, in case of a failure to implement or in case of any breach of obligations under money laundering legislation, the Ministry is empowered to deliver to the appropriate licensing authority (Czech National Bank, Securities Commission, etc.) a motion to repeal licence of the respective person. The licensing authority shall, within thirty days of the motion, inform the Ministry on measures taken and on its decision in re. The Central Reporting Authority (Financial Analytical Dept.) is not, however, mandated to withdraw the banking licence.

3.

BUSINESSES COVERED BY THE LEGISLATION The complete list of financial institutions obliged according to the “ Act concerning some Measures against Legalisation of Proceeds of Criminal Activity and Amending Legislation relating thereto ” (this list was extended by the above mentioned amendment):

banks and branches of foreign banks; savings and credit cooperatives; investment companies and investment funds; pension funds; securities traders; capital market organisers; the Securities Centre, and legal persons, keeping and/or operating and administering parts of its database and performing auxiliary services in this respect; natural and legal persons running gambling houses, casinos, betting shops, out-of-court auctions, real estate agencies, financial leasing and/or other financing business, foreign exchange bureaux, facilitating cash or wire credit transfers, savings-plan agents, insurance and re-insurance agents. 89

Czech Republic

4.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION The legislation does not provide for information feedback on notifications, made under the law.

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED The transformation, transfer, acquisition, possession, concealment or use of assets with the knowledge that those assets originate from criminal activity. There is reporting duty in case of the importation or exportation of more than approx. EUR 10,000 (in the form of valid Czech or other currency, banknotes and coins or travellers cheques or money orders exchangeable for cash).

6.

CONSERVATION OF RECORDS AND DOCUMENTS Duration Identification data should be kept for 10 years; this period runs from the first day of the year following the year when the last part of the transaction was carried out. Not only identification data but also transaction data and documentation must be recorded and kept for 10 years.

7.

PERSONS RESPONSIBLE FOR REPORTING Financial institutions employing three and more persons, shall, as a part of the internal procedures, appoint a contact person to be in charge of interaction and information exchange with the Ministry and of a compliance with the reporting requirement unless this is performed directly by the statutory body of the given financial institution. The financial institution shall, without delay, inform the Ministry about such appointment.

8.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION The law makes the appropriate modifications concerning banking secrecy in order to protect financial institutions and their staff against criminal or civil liability, which might otherwise arise from the performance of their duties under money laundering prevention legislation. Employees of notifying institutions are required to keep secret the fact that a report has been made and the steps taken by the Ministry. This obligation does not cease on termination of their employment contract with a financial institution.

9.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) Should there be an imminent danger that by executing the transaction, securing of the proceeds would be frustrated or substantially impended, the financial institution may execute the client’s transaction recognised as suspicious no earlier than 24 hors after receipt of the report on the transaction by the Ministry. The report on suspicious transaction shall include a notification by the financial institution to the Ministry on the suspended client’s transaction. 90

Czech Republic

10.

IDENTIFICATION A financial institution is obliged systematically to identify clients in the case of a suspicious transaction, for the opening of a current or a deposit account, or depositing of money to a pass book, or purchasing of a deposit certificate, or negotiating any other savings instrument; for entering into agreement to open a safety box or to store valuables in the bank's own safe; and in the case of transaction otherwise subjected to the identification requirement should the client be represented by a proxy holding a power of attorney. a)

Identification threshold amount The financial institution shall identify the parties upon performing a transaction over approx. EUR 16,300.

b)

Means of identification Natural persons Banks are currently required to verify a customer’s identity on the basis of an official or other reliable identifying document. Legal persons Banks are currently required to verify the identity of legal persons on the basis of an official or other reliable identifying document, which shows the commercial name, domicile and the business identification number. The identity of a natural person who is acting on behalf of the legal person in a given transaction must also be checked. Natural or legal persons acting for the account of a third person Banks are currently required to take reasonable measures to obtain information about the true identity of the person on whose behalf an account is opened or a transaction is conducted if there are any doubts as to whether the client is acting on his own behalf.

c)

Cases in which the identification requirement does not apply Opening of anonymous accounts in the form of bearer savings books is not permitted from 1 January 2001 (by provision of an amendment to the Civil Code, Act N°367/2000 Coll.). In addition, an amendment to the Law on Banks (Act N°126/2002 Coll. effective from 1 May 2002) determined expiration date of the bearer savings books on 31 December 2002 and extinctive prescription for collecting the savings on these books on ten years, starting from expiration date.

91

Czech Republic

ESTONIA

1.

2.


The law on Credit Institutions came into effect on 1 January 1995. Chapter 7 of the law deals with the prevention of money laundering through credit institutions.

-

Section 148.8 (“The breach of regulations relating to the hindering of money laundering”), which sets out the liability of staff and employees of credit institutions in the event of non-compliance with the regulations on the prevention of money laundering, was added to the Criminal Code, as was enforcement of the Law on Credit Institutions.

-

It should be noted, however, that money laundering is not in itself a punishable offence. It is only punishable to the extent that it is an indication of other criminal activities.

-

Decree 13 of 3 May 1996 established “the diligence and procedural requirements of the credit institutions with regard to enforcement of Chapter 7 of the law on Credit Institutions”.

-

Money Laundering Prevention Act was adopted on 25 November 1998 and entered into force on 1 July 1999.

-

Amendments to the above mentioned Act 2000.

CENTRAL AUTHORITY FOR REPORTING The Money Laundering Information Bureau (MLIB), a structural unit of the Police Board within the governing area of the Ministry of Internal Affairs.

3.

BUSINESSES COVERED BY THE LEGISLATION The Criminal Code has general application. The Prevention of Money Laundering Act covers:

credit institutions (Estonian) and any branch of a foreign credit institution in the Estonian Commercial Register; financial institutions (Estonian) and any branch of a foreign credit institution in the Estonian Commercial Register including: - insurance companies, insurance agents, insurance brokers; - investment funds; - professional securities market participants. real estate companies and agents; organisers of gambling and lotteries; any operator who concludes a non-cash transaction for more than approx. EUR 13,000 or a cash transaction for more than approx. EUR 6,400 . 92

Estonia

4.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION Regular feedback.

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED The legislation covers all crimes, including fiscal offences.

6.

7.


Duration 5 years from the time the contractual relationship with the client is terminated.

b)

Means of conservation Any reliable manner.

PERSONS RESPONSIBLE FOR REPORTING The manager of the credit or financial institution must appoint a person to serve as the MLIB liaison person.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED The information may be delivered only to preliminary investigation institutions, the prosecutor’s office and to the court in connection with court proceedings where this is important for the prevention, detection, detention or investigation of money laundering or related crimes. The MLIB may notify the supervisory authority of the credit or financial institution in case of suspicions of money laundering.

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION Credit and financial institutions and other parties subject to the Money Laundering Prevention Act, their employees and persons who have acted on their behalf are not liable for any loss suffered by the client as a result of their not executing the transaction or not executing the transaction in time following notification made to the MLIB of suspected money laundering. No manager, employee or other person may be accused of a breach of the obligation of confidentiality, either under law or contractually, on the basis of data disclosed to the MLIB.

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) -

When a credit or financial institution or any other operator concluding a transaction detects a situation which suggests money laundering, it must immediately notify such to the MLIB. The notice may be given orally, in writing or electronically. Where the notice has been given orally, it must be confirmed in writing no later than the next working day.

93

Estonia

-

-

-

11.

Any transaction which has been notified to the MLIB may be completed when the MLIB has given its written authorisation or when two working days have elapsed since notification was made. When the postponement of a transaction may lead to a substantial loss being incurred, the transaction may be concluded, but must be notified immediately afterwards in writing to the MLIB. The MLIB is entitled to suspend the transaction or impose requirements or restrictions on operations over the account for two working days.

IDENTIFICATION Persons who fail to fulfil the obligation to identify a customer are liable to penal sanctions. a)

Identification threshold amount Customers must always be identified when the non-cash transaction exceeds approx. EUR 13,000 or when cash transaction exceeds approx. EUR 6,400. Any person who concludes a transaction within smaller limits where the transaction is apparently related to another transaction so that the amount of such transactions exceeds the limit must also be identified. A credit or financial institution must identify any person acting for the account of a third person, in connection with the opening of a bank account. Identification is always required in the event of any suspicions.

b)

Means of identification Valid identification documents are: Natural persons Estonian passport; Diplomatic passport; Seaman’s service passport; Defence forces service certificate; Estonian driver’s licence; Foreign passport or an alien’s passport containing, if applicable, a valid visa or residence permit. Legal persons Estonian legal person – a copy of its registry card. A foreign legal person - which has not been entered in the (Estonian) commercial register must present an extract from the appropriate register of the foreign register or a notarised copy of the certificate of registration, which must contain: the business name, type of business activity, place of establishment and address of the undertaking; registration number; names, places of residence and personal identification codes of the members of the management body. Agents of a foreign legal person An agent of a foreign legal person which is not registered in Estonia must present a notarised authorisation for the use of the account. Where data or documentation are not available, the personal identity must be established on the basis of other notarised documents, and the credit or financial institution can only carry out the transaction when the identity of the counter-party has been established beyond doubt.

c)

Cases in which the identification requirement does not apply The identification obligation is deemed fulfilled where the credit or financial institution has determined the identity of the person during previous transactions with the same person. 94

Estonia

The identification requirement does not apply to legal operations between Estonian credit institutions nor to the transportation of cash and securities. 12.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING The Estonian Banking Association has produced for banks guidelines on additional measures to combat money laundering and a CD based interactive training programme. The Estonian Banking Association has published a customer booklet in Estonian, Russian and English, available in all bank offices.

95

Estonia

HUNGARY

1.


Amendment to the Penal Code (Btk. 303), which creates a specific money laundering offence and came into force on 15 May 1994.

-

Act XXIV of 1994 on the prevention of money laundering came into force on 4 June 1994.

-

Act XCVI of 1995 on insurance institutions and insurance activities.

-

Act CXII of 1996 on credit institutions and financial institutions.

-

Act CXI of 1996 on the offering of securities, investment services and the stock exchange.

-

Resolution No. 24 of 1998 of the Constitutional Court.

-

Act CI of 2000 transposing the November 1990 Strasbourg Convention (on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime).

-

In October 2001, the Hungarian government presented its Bill T\5216 to Parliament, in order to introduce stricter regulations against moneylaundering practices, as well as enhancing its powers for implementing these restrictions. The law entered into force in December 2001. This amendment co-ordinates previous amendments designed to tighten laws to combat money-laundering practices and terrorism. It also gives the government powers to regulate and prohibit transactions with certain countries, their citizens, and their corresponding economic, commercial and financial organisations.

-

Government Decree No 299 of 2001, which regulates the details of the amended anti-money laundering Act, such as the rules concerning the acceptance and copying of customer documents, renewed identification procedures for owners of dormant accounts, reporting channels, communication between the FIU and the reporting institution during the period when the assets are frozen .

-

A new Government Decree clarifies the position of tax advisors and tax experts in the context of anti-money laundering responsibilities.

-

Decision No 2298 of 2001 which contains a full anti-money laundering package to be implemented by different authorities.

-

Government Decision No 1003 of 2002 establishing the post of the Government Commissioner responsible for anti-money laundering coordination between the above authorities and for the development of antimoney laundering projects.

96

Hungary

2.

-

Government Decree No 232 of 2001 on Money Transfer, Money Transfer Services and Electronic Means of Payment. This reiterates that all the requirements of the anti-money laundering regulations must be met when opening a bank account and requires records concerning the opening of a bank account and copies of the documents presented to be kept for at least ten years after the closure of the account. It also lists the documents required in different situations and sets out the compulsory elements of internal regulations for controlling powers of attorney and signing powers. It requires the HFSA (the Hungarian Financial Supervisory Authority) and the National Bank of Hungary to approve these internal regulations and also stipulates that the regulations governing domestic bank transfers must also be applied to international transactions.

-

Government Decree No 56 of 2002 contains the lists of terrorist persons and organisations drawn up by the UN Security Council and other relevant international bodies. According to the AML Act, the Government has exceptional powers to freeze terrorist assets and to prohibit the provision of any financial service to persons or organizations considered as terrorists.

CENTRAL AUTHORITY FOR REPORTING The Hungarian Financial Investigation Unit (FIU).

3.

BUSINESSES COVERED BY THE LEGISLATION -

Financial services, i.e.:

banks and financial institutions; brokers; insurance companies and insurance brokers; securities brokers and traders; casinos; investment funds; mutual funds; mutual insurance funds.

-

Managers and employees of financial services institutions.

-

Other Businesses

The Act of 1994, which prohibits money laundering, further expanded its jurisdiction over individuals and/or their companies that are active in real estate, the sale of precious metals and fine jewellery, the auctioning of commissioned goods, charitable works, as well as lawyers, notaries public and accountants. Lawyers and accountants are not obliged to disclose to law enforcement authorities’ information regarding money-laundering practices discovered during the course of their work as legal representatives and tax-advisers whose job is to advise, represent and defend their clients. By accepting this law enforcement amendment, the Council and Parliament’s co-ordinating committee accepted and adopted the 1991 European Union Directive on the Prevention of Money-Laundering.

97

Hungary

In addition to lowering the compulsory identification limit to EUR 1,200, the regulation and supervision of Bureaux de Change has been substantially changed. The bulk of the new regime has to be implemented by the end of June 2002. Under the new regime, the licensing and supervision of Bureaux de Change was transferred from the National Bank of Hungary (NBH) to the HFSA, but – as a transitional measure – the NBH will continue supervision until 31 December 2002. Independent Bureaux de Change may not continue their activities after 30 June 2002, as the amendment of the Act No CXII of 1996 on Credit Institutions and Financial Enterprises restricts the provision of this service to credit institutions and their agents. Bureaux de Change wishing to continue their operations are obliged by law to become agents of credit institutions. This makes them subject in effect to a form of dual control, since financial service providers have full responsibility for their agents. Negotiations between the Bureaux de Change and the credit institutions are under way and it is now evident that some enterprises will go out of business. However the majority will most probably find partners in banks and other credit institution by the deadline. 4.


5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED

The amendment to the Penal Code (Btk 330) covers all offences relating to trafficking in people, drug trafficking, etc. Hungary has followed the same approach in predicate offence matters as most OECD countries. At first, predicate offences were drug dealing and the most serious crimes. As of 1 April 2000 predicate offences are all crimes punishable under the Penal Code with a prison sentence. The amendment to the Penal Code tightens the laws regulating money laundering used for terrorism: it regards the person who provides the financial means to carry out terrorist activities as a terrorist. Furthermore, a person is committing a basic money-laundering offence, if that person knowingly provides false information to financial institutions and customs officials regarding the origin and nature of funds, in order to evade the moneylaundering laws. 6.

CONSERVATION OF RECORDS AND DOCUMENTS Duration Financial services companies and customs authorities are required by these amendments to keep records obtained, as part of their efforts to combat money laundering, for ten years. The copying and archiving of documents used for checking the identity of the customer and/or of the beneficial owner is not only recommended, but has now become compulsory. The period for which records concerning accounts and other business relationships must be kept starts to run from the closure of the account.

98

Hungary

7.

PERSONS RESPONSIBLE FOR REPORTING There is a designated correspondent in each financial institution.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED The information cannot be used for purposes other than investigations into money laundering.

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION Knowledge or suspicions of money laundering must be reported. Any failure to comply with this obligation by bank staff can be sanctioned by up to two years imprisonment. In the case of credit institutions and financial institutions since 1 January 2001, and in the case of other financial institutions since 1 January 2002, if it is found that money laundering was, or could have been, committed in contravention of the due diligence rules at a financial service provider under the supervision of the HFSA, then the institution, its managers and employees can be fined by the HFSA for not fulfilling their duties regarding the anti-money laundering regulations. There are legal provisions to protect banks and their staff from criminal or civil liability for breach of any restriction, imposed by law or contractually, on the disclosure of information, if they report suspicious transactions to the authorities.

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) As a new measure in the law, the financial service provider may provisionally suspend a suspicious transaction for 24 hours. The law emphasises the exceptional nature of this suspension and – as a customer protection measure – requires the immediate execution of the transaction if no police investigation has been initiated within 24 hours. In the event that a transaction is suspended, it is also an offence to tip-off the party or parties involved.

11.

IDENTIFICATION a)

Identification threshold amount The EUR 8,000 compulsory identification threshold in the case of cash transactions is an additional security measure to the KYC rule, and essentially targets noncustomers who ask for a one-off cash transaction, i.e. the purchase of a bond. However, the identification requirement above the EUR 8,000 threshold remains mandatory for existing customers as well, since all customers have to produce their ID cards and the identification procedure has to be renewed, whenever a cash transaction, or several linked transactions above this level take place. The renewed identification of customers is also mandatory when cash transactions reach the EUR 8,000 threshold and such identification data - together with all other data on the transaction - have to be kept for ten years, but may not be destroyed 99

Hungary

earlier than five years after the closure of the account or other business relationship with the customer. Customer identification - irrespective of the amount involved in the transaction - is also mandatory, whenever a transaction seems to be suspicious. Reliance on identification checks of customers by intermediaries – contrary to certain other countries – is not permitted under Hungarian financial law. b)

12.

Means of identification Natural persons Official certificate of domicile, identification card or passport; of foreign natural persons: passport or identification card, provided that the latter includes authorisation to reside in Hungary, or residence permit issued by the police authority of the Republic of Hungary. Legal entities or organisations without legal personality If they have not been previously identified, in addition to the documents specified in point a) concerning the person(s) authorised to act on their behalf or commissioned by them, documents that certify that: the domestic economic organisation has been registered with the Court of Registration, or it has submitted an application for registration; the individual entrepreneur has a tax identification number, or he has submitted an application for registration by the tax authority, other domestic legal entities whose establishment is subject to registration by a judicial or administrative authority have been properly registered, or they have submitted an application for registration, foreign legal entities or organisations without legal personality have been incorporated or registered in accordance with the law of the country in which they are established. The articles of association (articles of incorporation) of the legal entity or the organisation without legal personality prior to the submission of their application for registration with the Court of Registration, or other judicial or administrative authority.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING The HFSA has prepared an awareness-raising campaign, targeting the media, consumers and financial service providers. The HFSA is collecting and distributing information on events and the development of anti-money laundering actions for these target groups in order to make transparent the objectives, methods and actual state of the transformation process, including the successes and the problems to be resolved. As previously noted, the media have expressed an unprecedented interest in anti-money laundering policies and measures. This has opened up an important communication channel between regulators and the general public. The topics covered include anti-money laundering regulations and their implementation, the reaction of the service providers, and customer experiences. The media report daily even on small new developments and give extensive coverage to press conferences and press briefings. Discussions, interviews, commentaries on money laundering are often broadcast on TV and radio channels.

100

Hungary

As a result, public awareness has been enhanced about the threat of money laundering and there is greater and more widespread acceptance of the need for action in this area. This extends to actions by both the government and by businesses and ordinary citizens themselves. Spontaneous press coverage has thus brought home to them the fact that they are in the "front line". In a specific TV and radio advertising campaign, via their homepages and other means Hungarian financial institutions are informing customers with clearly worded statements about the new regulations and their new duties and providing practical advice on the steps to be taken especially about the transformation process of anonymous deposits. The campaign is co-ordinated by the Bankers’ Association. Training is one of the compulsory elements of the anti-money laundering regulation for financial service providers. The HFSA and other supervisory and regulatory authorities closely monitor the implementation of training requirements in internal regulations, the allocation of responsibilities and the practical implementation of regulations. A particular problem in many jurisdictions is the relatively low per capita budgets allocated by institutions for anti-money laundering training and the often indifferent quality of commercial training packages. Accordingly the HFSA will be monitoring closely the quality of training for financial services and has commissioned basic standard training material for the new professions. Consultations are regularly organised both at the request of service providers and on the initiative of the regulators. The participation of professional associations in the formulation of standard rules and recommendations is just one example; the participation of the Bar Association in the preparation of the specific Lawyers’ and Public Notaries anti-money laundering Act is another. A representative of the Bankers’ Association is a permanent member of the Inter-Ministerial anti-money laundering Commission. A quasi-permanent contact has been established between the FSA and HFSA for the provision of advisory services. In March 2002 the HFSA organised a Conference on Money Laundering with the participation of eminent international academics. All professions covered by the anti-money laundering legislation were represented in the audience which filled the auditorium of the HFSA. Following the official example, commercial companies are also planning conferences. Such events will support an orderly implementation process.

101

Hungary

LATVIA

1.

MONEY LAUNDERING LEGISLATION Money laundering in Latvia is regulated by more than 25 various legal acts, including:

2.

-

The Law on the Prevention of Laundering of Proceeds Derived from Criminal Activity, enacted on 18 December 1997, entered into force on 1 June 1998;

-

Money laundering has been sanctioned under the Penal Code since 30 April 1998;

-

The Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime entered into force in the Republic of Latvia on 1 April 1999;

-

The Cabinet of Ministers Regulation No. 127 on the List of Indicators Pertaining to Unusual Transactions and the Reporting Procedure, adopted on 20 March 2001. This is the third subsequent regulation of this kind since 1998.

-

The Law on Financial and Capital market Commission is effective as of July 1, 2001. A commission will conduct supervision of credit institutions, insurance and securities market companies. It is a new subject for cooperation with the FIU thus expanding the scope of supervisory bodies.

CENTRAL AUTHORITY FOR REPORTING The Latvian FIU – the Office for the Prevention of Laundering of Proceeds Derived from Criminal Activity (Control Service for short) was established on 1 June 1998. It is a state body which operates under the auspices of the Prosecutor’s Office of Latvia Republic. The FIU receives disclosures about: Suspicious transactions; Unusual transactions according to the indicators set out in the abovementioned Government Regulation No. 127.

3.

BUSINESSES COVERED BY THE LEGISLATION The Law on the Prevention of Laundering of Proceeds derived from Criminal Activity covers the natural and legal persons whose professional activity includes conducting, counselling and certifying financial transactions referred to under Article 1 of the Law. -

Financial transactions (hereinafter also referred to as transactions):

receiving deposits and other repayable funds; lending; money transfer services;

102

Latvia

-

issuing and servicing payment instruments other than cash; trading money market instruments (checks, bills, certificates of deposit) foreign exchange, financial contracts and securities for own and customers’ accounts; trust operations; safekeeping and administration of securities, including administration of collective investment funds and pension funds; issuing guarantees and other written promises, whereby a party assumes responsibility to the creditor for a debt of a third party; safekeeping of valuables; issuing shares and providing related services; advising customers on financial services; money market intermediation services; providing information about the settlement of customer liabilities; insurance; lottery and gambling.

Other transactions similar by nature to the above. At the moment the FIU maintains contacts with more than 400 financial institutions, including banks, insurance agencies, securities market participants, gambling companies, post offices, notaries, bureaux de change, etc.

4.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION There is no provision fro feedback.

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED Proceeds derived from criminal activity or financial resources and other property derived from the following types of criminal offences (15 groups of offences including 41 crimes):

Illegal distribution of poisonous, narcotic or psychoactive substances; Banditry (gang related criminal activity); Smuggling; Illegal transportation of persons across the state border; Manufacturing or distribution of forged money or securities, unlawful activities with monetary documents, illegal issuance of securities; Seizing of hostages, kidnapping, child swapping; Infringement of copyright and related rights; Large-scale property-related organised crime ; Unauthorised (without permit) or unregistered business activities, dishonest acquisition of assets with credits or other loans, contributing to the insolvency and bankruptcy of an enterprise (business venture); Bribery through intermediaries, acceptance of bribes, acquisition of undue material advantage; Breach of regulations on importation, manufacturing or distribution of pornographic material, procuring; Breach of safety measures concerning radioactive and chemical substances;

103

Latvia

6.

7.

Illegal manufacturing, acquisition, storage and distribution of weapons, ammunition and explosives, illegal manufacture, acquisition, transportation and distribution of special devices; Illegal traffic in internal organs and tissues from a live or dead human body; Tax evasion and avoidance of settlement of payments considered as taxes.


Duration A credit or financial institution must keep copies of identification certificates for at least five years after the relationship with the customer has been terminated.

b)

Means of conservation Copies of documents identifying the customer.

PERSONS RESPONSIBLE FOR REPORTING Disclosures of unusual or suspicious transactions are made by credit institutions, financial institutions and in case of need by their supervisory and control authorities. The Law stipulates that credit and financial institutions shall have an obligation to designate a unit or a person (persons) directly responsible for the credit or financial institution’s compliance with the requirements of this Law, and for contact with the Control Service. The name of the unit or person (persons) must be communicated to the FIU and to the institution’s supervisory and control authorities. According to the Administrative Violations Code (Articles 165-4 and 165-5), a person may be held liable for any failure to report unusual or suspicious transactions, also for violations of customer identification requirements.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED The Law stipulates that the FIU shall be entitled to use information at its disposal only for purposes and according to the procedure established by this Law – meaning – for the prevention, detection, preliminary investigation or trial in respect of the laundering of proceeds derived from criminal activity or any other related criminal activity. The purpose of this Law is to prevent the Latvian financial system from being used for the laundering of proceeds derived from criminal activity.

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION Bank staff who have reported suspected money laundering to the Control Service have no liability in the pre-trial investigation. A report made to the Control Service by a credit or financial institution (or official/employee thereof) in accordance with the requirements of this Law, does not place the reporting institution or person under any legal or material liability, irrespective of whether the money laundering is proved during the pre-trial investigation or in court, and irrespective of the terms of the contract signed between the credit or financial institution and the customer.

104

Latvia

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) Latvian legislation provides for two types of reporting:

Mandatory about unusual transactions according to the indicators set out in

the Government Regulation No. 127 on the List of Indicators pertaining to Unusual Transactions and the Reporting Procedure; and Alternative about suspicious transactions, where the indicators do not match those set out in Regulation No. 127 but give grounds for suspicion of money laundering for other reasons.

The Law makes it compulsory to report suspicious transactions. Section IV of the Law regulates the conditions in which credit institutions should not execute a transaction which may be related to money laundering. Credit and financial institutions must refrain from carrying out any transaction that they suspect to involve money laundering or attempted money laundering. Where a credit or financial institution cannot refrain from executing a suspicious transaction or where any such action could serve as a source of information for persons involved in money laundering and help them to evade the legal consequences of such activity, the institution is entitled to execute the said transaction; it must however report it afterwards to the Control Service in accordance with the procedure set out in Article 12 hereof. Where a credit or financial institution has not executed a transaction pursuant to Article 17 hereof, the institution (or official/employee thereof) does not have any legal or material liability, irrespective of the consequences arising from the use of the disclosed information. 11.

IDENTIFICATION a)

Identification threshold amount a credit or financial institution must also identify a customer where the volume of a single transaction or several obviously linked transactions totals or exceeds approx. EUR 16,000 and the customer has not been identified when opening the account or accepting his/her financial assets for safe custody; where the volume of the transaction is not known at the time of its execution, the customer must be identified as soon as the volume is known and it totals or exceeds EUR 16,000; irrespective of the volume of the transaction, a credit or financial institution must identify the customer whenever the transaction is characterised by at least one of the unusual transaction indicators or there are other suspicious circumstances indicating that the transaction may be related to money laundering or attempted money laundering. where a credit or financial institution is aware or suspects that transactions are conducted on behalf of a third party, it must take reasonable measures to ascertain that person’s identification.

b)

Means of identification No credit or financial institution is entitled to open an account or accept financial assets for safe custody without obtaining the following customer information: 105

Latvia

-

-

c)

For a resident: if a legal person: the name, domicile, registration number and place of registration; if a natural person: the name, surname, identity number. For a non-resident: if a legal person: the name, domicile, registration number and place of registration; if a natural person: the name, surname, date of issue, number and the issuer of the identification certificate.

Cases in which the identification requirement does not apply The identification requirements stipulated in the Law do not apply to the following cases: - Financial transactions in which the customer of a credit or financial institution is one of the following: a credit or financial institution that has been granted a license in the Republic of Latvia; a credit or financial institution that has been granted a license in a country included in the list of countries specified by the Control Service. The list includes countries where laws on money laundering pursuant to the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychoactive Substances or to EU Council Directive 91/308/EEC on Prevention of the Use of the Financial System for the Purpose of Money Laundering are in effect. - A registered member of a stock exchange that is a member of Federation International des Bourses de Valeurs, and is established in a EU Member State or another country specified by the Control Service; - Insurance companies (insurers) where the total annual premium paid by the customer does not exceed approx. EUR 800 or a single premium does not exceed approx. EUR 2,400 irrespective of the amount of the insurance.

12.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING

11 July 2001 the amendments to the Law on the Prevention of Laundering of Proceeds Derived from Criminal Activity entered into force extending the authority of the FIU in several areas.

The reporting threshold has been decreased from approx. EUR 80,000 to approx. EUR 64,000. Other similar measures have been taken.

At the beginning of 2001 the Parliament of Latvia and the Government requested the FIU to provide a report on the work accomplished and the situation in the area of combating money laundering.

Over 1998-2001 the FIU has issued 67 publications on this issue as well as organised 60 training courses for the staff of credit/financial institutions and law enforcement officers.

106

Latvia

LITHUANIA

1.

2.


The Lithuanian Law on the prevention of money laundering implementing the EC Directive was enacted on 19 June 1997.

-

The Penal Code was amended on 26 June 1997 to include money laundering.

-

The Government and the Bank of Lithuania approved on 11 December 1997: the criteria for determining whether a monetary operation is suspicious; the regulations governing the register of monetary operations carried out by the customer.

-

The Government passed, on 3 December 1997, a Resolution on the implementation of the law on the prevention of money laundering, which sets out the procedure for identifying credit institution customers.

CENTRAL AUTHORITY FOR REPORTING The Tax Police.

3.

BUSINESSES COVERED BY THE LEGISLATION The law covers the financial sector, i.e.: Credit institutions (banks, credit unions, other institutions operating under a licence issued by the Bank of Lithuania); Financial institutions (insurance companies, insurance brokers, investment funds, investment fund managers and depositories, brokerage companies, investment managers and consultants); Post offices; Pawnbrokers; Casinos.

4.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION No feedback.

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED The Penal Code covers any punishable offence.

107

Lithuania

6.

7.


Duration Documents must be kept ten years after termination of the customer relationship.

b)

Means of conservation Credit institutions must accumulate and store the data on computer discs.

PERSONS RESPONSIBLE FOR REPORTING Credit institutions are recommended to establish a separate department to implement money laundering prevention measures and to liaise with the tax police. When they detect indications of money laundering, employees of credit institutions must notify such to the said department which is responsible for registering the information about the customer and the operation, verifying suspicions about operations, other data and communicating the relevant information to the tax police in accordance with the jointly agreed procedure.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED Information, with the aim of prevention of money laundering, may be communicated, in the cases established by law, to the relevant authorities and other state institutions.

9.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) If there is suspicion that operations may be related to money laundering, the institution must identify the customer and communicate, without delay, the information about the operation to the tax police, irrespective of the amount of the operation. The operation is prohibited if the customer fails to provide data confirming his identity, or if not all the data has been provided or if the data is false.

10.

IDENTIFICATION a)

Identification threshold amount Credit institutions must identify the customer in the following instances: where a single operation effected by the customer involves a sum in excess of EUR 11,700 or its equivalent in foreign currency; where several interrelated operations effected by the customer involve a sum in excess of EUR 11,700 or its equivalent in foreign currency; where the customer exchanges one currency into another, and the sum exchanged exceeds EUR 4,700 or its equivalent in foreign currency. Identification is also required whenever there are suspicions of money laundering.

b)

Means of identification In cases laid down by law, employees of credit institutions must request the customer to provide documents confirming his identity; those documents should contain the following information:

108

Lithuania

- Natural persons First name, family name, personal identification number, number and period of validity of a Republic of Lithuania permanent residence permit (in the case of stateless persons), name of the country, from which a foreigner arrived (in the case of foreign nationals). - Legal persons and enterprises without the status of a legal person: Name, address, code, number and issue date of registration certificate. When a transaction is entered into through an agent, credit institution employees staff must verify the information required, in respect of both the person represented and his agent. c)

11.

Cases in which the identification requirement does not apply if the customer of a credit or financial institution is another credit or financial institution; if payments and settlements are carried out with public authorities and municipal institutions, other budgetary institutions, the Bank of Lithuania, state and municipal funds, embassies or consular institutions; if customers activities involve continuous and regular financial operations, and over a period of at least one-year his actual quarterly income or payments for the last two quarters total more than EUR 235,000.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING Credit institutions are recommended:

to familiarise their staff with legislation regulating the prevention of money laundering and the liability for non-compliance with the measures for the prevention of money laundering to organise staff training to ensure the implementation of measures for the prevention of money laundering in credit institutions.

109

Lithuania

MALTA

1.


The Prevention of Money Laundering Act of 1994.

-

The Prevention of Money Laundering Regulations of 1994.

-

The Dangerous Drugs Ordinance, Cap.101 (as amended).

-

Gaming Act Regulations 1998.

In addition, Guidance Notes for Credit and Financial Institutions in relation to money laundering were drawn up by the Central Bank of Malta- in conjunction with the Malta Commercial Banks’ Association, the Malta Financial Services Centre and the Maltese Police and issued in August 1996 under the Banking Act 1994. Similar guidance notes have been issued for investment services providers, insurance business and stockbrokers. These have now been reviewed and updated and are being consolidated into one set. 2.

CENTRAL AUTHORITY FOR REPORTING The Regulations stipulate that knowledge or suspicion of money laundering should be reported to a police officer not below the rank of Inspector. In this respect, the Maltese Police has established a Unit within the Economic Crimes Unit that receives, analysis and investigates reports of suspicious transactions. However, legislative amendments are expected to be enacted soon providing for the setting up of a Financial Intelligence Unit which will be the single independent authority to receive and analyse reports and disseminate information accordingly. This has already been set up, and is expected to become fully operational in the immediate future.

3.

BUSINESSES COVERED BY THE LEGISLATION The Act covers all persons. The Regulations however cover all persons and institutions undertaking banking, investment or insurance-related business, as well as foreign exchange bureaux and stockbrokers. The Gaming Act Regulations 1998 have extended the application of the Regulations to casinos licensed under the Gaming Act, 1998.

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Malta

4.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION Although the Guidance Notes do not include a specific mechanism determining feedback procedures, they stress the necessity for feedback between the reporting institutions and the enforcement authority. Moreover, in allowing discretion to all parties concerned, the Guidance Notes provide enough scope and flexibility for the establishment of feedback procedures, as deemed necessary by the parties involved. The feedback procedures will be further strengthened once the Financial Intelligence Analysis Unit becomes fully operational.

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED The legislation extends to most serious crime. Fiscal offences are not included; reports on suspicions cannot be passed to the tax authorities.

6.

7.


Duration Identification documents must be kept for at least five years after the relationship with the customer has ended. Transaction records must be kept for at least five years after the completion of the transaction.

b)

Means of conservation Unless otherwise provided for in other legislation, documents may be kept in formats other than original documents, such as electronic or other forms.

PERSONS RESPONSIBLE FOR REPORTING Each institution must appoint a Reporting Officer to receive reports of suspicious operations. The Regulations require the Reporting Officer to consider, in the light of all available information, any reports made to him, allowing him reasonable access to any information held by the bank which may assist him for the purpose of considering the report. If appropriate, he will recommend to the bank that the report is disclosed to the authorities.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED The information can only be used in connection with investigations into money laundering activities.

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION Knowledge or suspicion of money laundering transactions must be reported. Any bona fide communication or disclosure made in accordance with the Regulations will not be treated as a breach of the duty of professional secrecy.

111

Malta

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) In refusing to handle transactions, banks must avoid tipping-off the customer that a report on a suspicious money laundering transactions is going to be made. Banks are expected to investigate internally any suspicious operation in order to confirm or disprove any suspicion. If the suspicion is not disproved, it must be reported to the authorities.

11.

IDENTIFICATION Identification must be obtained: at the start of all business relationships; if a transaction exceeds the threshold amount; where money laundering is suspect, regardless of the amount involved. In the event that satisfactory identification is not obtained, the business in question can only proceed either in accordance with any instructions issued by the authorities or on condition that a report is immediately lodged with the authorities. a)

Identification threshold amount EUR 11,700.

b)

Means of identification The legislation provides general guidelines on what would constitute adequate evidence of identity. Natural persons The Regulations do not establish what specific documents are acceptable. The Guidance Notes have laid down that a national identity card, passport or other document bearing a photograph and other personal details are the accepted means of identification. Legal persons Identification is required for the body corporate, all directors and all other persons authorised to transact on behalf of the company. Moreover, any other person transacting on behalf of the company must be authorised in writing by the principal. Natural or legal persons acting for the account of a third person Reasonable measures must be taken to establish the identity of all persons concerned. Furthermore, where the person applying to do business for the account of a third person is a lawyer, notary, certified public accountant or auditor, or a nominee, an additional declaration is obtained from them. A directive issued by the regulatory bodies in 2001 prohibits banks, investment firms, stockbrokers or any other financial services undertaking that is subject to the Prevention of Money Laundering Regulations from undertaking any business where a nominee arrangement is in place unless there is disclosure of the ultimate beneficiary.

c)

Cases in which the identification requirement does not apply Identification is not required when the person transacting is either subject to the Regulations or is introduced by a party bound by the Regulations who gives an assurance that identification for the transacting person has been obtained.

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Malta

d)

12.

Identification at a distance Institutions offering any type of financial service at a distance are required to implement procedures to identify positively the customer and to confirm all details in accordance with procedures in place for resident customers. Similar supporting documentation should also be sought.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING Institutions have drawn up training programmes for their employees. In addition, staff is sent on training courses abroad. They also regularly attend and participate in international seminars and conferences. The Money Laundering Reporting Officers of the major banks together with the Malta Bankers’ Association and the Association of Licensed Foreign Exchange Dealers sit on the Prevention of Money Laundering Joint Steering Committee, which is currently chaired by the Central Bank of Malta. This Committee is expected to be reconstituted under the chairmanship of the Financial Intelligence Analysis Unit.

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Malta

POLAND

1.

2.


Penal Code (published in Official Gazette No.88/97 and No.128/97);

-

Banking law (Official Gazette No.89/97);

-

Resolution of the Banking Supervision Committee No 4/98 on procedures to be applied in the event of suspicions of illegal transactions or large cash payments (Official Gazette of the Central Bank No.18/98);

-

Public Trading in Securities Act (Official Gazette 118/97 and 141/97);

-

General Inspector of Financial Intelligence (GIFI) Act (Act on prevention of introduction into financial circulation of assets originating from illegal or undeclared sources - Official Gazette n° 116/2000).

CENTRAL AUTHORITY FOR REPORTING General Inspectorate of Financial Intelligence (GIFI) located at the Ministry of Finance. All transactions over EUR 10.000 and all suspicious transactions irrespective of their value have to be reported to GIFI. GIFI has a right to stop a transaction for 48 hours.

3.


4.

Penal Code has general application; Banking law and Resolution N° 4/98 cover credit institutions; Public Trading in Securities Act covers brokerage houses; GIFI Act covers inter alia: banks, brokerage houses, notaries, real estate agencies, casinos, Post Office, leasing companies, pension funds.


5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED Any form of serious crime, inter alia:

6.

forgery of currencies and securities; extortion; arms and nuclear materials trafficking; smuggling; armed robbery.

CONSERVATION OF RECORDS AND DOCUMENTS 114

Poland

7.

a)

Duration Identification records and documents must be kept for 5 years.

b)

Means of conservation Original paper and/or microfilm/electronic form.

PERSONS RESPONSIBLE FOR REPORTING Each credit institution is obliged to set up suitable money laundering prevention procedures and a person responsible for preparing and putting into operation such procedures must be designated by the bank’s management. All customer identification data and information on the bank’s money laundering prevention procedures must be disclosed to the authorised employees of the General Inspectorate of Banking Supervision and of the General Inspectorate of Financial Intelligence.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED The State Prosecutor, in the course of an investigation following notification of a suspicious transaction may inform the tax authorities. The tax authorities may then launch a separate investigation under the provisions of the Tax Evasion Act. GIFI is authorised to make the information accessible to: the Minister of Interior, the State Protection Bureau, the Customs Office, the Customs Superintendent, the Banking Supervision Commission, the Securities Commission, etc.

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION Any person reporting to the appropriate authority facts suggesting criminal offences cannot be held liable for any such report unless it has been made untruthfully with intent to mislead or there has been gross negligence.

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) It is left to the bank to decide whether or not to execute a transaction.

11.

IDENTIFICATION a)

Identification threshold amount Customers must always be identified when the transaction exceeds the equivalent of EUR 10,000.

b)

Means of identification Natural persons Identity card or passport.

-

Legal persons 115

Poland

-

Official articles of association and statutes, tax registration number, copy of company registration certificate. Natural or legal persons acting for the account of a third person After identification of the person who is physically undertaking the transaction, the proxy must disclose the identity of the persons on whose behalf the operation is being made.

c)

Cases in which the identification requirement does not apply None.

d)

Identification at a distance Banks always check, on the basis of ID Card or passport, the identity of a person wishing to open an e-banking account. Large transactions (generally over EUR 1,300) are executed only after multiple checks on the identity of the person concerned. Distance identification will be regulated by Electronic Signature Act, which is currently awaiting the President’s approval.

12.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING The Security Division of the Polish Bank Association organises seminars on the subject of money laundering and bank fraud. Internal staff training is provided by the banks.

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Poland

SLOVAK REPUBLIC

1.

2.

MONEY LAUNDERING LEGISLATION

-

The Banking Act No 278/1998 was adopted in its complete amended version in 1998. Besides the provisions of this Act, the following legislation also applies: a special law concerning money laundering prior to 1998, Act No 249/1994 on Combating the Legalisation of Revenues Derived from Serious, in particular Organised Crime, Decree No 181/1997 of the Ministry of the Interior SR on Suspicious Banking Operations.

-

A new law, concerning money laundering, was adopted in 2000. Act N°367/2000 on Protection against the Legalisation of Revenues Derived from Criminal Offences came into force on 1 January 2001, and fully substituted Act No 249/1994 as well as Decree No 181/1997.

-

A new amendment to the Act No 367/2000, which is valid from 1 September 2002, extended the range of businesses subject to the Act and specifies the conditions for postponing transactions.

-

Bank Act (adopted in 2001); banks are obliged to demand proof of the identity of customers for every transaction. A customer is obliged to comply with such a request from a bank for each transaction. Banks are obliged to refuse to execute transactions for customers on an anonymous basis. Banks are obliged to determine the ownership of the funds used by the customer for every transaction in excess of EUR 2,325. For the purposes of this provision, the ownership of the funds is determined by a binding written statement from the customer in which the latter must declare whether these funds are his property and whether he is carrying out the transaction for his own account. If the funds belong to another person or if the transaction is carried out for the account of another person, the customer’s declaration must specify the name, surname, birth certificate number or date of birth, and permanent residence of the natural person or the name, registered office, and identification number, if that person is not the beneficial owner, of the legal person, who is the owner of the funds and for whose account the transaction is to be executed. In this case, the customer must also provide the bank with a written authorisation from the natural person or legal person concerned to use his funds for the said transaction and to execute the transaction for his account. If the customer fails to meet the requirements laid down in this paragraph, the bank must refuse to execute the transaction.

CENTRAL AUTHORITY FOR REPORTING Financial Police of the Presidium of Police Corps.

3.

BUSINESSES COVERED BY THE LEGISLATION Notification obligation for: 117

Slovak Republic

4.

Export-Import Bank of the Slovak Republic, banks and branches of foreign banks; asset management and investment companies and custodians, stock market operators, stockbrokers, Stock Exchange, Securities Centre, Commodity Bourse, insurance companies, branches of foreign insurance companies and re-insurance companies; post offices, auditors, tax advisors; legal or natural persons who are eligible to hold auctions, other than auctions of property seized by the State, and to provide financial leasing services; operators of casinos, betting agencies, real estate agencies, exchange offices and pawnshops; legal persons running lotteries and similar games.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION There is no provision for feedback on the results of investigations arising from notifications.

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED The Act covers offences related to the use or any other treatment of revenues or other property originating from criminal activity or from participation in criminal activities or financing terrorism.

6.

CONSERVATION OF RECORDS AND DOCUMENTS Duration The Act imposes an obligation to keep data and documents concerning business transactions and information acquired for identification purposes for 5 years. This period runs from the termination of contractual relationships for identification data and from the execution of transaction for other documents and data.

7.

PERSONS RESPONSIBLE FOR REPORTING The persons responsible for reporting must elaborate and upgrade their reporting programmes to comply with legislation, which involves establishing indicators of unusual business transactions, detection methodology and procedures as well as organising staff training at least once a year.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED The Financial Police have to provide the information acquired as a result of notification to the tax collector’s office if the information indicates tax offences.

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION Bank staff is obliged to treat reports as confidential and this obligation continues even after they cease to be employed by the bank. The State is liable for damages, which may be claimed as the result of delays in the execution or the non-execution of business transactions. The Ministry of the Interior provides an indemnity against possible claims for damages.

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Slovak Republic

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) The bank must refrain from executing an unusual business operation until it has received a confirmation notice of the report on unusual business operation from the police. The report on unusual business operations must be filed without undue delay. Notification may be made in writing, orally, electronically, by telephone and confirmed in writing. The bank may suspend the execution of a suspicious transaction for 48 hours following receipt of the report by police. If the police advise the bank that the case has been passed to the prosecution authorities, the bank must postpone the transaction for a further 24 hours. The bank must decline an operation if it is an unusual business operation and there is evidence that it involves money-laundering or the financing of terrorism or if the customer refuses to provide proof of identity pursuant to the Act.

11.

IDENTIFICATION a)

Identification threshold amount

Banks must always identify customers in respect of transactions amounting to EUR 15,000. The Act obliges banks to report transaction exceeding EUR 15,000, either by way of a single transaction or in the form of several related transactions over a 12-month period. b)

Means of identification

-

Natural persons Customer’s name, date of birth, permanent address, number of identity card or passport in the case of foreigners as well as their nationality.

-

Legal persons Commercial name, domicile and business identification number. The natural person who is acting on behalf of the legal person must also be identified.

-

Natural or legal persons acting for the account of a third person In the case of a minor who does not have an identity card, the name, date of birth, permanent address, and number of identity card of the parent must be obtained.

119

Slovak Republic

SLOVENIA

1.

2.


The law on Money Laundering Prevention came into force on 7 July 1994 and the amending law on 6th November 1995 and decree on 23 May 1999.

-

The law on the Prevention of Money Laundering, which came into force on 25 October 2001, replaced the former legal regulations.

-

The Penal Code, 1994 and the amending law, 1999, in the chapter dealing with economic violations, establishes money laundering as a separate criminal offence punishable by imprisonment and the confiscation of money and property acquired through money laundering. The special methods and techniques which can be used in the investigation and detection of money laundering are also defined.

CENTRAL AUTHORITY FOR REPORTING The Office for Money Laundering Prevention of the Republic of Slovenia, under the auspices of the Ministry of Finance.

3.

BUSINESSES COVERED BY THE LEGISLATION The law on Money Laundering Prevention covers the following types of organisation: banks, savings banks and branches of foreign banks; savings and credit institutions; investment and pension funds, investment companies and companies for the management of investment funds; post offices; organisations executing payment transactions; insurance companies; stock exchanges, stock exchanges agencies and stock exchanges branches; exchange offices; pawnbrokers; gambling houses and other concessionaires for special lottery games. It also covers legal and private persons performing the following activities:

sale and purchase of receivables; factoring; management of the property of third persons; issuing and related business involving charge and credit cards; leasing; travel organisation; real estate dealers; safe-custody services ;

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Slovenia

dealing in precious metals and stones, and articles made from these materials; issuing guarantees and other warranties; credit agencies; offering loans and loan brokering services; insurance brokers. 4.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION There is a provision for feedback from the Office for Money Laundering when investigations into a case have been completed.

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED The law on Money Laundering Prevention covers the laundering of the proceeds from any form of criminal offence.

6.

7.


Duration Records concerning the identification of customers and operations must be kept for at least 10 years following the transaction in question or after the termination of the customer relationship.

b)

Means of conservation There is no special provision. The documents may be originals, photocopies, microfilm or other data media.

PERSONS RESPONSIBLE FOR REPORTING Organisations covered by the law on the Prevention of Money Laundering have to appoint an employee to report to the Office for Money Laundering Prevention once the reports have been channelled through an internal reporting procedure.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED The information may only be used in relation to the detection of money laundering and to combat specific criminal offences and those which are punishable by a prison sentence of five or more years.

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION A disclosure made in good faith is not treated as a breach of banking secrecy and/or customer confidentiality. Moreover, banks are not held liable for any loss caused to customers or to third persons as a result of notifying details of the transaction to the authorities or the transaction being temporarily postponed on the instructions of the Office for Money Laundering Prevention.

121

Slovenia

It should be noted that any failure to establish the identity of a customer or to report when required to do so, or to forward to the Office the required information and documentation, tipping off a third party that a report has been made, and any failure to keep the necessary records can be sanctioned by a fine. The organisation itself, its directors and managers are liable to be prosecuted. 10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) Banks should not execute suspicious transactions before notifying the Office for Money Laundering Prevention. The Office may order a temporary postponement of the transaction if it believes that there are reasonable grounds for suspecting money laundering. The temporary postponement of the transaction must be lifted no later than 72 hours after the order has been issued. If a bank is unable, due to the nature of the transaction, to notify the Office before the completion of the transaction, it must forward the data as soon as possible or immediately after it has grounds for suspecting that money laundering is involved.

11.

12.

IDENTIFICATION a)

Identification threshold amount Customers must be identified when they initiate operations which, either as a single transaction or as a series of linked transactions, amount in total to EUR 13,600 or when money laundering is suspected. All cash transactions exceeding EUR 22,700 must be notified.

b)

Means of identification Natural persons Identity card, passport or other official personal identification document. Legal persons Court register or a certified copy of an excerpt from an other public register which shows the company name and registered office, together with the powers of the persons acting on behalf of the company. Natural or legal persons acting for the account of a third person The identity of the third party must be established in addition to the identity of the natural or legal person initiating the transaction.

c)

Cases in which the identification requirement does not apply The identification requirement does not apply if the customer is a State body, an organisation with public authorisation or one of the organisations covered by the law on Money Laundering Prevention and if it has been specially designated by the Minister of Finance.

d)

Identification at a distance There is no provision for identification at a distance.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING Seminars have been organised by the Bank Association, and internal training is being proved within banks. 122

Slovenia

A Money Laundering Prevention Committee was established by the Bank Association with representatives from member banks and the Association. Guidance notes and a list of indicators for recognising suspicious transactions for the members have been prepared. Leaflets intended for bank customers have been drafted.

123

Slovenia

TURKEY

1.

MONEY LAUNDERING LEGISLATION The following regulations entered into force with the enactment of the law N° 4208:

2.

-

Regulation on the implementation of Law N° 4208;

-

Regulation on the operation procedures and principles of the Coordination Board for Combating Financial Crimes;

-

Regulation on duties and operations of Investigation Experts of Financial Crimes;

-

Regulation on procedures and principles of controlled delivery applications of the Ministry of Interior;

-

Decree on Customer Identification;

-

Decree on Suspicious Transactions.

CENTRAL AUTHORITY FOR REPORTING By the Law N° 4208 the Financial Crimes Investigation has been set up as attached directly to the Ministry of Finance to investigative and monitor money laundering offences through the Ministry of Finance inspectors, auditors, revenue comptrollers, sworn bank auditors, Treasury comptrollers and Capital Market Board experts.

3.

BUSINESSES COVERED BY THE LEGISLATION Public institutions and establishments, natural persons and corporate bodies are obliged to provide all documents and information to be requested by the Financial Crimes Investigation Board and the other authorities empowered under the Law and provide them with adequate support.

4.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION Information feedback to financial institutions (obligers) that have notified suspicious transactions is considered by the Coordination Board for Combating Financial Crimes.

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED

Offences against the Law N° 1918 on Prevention and Follow-up of Smuggling; Offences against the Law N° 6136 on firearms and knives;

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Turkey

Offences against the Law N° 2238 on Removal, Preservation and Transplantation of Organs and Tissues; Offences against the Law N° 2863 on Protection of Cultural and Natural Values; Production of arms and explosives; Felonies against the State (they also include a high proportion of terror crimes); Felonies against personal liberty; Certain tax offences; Kidnapping; Blackmail (extortion); Forgery on official and private documents; Counterfeiting and related crimes; Instigation and force to prostitution (White Slave Trade); Pillage; Fraud; Fraudulent bankruptcy.

Statutory limitation of investigating money laundering offences is ten years. Turkey has signed the Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime (Strasbourg Convention) on 27 September 2001. After ratification of this convention, the list of predicate offences will be revised. 6.

CONSERVATION OF RECORDS AND DOCUMENTS According to Article II/A of the Decree on Customer Identification, records must be retained for five years.

7.

PERSONS RESPONSIBLE FOR REPORTING The liable parties shall assign compliance officer at administrative level for purpose of performing their reporting obligation in accordance with provisions of money laundering legislation. The Ministry of Finance has been authorised to determine liable groups, who will assign compliance officer, beginning dates of implementation and qualifications, duties, powers and responsibilities of compliance officer.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED The information may be used either as intelligence or evidence. There is no legal obstacle to this information being used as evidence.

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION Natural persons and corporate bodies from whom information and documents are requested by the Financial Crimes Investigation Board and other money laundering investigate authorities, may not refrain from submitting information and documents by claiming the protection provided by privacy provisions in special law, provided that the provisions related to the right of defence are reserved.

125

Turkey

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) When a bank has made notification of a suspicious transaction, the authorities may take precautionary measures, at the latest within 24 hours. Alternatively, where this is not appropriate, controlled execution of the transaction may be authorised.

11.

IDENTIFICATION a) Identification threshold amount As a general principle for customer identification, amount of transaction should exceed EUR 1,800 or equivalent foreign exchange. However, the liable parties shall make identification regardless of monetary limit before the transactions related to insurance, financial leasing, deposit box services and opening deposit, profit and loss participation, current and repo account and the account alike are carried. b) Means of identification Natural persons ID cards, driving license or passport for Turkish citizens and for foreign nationals their passport or residence permit. Legal persons: For legal entities registered on the trade registry, a copy of the document certifying registration, a document justifying the person applying to the bank on behalf of the legal entity and a certified signature card; For foundations, a document certifying registration with the General Directorate of Foundations; For associations, a document justifying that they are registered with the association registry kept by the Security Directorates in provinces; For organisations that are not legal entities, a document authorising their management and showing the identity of the natural person carrying out the transaction. Copies of any of above documents can be verified by a notary public, with the information recorded on the back of the related transaction document. Natural or legal persons acting for the account of a third person If the transaction is realised on behalf of another real person, that person’s identity must also be checked. c) Cases in which the identification requirement does not apply Obligers are not required to make customer identification checks for transactions carried out for central and local public administrations, state economic enterprises and quasi public institutions established by law and transactions carried out between banks and special finance houses.

12.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING The Board for Investigating Financial Crimes organises training courses in public and financial institutions to ensure that the Law n° 4208 is applied more efficiently.

126

Turkey

NATIONAL MEASURES IN THIRD COUNTRIES

AUSTRALIA

1.

MONEY LAUNDERING LEGISLATION Financial Transaction Reports Act 1988. It establishes a comprehensive regime of reporting and identification. It also creates the offence of opening or operating a false name account and requires verification of identity in the opening of accounts.

2.

CENTRAL AUTHORITY FOR REPORTING AUSTRAC is the agency charged to oversee compliance with money laundering requirements and to monitor and identify money laundering related to serious crime and tax evasion. It is a common data repository for the principal law enforcement agencies in Australia.

3.

BUSINESSES COVERED BY THE LEGISLATION The legislation covers ‘financial dealers’, i.e.:

banks, building societies and credit unions (‘financial institutions’) and financial corporations generally; cash carriers; insurance companies and insurance intermediaries; securities dealers and futures brokers; managers and trustees of unit trusts; firms that deal in travellers cheques, money orders, etc; currency and bullion dealers; casinos and gambling houses, etc

Members of the public are required to report to the Australian Customs Services (ACS) cash transfers into and out of Australia of EUR 6,600 and above or foreign currency equivalent. 4.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION AUSTRAC does not provide formal feedback to cash dealers following their reporting of suspicious transaction reporting to the Agency. AUSTRAC provides this information to partner agencies that use this information for their own purposes. AUSTRAC provides general notification of action taken in conjunction with partner agencies in our quarterly newsletter. There is no identification of cash dealers who have assisted AUSTRAC and partner agencies in this or any other format.

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED The Australian law extends to tax evasion as well as money laundering from serious crime.

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Australia

6.

To this end, Australia monitors, by computerised means, international telegraphic transfers of funds to and from Australia (by banks and other financial institutions on behalf of other persons). CONSERVATION OF RECORDS AND DOCUMENTS a)

Duration The FTR Act 1988 requires that cash dealers who ‘make or obtain a record of any

information in the course of obtaining account information or signatory information, must retain the record or a copy of it for 7 years after the day on which the relevant account is closed’. In the case of exemption registers held by cash dealers, the cash dealer must maintain significant cash transaction report exemption information ad infinitem. Cash dealers must retain information from International Funds transfer instruction reports, not reported to AUSTRAC, for a period of 7 years.

b)

Means of conservation A cash dealer must maintain, in relation to each account, in a way that can be audited, any account information obtained by the cash dealer; and any signatory

information obtained by the cash dealer in relation to each signatory to the account.’ This rule does not apply to information obtained by the cash dealer prior to the commencement of Part 2 of the Crimes Legislation Amendment Act 1992. In relation to exemption registers, the FTR Act states: ‘The register shall include the prescribed details in relation to each transaction, or class of transactions that is entered in the register.’ Prescribed details are outlined in details on Schedule 2 of the FTR Act 1988.

7.

PERSONS RESPONSIBLE FOR REPORTING Pending exemption for reporting of particular types of transactions, it is the cash dealers’ responsibility to prepare a report for AUSTRAC in the approved form, containing the reportable details as defined within the FTR Act 1988. The forms must be signed by the cash dealer (or delegate of cash dealer) or otherwise authenticated by the cash dealer in a manner approved by the Director of AUSTRAC, and must be reported within the time frames as stipulated in the FTR Act 1988.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED The principle aims of the FTR Act are defined as follows: the principle object of this Act is to facilitate the administration and enforcement of taxation laws; a further object of this Act is to facilitate the administration and enforcement of laws of the Commonwealth and of the territories (other than taxation laws); further, to make information collected for the purposes referred to above, available to State authorities to facilitate the administration and enforcement of the laws of the States.

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Australia

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION The law does provide some limited protection for the identity of staff that initiates a suspect transaction report. The FTR Act 1988 outlines the protection for cash dealers where information is communicated to AUSTRAC.

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) Banks and other financial dealers are required to report: cash transactions of EUR 6,600 or more, or foreign currency equivalents; suspect transactions; international telegraphic transfers.

11.

IDENTIFICATION a)

Identification threshold amount Banks and other financial dealers, who have obtained Identifying Cash Dealer status from AUSTRAC, are required to verify the identity of all new account holders. It is a criminal offence to operate false name accounts. Accounts blocked for more than 12 months because of inadequate identification are required to be notified to AUSTRAC.

b)

Means of identification The FTR Act 1988 defines the requirements for natural persons and legal entities and accounts for third parties.

c)

Cases in which the identification requirement does not apply Identification of account holders does not apply in two instances only. Section 20 of the Financial Transaction Reports Act 1988 (the FTR Act) came into effect on 1 February 1991. There is no requirement to identify signatories to accounts opened prior to this date. Subject to thresholds provided in section 18 of the FTR Act, all signatories to accounts opened after this date require identification. Identification of signatories to an account is also only required when the account balance is more than EUR 1,125 or there have been credits in excess of EUR 2,250 over a thirty-day period. It is possible for a person to have a balance of less than EUR 1,125 and still have credits on excess of EUR 2,250 over a thirty-day period. Where accounts have been identified as falling within either of the above categories the transaction date would be the date it occurred. The thresholds could have been triggered at any point in time from when the accounts were initially opened.

12.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING AUSTRAC regularly provides cash dealers with updates on information in relation to money laundering and requirements under national and international legislation/agreements.

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AUSTRAC prepares guidelines and circulars for information of importance, in addition to a quarterly newsletter which provides a more general overview of activities being undertaken by AUSTRAC and partner agencies both domestically and internationally. AUSTRAC’s website is updated regularly to provide current information with relation to money laundering issues, and as well as providing links to other applicable sites.

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GIBRALTAR

1.

2.


The Drug Trafficking Offences Ordinance, 1995, establishes offences for drug trafficking and the laundering of drug-related money as offences.

-

The Criminal Justice Ordinance, 1995, establishes offences relating to money laundering for all other criminal activities and provides detailed requirements for identification, record keeping, recognition and reporting of suspicions, etc.

CENTRAL AUTHORITY FOR REPORTING The Gibraltar Financial Intelligence Unit (“GFIU”) which is located within the Gibraltar Criminal Intelligence Unit (“GCID”). Members of the Royal Gibraltar police and Gibraltar Customs Department staff this unit.

3.

BUSINESSES COVERED BY THE LEGISLATION The scope of the ordinances is very wide. They affect not only banks and other financial institutions, but many other businesses, including:

estate agents; car and boat dealers; lawyers; accountants; bureau de change; safe deposit box companies; jewellers; gold and bullion dealers; casinos, etc.

Any person accepting money or other property from an individual knowing or suspecting that it represented the direct or indirect proceeds of drug trafficking or other criminal conduct would be vulnerable to prosecution. It is also an offence for any person (natural or legal) irrespective of whether he or she is a financial institution not to disclose a suspicion of money laundering. 4.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION GFIU provides reporting institutions with feedback in relation to disclosures made.

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED The legislation extends to:

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Gibraltar

the laundering of the proceeds of all criminal conduct; assisting another to retain the benefit of criminal conduct; acquisition, possession or use of property representing the proceeds of criminal conduct; the concealment or transferring of the proceeds of criminal conduct. 6.

7.


Duration Identification documents must be kept for at least 5 years after the relationship with the customer has ended and transaction records must be kept for at least 5 years after completion of the transaction.

b)

Means of conservation Records may be kept electronically or on microfilm formats.

PERSONS RESPONSIBLE FOR REPORTING The institution must appoint a Money Laundering Reporting Officer to receive reports of suspicions within the institution. He/she is required to consider any reports made to him/her in the light of other available information and, if appropriate, pass it on to the GFIU.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED The information may only be used in criminal investigations.

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION Disclosure does not constitute a breach of any restriction upon the disclosure of information which may be imposed by statute or otherwise. Thus a banker, by way of example, would not be liable to the customer for breach of confidentiality by disclosing his suspicions to a Police or Customs Officer. It is an offence to disclose to (“tip-off”) any other person the fact that an investigation is or is about to be or being conducted in relation to money laundering.

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) The institution can refuse to handle a suspicious transaction but must avoid tipping-off the customer. Institutions are encouraged to accept the transactions to provide an audit trail.

11.

IDENTIFICATION a)

Identification threshold amount Identification must be verified at the start of a business relationship or where no continuing business relationship is intended, when the sum involved is EUR 15,000

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or more, or whenever money laundering is suspected regardless of the amount involved. b)

Means of identification The legislation does not specify what constitutes adequate evidence of identity but the official interpretation of the requirements of the Ordinances is contained in the Anti-Money Laundering Guidance Notes issued by the Financial Services Commission to all institutions covered by the provisions of the Criminal Justice Ordinance. -

-

-

-

12.

Natural persons Verification includes name and address, date of birth and the expected nature of the customer's business and transactions. Documentary evidence should include a document from an official source which bears a photograph. Legal persons For companies, in addition to the official documents for registration, documentary evidence of the identity of the persons behind the legal entity and with ultimate control (beneficial owners, directors, shareholders) must be obtained. Trust accounts Detailed verification requirements exist for trust accounts including the verification of all trustees, principals, settlers, and underlying beneficiaries and the nature and purpose of the trust. Natural or legal persons acting for the account of a third person Reasonable measures must be undertaken to ascertain the identity of the ultimate beneficiary.

c)

Cases in which the identification requirement does not apply Where the applicant is itself a credit institution from a country with equivalent legislation to the EU Directive on Money laundering or for a one-off transaction under EUR 15,000.

d)

Reliance on others to verify identity. Institutions can rely on introductions from group companies. Changes are presently under way that will allow eligible introducers from conducting KYC of introduced customers but copies of all underlying KYC documentation must be supplied to the institution together appropriate declarations/certificates.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING Training for employees of financial institutions are provided for at regular intervals and there is continuing development of the Anti-Money Laundering Guidance Notes in order to maintain pace with international best practice.

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Gibraltar

JAPAN

1.

MONEY LAUNDERING LEGISLATION There are basically four laws that effectively facilitate the prevention, detection and prosecution of money laundering and the financing of terrorism in Japan. The requirements of the laws can be summarized as follows: - Law concerning Punishment of Organized Crime, Control of Crime Proceeds and Other Matters (hereafter, “the Anti-Organized Crime Law”): The Anti-Organized Crime Law makes it a criminal offence to conceal the proceeds from certain serious crimes, including drug-related crimes and requires financial institutions to report suspicious transactions concerning such crimes (enforced from 1 February 2000). It also requires financial institutions to report suspicious transactions concerning crimes as defined by the Law concerning Punishment of the Financing of Criminal Acts Aiming at Intimidation of the General Public, etc. (enforced from 2 July 2002). - Law concerning Punishment of the Financing of Criminal Acts Aiming at Intimidation of the General Public, etc.: The law makes it a criminal offence to finance terrorism, to induce and collect funds by other means for financing criminal acts (enforced from 2 July 2002). - Law on Customer Identification and Retention of Records on Transactions by Financial Institutions (hereafter, “the Customer Identification Law”): In correlation with the International Convention for the Suppression of the Financing of Terrorism, the Customer Identification Law makes customer identification, the making and keeping of such records and ensuing transactions compulsory (promulgated on 26 April 2002 and to be enforced from 6 January 2003). These obligations have been enacted at the request of trade associations such as the Japanese Bankers Association. - Foreign Exchange and Foreign Trade Law: The law will be amended to facilitate the exchange of information among relevant governmental organizations with a view to identifying terrorists whose assets need to be frozen. In addition, customer identification will be made compulsory rather than just encouraged, and the scope of transactions requiring customer identification will be expanded (amendments promulgated on 7 May 2002 and to be enforced from 6 January 2003).

2.

CENTRAL AUTHORITY FOR REPORTING The central authority for reporting suspicious transactions is the Commissioner of the Financial Services Agency (Japan Financial Intelligence Office (JAFIO) is the office in charge). JAFIO analyzes the reports, and, if necessary, provides the relevant information to Japanese law enforcement agencies. JAFIO also co-operates with foreign FIUs to combat money-laundering activities and its related offences through intelligence/information exchange.

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3.

BUSINESSES COVERED BY THE LEGISLATION Banks and other depository institutions, insurance companies, securities companies, investment trust companies, trust companies, bureaux de change, etc.

4.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION JAFIO holds seminars, as necessary, to report on cases previously reported to financial institutions, with a view to improving the quality of future reporting.

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED As of the end of August 2002, more than 200 serious offences have been designated by the Anti-Organized Crime Law (including crimes relating to financing terrorism).

6.

7.


Duration The guidelines of the Japanese Bankers Association stipulate that records related to customer identification, transactions over accounts, while domestic and international transactions must be kept at least five years. However, in practice, banks keep them at least ten years, in line with the requirements of the Commercial Code. The Customer Identification Law, which will be implemented from the beginning of 2003, requires records to be kept for seven years: from the account closure date for customer identification records and the transaction date for transaction records.

b)

Means of conservation Currently banks keep the records either on paper, by electro-magnetic means, or on microfilm. The Customer Identification Law will authorize these three means as legally binding methods from the beginning of 2003.

PERSONS RESPONSIBLE FOR REPORTING “Organizational Checkpoints for Money Laundering Prevention” published by the Japanese Bankers Association make the following recommendations:

8.

Appointment of a person in charge of anti-money laundering measures at head office level who contacts JAFIO on this issue, and his/her role, Appointment of a person in charge of anti-money laundering measures at branch level who contacts the above person, and his/her role, Facilitating exchanges of information among interested parties.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED The information collected may be used in the investigation of money-laundering crimes and their related offences by law enforcement agencies.

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9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION It is a legal obligation for bank staff to report suspicious transactions and, accordingly, notification of such transactions is not construed as a violation of banking secrecy. On the other hand, negligence in reporting may result in administrative sanctions including issuing of a Business Improvement Order by the Financial Services Agency based on the Banking Law. The Anti-Organized Crime Law stipulates that financial institutions must not warn the other party to a transaction or other interested parties that a report is being filed or has been filed in relation to the transaction. The “Anti-Organized Crime Law and Prevention of Money Laundering,” a handbook published by the Japanese Bankers Association for bank staff, also stresses the need to control information within institutions in this connection . The Customer Identification Law makes it obligatory for customers to provide true and accurate information to financial institutions for information purposes.

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) Financial institutions must identify such operations under their own responsibility by referring to examples provided by JAFIO and notify them promptly to the Commissioner of the Financial Services Agency. The Customer Identification Law stipulates that financial institutions may refuse to execute a transaction until such time as the customer complies with the customer identification process.

11.

IDENTIFICATION The Customer Identification Law stipulates as follows. a)

Identification threshold amount Customer identification is carried out in the following circumstances:

b)

Establishing business relations (i.e., opening a bank account, initiating securities transactions, concluding an insurance or loan contract, etc.), Conducting new transactions involving previously processed customer identification procedures that now appear to be suspicious, or Carrying out a cash transaction above two million yen, etc. Means of identification Face-to-face transactions (legal & natural persons): - Presenting public IDs (e.g., a driver’s license or health insurance certificate) that are not obtainable by a third party. - Presenting IDs and then mailing relevant documents such as a passbook by registered mail to the address indicated on the IDs when the IDs are obtainable by a third party. Non face-to-face transactions such as Internet transactions (legal & natural persons):

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- Receiving an original or a copy of public IDs and then mailing relevant documents by registered mail to the address indicated on the IDs that were sent from the prospective customer to the bank. - Receiving digital certificates. Legal persons - Identification is required for both the legal person and the natural person in charge of the transaction. c)

12.

Cases in which the identification requirement does not apply Certain transactions, such as transactions between the Bank of Japan and domestic banks, and their settlements are executed through accounts provided by the Bank of Japan.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING

The Japanese Bankers Association has compiled a handbook containing basic information about the Anti-Organized Crime Law, the notification procedure for suspicious transactions and reference cases of suspicious transactions provided by JAFIO. The handbook has been distributed among member banks for their internal training.

The Japanese Bankers Association recommends its member banks to take the following measures. - Enhance staff awareness through training course on the prevention of money laundering and examples of accounts being opened with fictitious names. - Enhance checking functions regarding fictitious accounts by providing branches with concrete cases of suspicious transactions. - Enhance checking functions regarding suspicious transactions by using a checklist.

JAFIO holds regular meetings with the Japanese Bankers Association and other relevant trade associations to update necessary information, which is then forwarded to member institutions.

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Japan

MONACO

1.


Law n° 890 of 1 July 1970 on drug trafficking.

-

Law 1.086 of 20 June 1985, which made it an offence to launder the proceeds of drugs and made it possible to confiscate goods acquired with funds deriving from drug trafficking.

-

Law 1.105 of 20 July 1987 amending law 890 increased the sanctions for large-scale drug trafficking and for the financing of such operations.

-

Sovereign order 10.201 of 3 July 1991 transposed the United Nations Vienna Convention of 1988. It was implemented in law 1.157 of 23 December 1992 amending Law 890 to make it an offence to launder money by negligence.

-

Law n° 1.161 of 7 July 1993 amended the Penal Code to make it an offence to launder money or goods of an unlawful origin where this offence relates to the activities of a criminal organisation.

-

Law n° 1.162 of 7 July 1993 deals with the participation of financial bodies in the prevention of money laundering (amended by law n°1253 of 7 July 2002 to include terrorism and terrorist activities under the circumstances requiring declarations to the Monaco FIU). The conditions under which this law applies were established in Sovereign order 11.160 of 24 January 1994, amended by Sovereign Order n°15453 of 8 August 2002.

-

Sovereign order n° 11.246 of 12 April 1994 established the Service d’Information et de Contrôle sur les Circuits Financiers (SICCFIN), amended by Sovereign Order

n°15454 of 8 August 2002. -

Sovereign order N°14466 of 22 April 2000 regarding the application of the law 1162 dated July 7, 1993 relating to the participation of the financial institutions in the fight against money laundering.

-

Recommendations of the Monaco’s Banking Association dated August 2000 in reference to the fight against money laundering.

-

Sovereign Order N°15320 dated 8 April 2002 regarding the fight against the financing of terrorism.

-

Sovereign Order N°15321 dated 8 April 2002 regarding procedures for blocking accounts in relation to the fight against terrorism.

-

Law N°1162 of 7 July 1993 is to be amended shortly (pending parliamentary approval) so as to include terrorism and terrorist activities under the circumstances requiring declarations to the Monaco FIU known as SICCFIN.

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Monaco

2.

-

Sovereign Order N°15320 of 8 April 2002 regarding the fight against the financing of terrorism.

-

Sovereign Order N°15321 of 8 April 2002 regarding procedures for blocking accounts in relation to the fight against terrorism.

CENTRAL AUTHORITY FOR REPORTING

Service d’Information et de Contrôle sur les Circuits Financiers (SICCFIN). 3.


Banks, Postal banks, Certain insurance companies, Stock brokers and securities firms, Money brokers, Persons exercising a profession linked to the courts and notaries public, Gambling houses.

Sovereign order 14466 of 2 April 2000 has added a list of businesses subject to the money laundering legislation:

4.

auditors, chartered accountants, accountants and official receivers, legal and financial advisers, business agents ,personal and real estate dealers, real estate agents, fund carriers, shopkeepers and dealers in precious stones, valuable metals, antiques, valuable works of art, persons managing or controlling foreign companies, persons involved in investment activities and fund transfers on behalf of third parties.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION There is no provision for feedback in the legislation.

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED Offences which give rise to laundered money, e.g. the use and counterfeiting of seals, punches, stamps and marks, the circulation of counterfeit money, corruption, fraud, assassination, procuring, kidnapping, abduction, extortion, arms trafficking (Art.281-3 from the Penal Code) and activities resulting from criminal organisations.

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6.


Duration Identification documents must be kept by financial institutions for five years after the customer’s accounts have been closed or the relationship with the customer has been ended. Transaction records must also be kept for five years.

b)

7.

Means of conservation All transactions above a certain amount (established in a Sovereign order) must be entered into a register which is kept for 5 years.

PERSONS RESPONSIBLE FOR REPORTING There are two designated correspondents in each credit institution.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED The information collected by SICCFIN during enquiries or entered into databases is totally confidential and cannot be communicated to any other authority in Monaco.

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION There is no liability for bank staff provided they have acted in good faith.

10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) Credit institutions must notify in writing any suspicious transactions executed or refused. Receipt of the notification is acknowledged and may be accompanied by an injunction preventing execution of the transaction for a certain period of time. The transaction can be suspended for up to 12 hours, although this can be extended by court order.

11.

IDENTIFICATION Credit institutions must verify the identity of people wanting to hire a safe-deposit box. a)

Identification threshold amount Credit institutions must verify the identity of occasional customers undertaking transactions for more than EUR 31,000. Credit institutions are also required to pay particular attention to any transaction or series of transactions which amount to more than EUR 310,000, which are of a complex nature, unusual or seem to have no economic justification.

b)

Means of identification Natural persons Any official document containing a photo.

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Monaco

-

c)

12.

Legal persons The original or certified copy of a act or extract from an official register mentioning the name, legal form and head office, as well as the powers of any persons authorised to act on the company’s behalf.

Cases in which the identification requirement does not apply Financial institutions are not required to carry out identity checks where the customer is a financial body subject to the law.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING Monaco adhered to the United Nations International Convention on Terrorism Financing (Sovereign Order n°15319 of 8 April 2002). Effective 1 September 2002, Monaco adhered to the Council of Europe Convention dated 8 November 1990 which refers to “Blanchiment, depistage, saisie et confiscation des produits du crime (by Sovereign Order n°15452 of 8 August 2002). Monaco’s SICCFIN has signed numerous co-operation agreements with equivalent entities in France, Belgium, Spain, Luxembourg, Portugal, United Kingdom. Monaco has been an original member of the Egmont Group formed in 1995 to strengthen cooperation among FIUs. The 10th plenary meeting of the Group took place in Monaco, 5 to 7 June 2002, and was attended by 69 countries and numerous international organisations.

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Monaco

NEW ZEALAND

1.

2.


Crimes Act 1961.

-

Proceeds of Crime Act 1991.

-

Mutual Assistance in Criminal Matters Act 1992.

-

Financial Transactions Reporting Act 1996.

-

The Police Commissioner will, from time to time, issue and review guidelines relating to the reporting of suspicious transactions.

CENTRAL AUTHORITY FOR REPORTING The Commissioner at Police National Headquarters in Wellington.

3.

BUSINESSES COVERED BY THE LEGISLATION All financial institutions, including:

4.

banks; building societies; friendly societies or credit unions; life insurance companies; stockbrokers; real estate agents; trustees/managers of superannuation schemes or unit trusts; lawyers; accountants; auditors; licensed casino operators.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION Police are not obliged either to acknowledge receipt of a suspicious transaction report nor to provide feedback on the progress of police investigation of that report.

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED Any offence attracting as a penalty a term of imprisonment of five years or more, e.g.:

drug trafficking offences; terrorist activity; 142

New Zealand

major thefts and frauds; robbery; forgery and counterfeiting; blackmail and extortion; receiving and conversion.

There is also an obligation to report imports and exports of cash, in relation to which the customs have the power to search persons and accompanying baggage. 6.


Duration Identification documents must be kept for at least five years after the relationship with the customer has ended. Transaction records must be kept for at least five years after the completion of the transaction. Every copy/record retained by the financial institution must be destroyed as soon as practicable after the expiry of that period, except where there are reasonable grounds for retaining that record. There is no requirement for records to be retained in the event that a financial institution is liquidated or dissolved.

b)

Means of conservation Either in written form, or in any other form which will enable the records to be readily accessible and readily convertible into written form.

7.

PERSONS RESPONSIBLE FOR REPORTING Financial institutions only and not their employees or agents individually.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED The information in a suspicious transaction report may only be used for the:

9.

detection, investigation and prosecution of offences against the Financial Transactions Reporting Act, money laundering offences, and offences attracting more than five years imprisonment (see point 5 above); enforcement of the Proceeds of Crime Act 1991; and, administration of the Mutual Assistance in Criminal Matters Act 1992.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION Staff of financial institutions faces criminal liability if they:

do not keep secret the fact that a suspicious transaction report has been made and/or the police are investigating the suspicious transaction; give false or misleading information in a suspicious transaction report.

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New Zealand

No civil, criminal or disciplinary proceeding can be taken against any person disclosing any information in any suspicious transaction report where they have acted in good faith, even if it amounts to a breach of professional secrecy, of a contract or of an agreement. In suspicious transaction reports, financial institutions must disclose to the Commissioner of Police identities of staff involved in the preparation of the report. Those identities may be revealed by police involved in the detection, investigation and prosecution of money laundering legislation or in court if the person presiding is satisfied disclosure is necessary. 10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) A report must be submitted before the suspicious transaction is performed; or as soon as practicable thereafter. Suspicious transactions can be reported in writing, by fax, electronic mail, etc, (or even orally, but written statement must be forwarded as soon as practical thereafter) and contain a statement setting out the grounds for suspicion.

11.

IDENTIFICATION In addition to an obligation to verify the identity of any person before they commence a business relationship, the Act requires financial institutions to verify the identity of persons conducting occasional transactions where: the amount of cash involved exceeds the prescribed amount; a series of occasional transactions are conducted through the same financial institution; there are grounds for suspicion. a)

Identification threshold amount The threshold amount for verification of identity in relation to occasional cash transactions is approx. EUR5,000 or more.

b)

Means of identification Verification records must contain a copy of identification documents or such information as is necessary to enable that evidence to be obtained. Natural persons Legal persons Natural or legal persons acting for the account of a third person Financial institutions are required to verify the identity of persons acting on behalf of others in respect of occasional transactions and of the persons for whom they are acting.

c)

Cases in which the identification requirement does not apply -

Where the person who is conducting the transaction is a financial institution. Where the identity of the person who is conducting the transaction is required to be verified by another financial institution. Where the transaction relates to beneficiaries under a trust.

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New Zealand

12.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING An industry pamphlet, training video and supporting written materials have been produced on the nature of money laundering and the money laundering legislation.

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New Zealand

UNITED STATES OF AMERICA

1.

2.


Money Laundering Control Act of 1986: established money laundering as a Federal offence and made it a crime to “structure” a cash transaction to avoid the reporting laws.

-

Omnibus Anti-drug Abuse Act of 1986: required reports of US$ 3,000 monetary instruments.

-

Annunzio-Wylie Anti-money Laundering Act of 1992: provided a “safe harbour” for banks that reported possible violations of laws.

-

Money Laundering Suppression Act of 1994 streamlined the cash transaction reporting process.

-

USA PATRIOT Act of 2001 requires “special due diligence” for certain correspondent and private banking activities, prohibits continued transactions with “shell banks”, allows banks to share information on employees who have been terminated for criminal activities, and mandates that banks have procedures for account verification.

CENTRAL AUTHORITY FOR REPORTING The Internal Revenue Service and the Treasury Department (in practice, the FinCEN Financial Crimes Enforcement Network) receives currency transaction reports and suspicious activity reports.

3.

BUSINESSES COVERED BY THE LEGISLATION The legislation covers financial institutions, i.e.:

insured banks and mortgage credit institutions; commercial banks and trust companies; private banks; agencies or branches of foreign banks in the USA; thrift institutions; brokers and dealers in securities and commodities; investment banks and investment companies; currency exchanges and dealers; issuers, redeemers or cashiers of travellers cheques, cheques, money orders, or similar instruments; operators of credit card systems; insurance companies; dealers in precious metals, stones or jewels; pawnbrokers and loan or finance companies; travel agencies; licensed sender of money;

telegraph companies and electronic payment transfer systems;

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United States of America

4.

agencies of the Government, State or local government; businesses engaged in vehicle sales, including automobile, aeroplane and boat sales; persons dealing in real estate closings and settlements; the US Postal Service; any other businesses designated by the Secretary of State whose cash transactions have a high degree of usefulness in criminal, tax or regulatory matters.

FEEDBACK FOLLOWING NOTIFICATION OF A SUSPICIOUS OPERATION Currently, US financial institutions file ‘Suspicious Activity Reports’ (SARs) on possible violations of a variety of laws, including money laundering. FinCEN releases aggregate data of the types of filings as well as case studies and trends twice a year.

5.

OFFENCES COVERED IN ADDITION TO THOSE WHICH ARE DRUG-RELATED US law currently has over 197 predicate offences for money laundering, most are not drug related.

6.

7.


Duration Currency Transaction Report: a copy must be retained by a financial institution for five years after the date of the report. Wire Transfers: financial institutions must also record and retain, for five years, funds transfers over EUR 3,400. Under the new law of 26 December 2001, the United States Department of Treasury is now authorized to require domestic financial institutions to take one or more “special measures” (record keeping and reporting) if the Secretary makes a finding that there is a primary money laundering concern with certain transactions, jurisdictions or institutions. The measures can be placed into effect for 120 days and made permanent after an official rulemaking process. All records required under the USA Patriot Act regulations must be retained for 5 years.

b)

Means of conservation A financial institution must also retain the original or a copy of many items reflecting transactions of over EUR116, and in particular records of extensions in credit.

PERSONS RESPONSIBLE FOR REPORTING All financial institutions, not specific bank officials.

8.

PURPOSES FOR WHICH THE INFORMATION MAY BE USED Money laundering offences include foreign corrupt practices, terrorism, foreign bank fraud and certain other foreign crimes.

9.

LIABILITY OF BANK STAFF IN THE EVENT OF NOTIFICATION 147


Any financial institution, officer, employee or agent thereof, making a disclosure will not be liable to the customer under the law for making such a disclosure. There is also a ban on notifying the customer of such disclosure. Financial institution personnel are prohibited from notifying the targets of grand jury subpoenas in money laundering investigations about the existence of the subpoenas or investigation. In the case of financial institutions, money laundering offences committed by the institution or its officers are punishable by fines and in certain cases by the closing of its offices and licence termination. If criminal activity or misconduct at a bank is suspected, a bank must report such activity under most circumstances. 10.

REACTION OF THE BANK AT THE TIME OF OR SUBSEQUENT TO A SUSPICIOUS OPERATION (EXECUTION/NON-EXECUTION) If an officer is unable to verify the identification of a customer who purchases between EUR 3,400 and EUR 11,300 in travellers cheques, bank cheques, money orders and/or cashier’s cheques with cash, a financial institution must refuse the transaction. Irrespective of whether a suspicious transaction takes place, financial institutions are required systematically to file a currency transaction report (CRT) with the Internal Revenue Service for each deposit, withdrawal or other currency transaction of more than EUR 11,300. A CTR must be filed by a financial institution within 15 days of the date on which the reportable transaction occurred. In addition, certain reports must be filed indicating a bank’s financial interest in securities or account abroad over EUR 11,300. A financial institution must file a currency or monetary instrument report (CMIR) with the US Customs Service whenever a financial institution physically transports, mails or ships currency or monetary instruments in an aggregate amount exceeding EUR11,300 at one time into or out of the USA, or within 15 days of receipt if a financial institution receives such instruments that have been transported, mailed or shipped from abroad.

11.

IDENTIFICATION a)

Identification threshold amount Before a financial institution may conclude any currency transaction of more than EUR 11,300, it must verify and record the name and address of the individual presenting the transaction and the identity, account number and social security or taxpayer identification number of the person on whose behalf the transaction is being effected. Under US law, a financial institution must verify and maintain records of the identification of individuals who purchase certain monetary instruments for EUR 3,400 or more in currency. Congress has just passed another law that requires the Treasury Department to issue regulations covering all the verification of identity at the account opening process by October 2002.

148


12.

b)

Means of identification Natural persons A financial institution must also obtain and record the taxpayer identification number of a customer to whom a certificate of deposit is sold or redeemed, or a deposit or share account has been opened, within 30 days after the date of such a redemption or opening of such account. Natural or legal persons acting for the account of a third person If a financial institution is acting as an agent of another person in the purchase or redemption of the certificate of deposit issued by another bank, a financial institution is responsible for obtaining and recording the required taxpayer identification number. Where a transaction is made with a foreign financial agency, a record must be kept of the identity and address of the participants in the transaction, the legal capacity in which a participant is acting, the identity of the real interested parties and a description of the transaction.

c)

Cases in which the identification requirement does not apply Certain transactions, such as transactions with the Federal Reserve Banks and those between domestic banks do not have to be reported. Banks can also exempt certain transactions by certain customers; a list of such exemptions must be filed within FINCEN.

STEPS TAKEN TO INCREASE AWARENESS OF THE PHENOMENON OF MONEY LAUNDERING All of the federal banking agencies issue frequent advisory circulars on new schemes and other methods to launder money. All regulated financial institutions receive such information and additional training from industry trade groups, such as the American Bankers Association (ABA). The ABA programmes rely heavily on government officials to increase awareness and FinCEN and the federal banking agencies have been leaders in that area.

149


ANNEX 1: IDENTIFICATION AT A DISTANCE

IDENTIFICATION AT A DISTANCE: EXAMPLES OF NATIONAL REGULATIONS

Country

Specific provision

Means used Third party in charge of identification

Austria

Specific remark/ initiative Identification documents

So-called "reliable third parties" who

In certain limited circumstances, an account may also be opened

perform the verification on behalf of

without the prospective accountholder being obliged to go physically to

the credit institutions. Are for instance

the credit institution.

correspondent banks who are subject

The opening of accounts by correspondence, telephone and, according

to the obligations of the EC Directive

to the jurisprudence of the Austrian Supreme Court, by fax, is not

on money laundering or banks of

allowed.

countries that have comparable rules such as US banks or Austrian consulates. Belgium

The BFC circular states that credit institutions must establish adequate customer identification procedures and internal control procedures for distance transactions. These procedures must enable credit institutions to comply with all their legal obligations and the principles set out in the circular.

Denmark

In case of home banking, same identification documents

The identification requirements are under consideration.

than usual. Customers can go physically to a branch or can send photocopies of documents required by mail. The correctness of the name, address and personal or corporate registration number is then checked at the Danish register. International customers are asked to present themselves at a correspondent bank or at the local consulate. France Germany

"Trustworthy third parties" such as

The German Post Office developed the so-called system “Postident”

other banks, insurance firms, notaries,

system especially for identification at a distance.

the German Post Office, embassies and

A customer is identified by the German Post Office’s mail delivery

consulates of EU Member States.

service or at a counter of a local post office.

Or other third parties agreed by banks.

Ways of using digital signatures to identify customers who open accounts via the Internet are currently being discussed.

Greece

I

Italy

Luxembourg

Two possible “suitable attestation” procedures exist: - an “implicit attestation” in connection with the execution

The Italian Foreign Exchange Office (UCI), the Italian institution

of a credit transfer by the attesting intermediary to the one

responsible for implementing the law against money laundering,

that must make the distance identification;

provided intermediaries, in January 2000, with operational guidelines

- a “suitable identification” by a form filled out by an

for the valid identification of customers at a distance.

authorised intermediary, duly signed and sealed by the

The UCI issued an opinion, in May 2001, confirming the validity of

attesting intermediary, giving the identifying details.

identification made by a digital signature certifier.

Embassies, consulates, notary, police

All documents must be true copies certified by a competent

officer…

authority. Banks must reach the same level of identification than in counter business.

The Netherlands Norway

Institution or body subject to money

In principle identification must be done face-to-face. Exemptions can

laundering requirements.

be made only if personal appearance at the institution would constitute a substantial disadvantage for the customer (for instance person who are unable to move on account of illness, handicap, persons in prison, cases where the geographical distance to the financial institution is considerable). In such cases, adequate identity checks must be made.

Portugal Spain Sweden

Card issuers/manufacturers, public

Combination of checks of: signature against a photocopy of

Use of electronic ID cards, telephone verification and electronic

authorities.

ID document; particulars concerning national registration

tampering safeguards.

or corporate registration number; signatories of Boards of Directors; address; charge card number; number of ID document against the particulars in the company’s own register or other registers. UK

Another institution or person can identify the customer. Banks remain responsible for verifying the identity of customers and it is recommended that a certificate of introduction must be completed and robust arrangements made for retention of the underlying documentary evidence.

Cyprus

Reputable credit or financial institution in the

For prospective non-resident customers who wish to open bank

applicant’s country or residence.

account by post, extra care is required in customer identification.

II

Malta

Similar document to that required for resident customers

Institutions offering any type of financial service at a distance are

needs to be obtained.

required to implement procedures to positively identify the customer and to confirm all details in accordance with procedures in place for resident customers.

Poland

Banks always check, on the basis of an ID card or passport, the identity of a person wishing to open an e-banking account. Large transactions (over 1,300 euros) are executed only after multiple checks on the i

identity of the person concerned.

III

ANNEX 2: TERRORIST FINANCING

MONEY LAUNDERING & TERRORIST FINANCING: SPECIFIC MEASURES ADOPTED SINCE 11 SEPTEMBER 2001

Country Austria

Type of legislation

Contents / Objectives

Money laundering and Banking secrecy Amendment to the Austrian Penal Code (Strafrechtsänderungsgesetz 2002) – August 2002

- Money laundering: the scope of money laundering to be punishable by the Penal Code is broadened to cover fully the requirements of the UN Convention on Organised Crime including the financing of terrorism. - Banking secrecy: an amendment to the Austrian Penal Code provides that the banking secrecy shall not exist according to the obligations of the Protocol to the Convention on Mutual Assistance in Criminal Matters. Obligation for the credit industry to trace and identify accounts which are used for the financing of terrorist or criminal activities and the monitoring of banking transactions.

I

Belgium

Money laundering - Law draft

- modifies the 1993 law; - considers as suspect any facts and operations in relation with any physical or moral person domiciled, registered or established in a State or a territory whose legislation is recognised as being insufficient or whose practices are considered as obstacles to the fight against money laundering according to a competent international authority (conformed to the FATF).

- A register of bank accounts might be set up, but no concrete step yet. - New European directive: process of transposition. - Discussions on cash transfers of big amount to be forbidden.

II

Cyprus

Money laundering The enforcement of national legislation against money laundering has become more strict and the authorities more proactive in an attempt to maintain a clean record for Cyprus. The Central Bank has intensified its efforts for the prevention and suppression of money laundering by enhancing the awareness of bank and financial institution employees of the need to discourage and avoid suspected transactions. To this effect it was issued several circulars and directives as an addition to the current legislative framework in an attempt to tighten the control on suspected transactions. The Central Bank has placed special responsibilities upon banks and financial institutions.

III

Denmark

Terrorism - General measures taken by the banking industry.

- All banks and savings banks requested to scrutinize bank accounts, deposits etc on the basis of lists of persons associated with terrorism - the first list was contained in the US Executive Order no. 13, 224.

- All Council Regulations concerning freezing of funds in respect of Taliban, Zimbabwe etc and the Council Regulation 2580/2001 of 27 December 2001 with a view to combating terrorism have been implemented in Danish banks. Money laundering - 31.5.2002: the Parliament passed a Bill amending the Money Laundering Act

- implementing the Council Directive of 4. December 2001 on Money Laundering amending Directive 91/308; - implementing the UN Convention of 9 December 1999 against financing of terrorism; - implementing the Security Council Resolution no 1373 of 28 September on combating terrorism.

IV

Finland

Money laundering & Terrorism - EU Regulations are applicable directly in the law. - 23.01.2002: new regulation of the Ministry of Interior on more severe obligations of identification, diligence and reporting. Came into force on 15 February 2002.

- special attention must be paid to transactions connected to the countries which do not fulfil the international demands of money laundering legislation.

- 28.6.2002: Finland ratified the UN Convention for the Suppression of Terrorist Financing. Finland has then ratified all UN anti-terrorism Conventions. - June 2002: Financing of terrorism was criminalized by prescribing a new provision to the Penal Code. - Amendments to the AML-act are being drafted at the Ministry of Interior. These amendments will transpose the 2nd EU Money Laundering Directive (2001) and the FATF Special Recommendations on Terrorist Financing into the Finnish AML - legislation. The Government proposal is expected to be submitted shortly.

The key amendments will be the extension of the scope of the AML- regime and broader coverage of the reporting requirement: - the AML-regime will be widened to cover the prevention and detection of the financing of terrorism; - the financing of terrorism will become a predicate offence for money laundering; - the reporting requirement on suspicious transactions will cover suspicion of financing of terrorism; - the reporting requirement will be extended to include external auditors and accountants, dealers and brokers in valuables, auctioneers and independent legal professionals; - the powers of the FIU will be strengthened in the same proportion ie. allowing freezing of assets when financing of terrorism is suspected; - the supervisory responsibility of the FSA will be extended, i.e. to cover compliance monitoring in respect of the new provisions.

V

France

Terrorism - Loi n° 2001 – 1118 du 28.11.2001 - Loi n° 2001 – 1062 du 15.11.2001 (article 421-2.2 du Code Pénal) - Direct application of the European rules 8 decrees :

n° n° n° n° n° n° n° n°

2001 2001 2001 2002 2002 2002 2002 2002

– – – – – – – –

875 of 25.09.2001 934 of 10.10.2001 1032 of 09.11.2001 383 of 22.03.2002 541 of 20.04.2002 1103 of 30.08.2002 1139 of 09.09.2002 1270 of 19.10.2002

- The listed persons in the decrees are the same than those of the European regulation. But the French decrees are often adopted sooner than the European regulation. According to the French decrees, the movements of funds between France and foreign countries for or on behalf of the listed persons are submitted to a prior authorization of the Minister of Economy and Finance.

Money laundering Regulation of the Comité de la Réglementation Bancaire et Financière n° 2002-01 of 18 April 2002 relating to vigilance obligations with regard to cheques for the purpose of combating money laundering imposes specific obligations on the banks with regard to cheque monitoring. A French law of may 2001 provides for transaction reporting for transactions carried out by financial Institutions for their own business or on behalf of a customer with legal or natural persons who are resident, registered or established in a non cooperative country listed by FATF. The country and the amount of the transactions concerned are specified on a case by case basis by decree. The first decree to be adopted on the basis of this provision was decree n° 2002 – 145 of 7 February 20002 concerning Nauru.

- One of the new obligations is to check at 100 % cheques that come from countries that are mentioned on the FAFT black list. Another new obligation imposed on French banks is to conclude contracts of correspondent banking with foreign banks, by which the foreign banks commit themselves to sort cheques out according the country where they come from (black listed country or not). - imposed on financial institutions the obligation to report to TRACFIN any transactions they carry out for their own business or on behalf of a customer in an amount greater than 8,000 euros, with persons resident, registered or established in Nauru.

VI

Germany

Act to combat terrorism (“Security Package II”) of 9 January 2002. Came into force on 11 January 2002.

- The Federal Office of Criminal Investigation has broader powers to obtain information from banks in its function as the central agency for police information and intelligence. - Power is given to the intelligence services to obtain information free of charge under certain conditions from banks, financial services enterprises and financial institutions. Information may be obtained on: 9 accounts 9 account holders 9 other authorised persons 9 other “parties involved in payment operations” 9 movements of funds 9 placements of funds. The intelligence services is given an independent right to obtain information. Also, unlike the powers to obtain information which the prosecution authorities have, those given to the intelligence services do not require a court order. They are subject instead to an order by the federal ministry overseeing the intelligence service in question. Such federal ministry orders are controlled by parliamentary committees. - Also new are additional intelligence service powers to access certain teleservice data that have to be kept by telecommunications companies. In the case of banks, these powers of access cover, for example, the data on telebanking products (online banking) referred to in the Act. The conditions for access and control mechanisms are the same as under the new general powers to obtain information granted to these intelligence services (see above). - The provisions of the Act to Combat Terrorism are limited to a period of five years and thus automatically cease to apply on 11 January 2007, unless they are extended by way of new legislation beforehand.

VII

Germany

Act to combat tax evasion of 19 December 2001. Came into force on 28 December 2001. Designed to combat organised crime. Amended on 27 July 2002.

New offence of “tax evasion of huge dimension perpetrated through commercial activity or a criminal association” (Section 370 a of the Tax Code), which is a predicate money laundering offence within the meaning of Section 261 (1), sentence 2, no. 1 of the Criminal Code. At the same time, it widens the reporting requirement under the Money Laundering Act accordingly.

Fourth Financial Market Promotion Act came into force on 1 July 2002.

Section 24 c of the Banking Act (draft) introduced “automated access to account information” . The new provision gives the Federal Authority for Financial Services Supervision [Bundesanstalt für Finanzdienstleistungsaufsicht - BaFin] direct electronic access to special new bank files containing the number of a cash account or securities account, the date on which the account was opened or closed, the name (where natural persons are concerned, the date of birth of the account holder) of any persons authorised to draw on the account and the name and address of any different economic beneficiary. BaFin will be authorised to access individual data in these files without the knowledge of the bank concerned or the customer, provided this is necessary to allow it to perform its supervisory duties and provided particularly prompt action is called for. Domestic and foreign prosecution authorities are authorised under the procedures they operate to request information from BaFin. Access will be by means of an automated procedure. Section 24 c of the Banking Act will enter into force on 1 April 2003. In Germany, there is agreement between banking regulators and the central banking associations that, under the reporting requirement laid down in Section 11 of the Money Laundering Act, banks should follow up suspicion of money laundering also by using electronic data processing facilities. The law takes this into account with the new Section 25 a (1) N°4 of the Banking Act.

Act to combat money laundering. It is designed particularly to combat any funding of terrorism and to implement Directive 2001/97/EC of the European Parliament and the Council amending European Anti-Money Laundering Directive 91/308/EEC. Amends the Act to combat money laundering of 1993 and came into force on 15 August 2002.

Identification under Section 2 of the Money Laundering Act will be possible in future using a “qualified electronic signature” as defined in the Digital Signature Act (Signaturgesetz). Section 5 of the Money Laundering Act (draft) is designed to establish the legal basis for the Financial Intelligence Unit (FIU). This unit is to be set up at the Federal Office of Criminal Investigation (BKA). Section 5 also requires the FIU to ensure an abstract feedback by way of reports on the money laundering situation and the types of money laundering encountered.

VIII

Section 11 of the Money Laundering Act (draft) gives powers to the government to allow it “to define individual types of financial transaction that are suspicious within the meaning of paragraph 1, sentence 1”. This provision is linked to possible future FATF measures directed at non-cooperating countries and territories. New provision on “Special organisational duties in the payments sector” (Section 25 b of the Banking Act), which is designed to implement FATF Special Recommendation No. VII of 31 October 2001. This provision requires banks conducting giro business and accepting payment orders from their customers to establish the name, address and account number of the payer and to forward these to the beneficiary banks (and to any intermediary banks) in the message formats (e.g. SWIFT MT 103) used for electronic payments. The recipients of these messages, i.e. the intermediary banks as well as the beneficiary banks, are required to check these details and to complete them “if possible” where they are incomplete.

Germany

Section 25 b of the Banking Act will enter into force on 17 July 2003. Financial Sanctions against terrorism.

Financial sanctions are normally implemented on an EU legal basis. To avoid delays, orders by the German government sometimes temporarily impose sanctions on newly discovered terrorist persons and organisations until EU financial sanctions are amended accordingly. Breaches of new EU financial sanctions and amendments to these are penalised by the German government as soon as possible.

IX

Greece

Financial sanctions and money laundering The Bank of Greece has issued special instructions to banks. -

These instructions concern: procedures for the identification of nonresidents control procedures for the fight against terrorism financing transactions with non – cooperative countries including Nauru cash transactions in Euro and foreign exchange, over certain amounts.

X

Hungary

Money laundering 27.11.01: Act LXXXIII of 2001 on combating terrorism, on tightening up the provisions on the impeding of money laundering and on the ordering of restrictive measures.

Amends a whole range of existing laws in order to develop its regulatory and enforcement system and to create an anti money-laundering environment of high standard.

Amendment of Law-Decree N° 2 of 1989 on Savings Deposits. Focuses on the anonymous savings deposit books. The main elements are as follow: savings deposits can be placed with a credit institution only on a registered basis, with the savings deposit book bearing the depositor’s (and the beneficiary’s) name, date and place of birth, those savings deposits that are already in existence and are anonymous (bearer’s savings deposit books or savings deposits with a password) must be converted into registered form. This must take place at the time of the first presentation of the savings deposit book, once the credit institution has established the identity of the holder; if the first presentation takes place after 30 June 2002 details of the holder will be reported to the National Police Headquarters in case of deposits of more than EUR 8,000; after 31 December 2004, the transformation of the savings deposit can be carried out only upon the written request of the deposit holder, with the approval of the National Police Headquarters. Amendment of Act XXIV of 1994 on the Prevention and Impeding of Money Laundering

Extension of the scope of professions concerned outside the financial sector; identification obligation also holds when entering into business relations; identification obligation applied to currency exchange offices when above the threshold of EUR 1.200; information on the beneficial owner must always be required when the client is identified (e.g. when entering into business relation, at transactions over EUR 8,000 in value and when circumstances indicate money laundering); as an exceptional rule, the execution of suspicious transactions can be suspended for 24 hours; definition of identification data and documents are shifted to the act from the Government decree; the import and export of cash over EUR 4,000 in value must be declared to the customs authority on the basis of this act.

XI

Hungary

Amendment of the Civil Code.

Changes the definition of the savings deposit, so only registered savings deposit will exist.

Amendment of Act CXII of 1996 on Credit Institutions and Financial Enterprises.

The regulation of "bureaux de change" becomes much stricter: only credit institutions and their agents will be authorised to offer currency exchange services; licensing will be undertaken by the Hungarian Financial Supervisory Authority.

Action Plan specially designed to conform to the FAFT Recommendations.

The main measures are the following: reviewing and upgrading the Hungarian Act XXIV of 1994 on the Prevention and Impeding of Money Laundering; strengthening the Financial Intelligence Unit within the Police Headquarters; developing new model rules for financial service providers.

Government Decision N° 298 dated 19/10/2001

Outlines the basic elements of implementation policy of the new anti money laundering regulation and other measures, and outlines the necessary improvements of the existing anti-money laundering regime in connection with the enactment of the Act n° LXXXIII of 2001 on the Fight Against Terrorism, on the Amendment of the AML Act and on the Promulgation of Certain Restrictive Measures.

April 2002: Implementation plan of the Hungarian authorities Improving the Efficiency of the Implementation of Anti-Money Laundering Policy in Hungary.

XII

Ireland

Money laundering - The Criminal Justice Act 1994 provides inter alia for the offence in Irish law of money laundering. The Money Laundering Guidance Notes November 2001 have replaced the Money Laundering Guidance Notes, April 1995.Came into effect on 1st May 2002.

These guidelines facilitate the implementation of the Act, the EU Council Directive (91/308/EEC) and the Forty Recommendations of the Financial Action Task Force. The notes provide guidance on internal controls, policies and what the law requires. It explains how to establish identity and when identity must be established. Finally the notes cover recognition and reporting of suspicious transactions.

- The Criminal Justice (Theft & Fraud Offences) Act became part of Irish law on 19 December 2001. Section 31 of the Act creates new statutory offences in respect of money laundering. Came into effect on 1st August 2002.

The 2001 Act provides that the Minister may designate any state, or territorial unit within a state that in his or her opinion has not in place adequate procedures for the detection of money laundering.

- The Garda Bureau of Fraud Investigation (GBFI) was established in April 1995 and is responsible for investigating breaches of the Criminal Justice Acts concerning moneylaundering offences. Financial sanctions - The Minister for Finance signed Statutory Instruments No. 361 & 362 on 15 July 2002. These are entitled Financial Transfers (Counter Terrorism) Order 2002 and European Communities (Counter Terrorism Financial Sanctions) Regulations 2002 respectively. - The Minister for Finance signed Statutory Instruments No. 282 & 283 on 6 June 2002. These are entitled European Communities (Zimbabwe) (Sanctions) Regulations 2002 and Financial Transfers (Zimbabwe) (Prohibition) Order 2002 respectively. - The Minister for Finance signed Statutory Instruments No. 74 & 75 on 7 March 2002. The Financial Transfers (Angola) (Prohibition) Order 2002 introduced a further prohibition on trade of certain goods and services to the UNITA faction in the Angolan conflict. - The Minister for Finance signed Statutory Instrument No.447 on 3 October 2001 and Statutory Instrument No. 496 on 2 November 2001. These implemented the European Communities (Taliban of Afghanistan) (Sanctions) Regulations 2001. - Statutory Instruments relating to Iraq, the Former Republic of Yugoslavia and Burma are currently being considered by the Government. Terrorism The Government is considering further legislation aimed at combating terrorism.

XIII

Italy

Terrorism - 24.09.2001: Bank of Italy regulations supplementing the Supervisory Instructions.

- The measure requires banks to perform appropriate checks to ascertain whether relationships with customers may possibly be traceable to persons linked to the terrorist attacks of 11 September 2001 (see EC Regulations 467/2001 and 1354/2001).

- 28.09.2001: Decree-Law 353/2001 (Gazetta Ufficiale n° 226, 28.09.2001) enacting "Sanctions for violations of the measures adopted against the Afghan faction called the Taleban".

- The measure decrees the legal inefficacy of acts taken in violation of the measures cited and requires that capital and other financial resources frozen must be reported to the competent national authorities.

- 2.10.2001: Bank of Italy regulations supplementing the Supervisory Instructions.

- The regulation requires that banks, in order to conduct anti-terrorism checks, shall consider both lists annexed to the EU regulations, and the list drawn up by the Basel Committee on Banking Supervision.

- 12.10.2001: Decree-Law 369/2001 (Gazetta Ufficiale n° 240, 15.10.2001) enacting "Urgent measures to repress and counter the financing of international terrorism".

- 18.10.2001: Decree-Law 374/2001(Gazetta Ufficiale n° 244, 19.10.2001) enacting "Urgent measures to combat international terrorism".

- This decree-law institutes a Financial Security Committee. It also enshrines, as a general principle, the inefficacy of acts taken in violation of the EU norms for the freezing of capital and other financial resources of natural or legal persons suspected of links with international terrorism and the obligation to report the amount of goods and other financial resources frozen to the Ministry of Economy and Finance. - Among other things, the decree: a) defines the crime of "Association for purposes of international terrorism"; b) extends the powers of banking inspection accorded to the criminal courts and the chief of police under the anti-mafia legislation, also to cases of persons under investigation for acts of international terrorism.

XIV

Italy

- 9.11.2001: Regulation by the Italian Foreign Exchange Office (UIC) (Gazetta Ufficiale n° 266, 15.11.2001) enacting "Instructions for financial action to counter terrorism".

- Enacts: a) compulsory reporting of measures of freezing of assets applied to the persons referred to in Community measures; b) compulsory reporting of transactions and/or relationships that may be traceable to the persons (suspected of terrorism) on the lists sent by the Foreign Exchange Office; c) compulsory reporting of all transactions or relationships that are directly or indirectly traceable to the activity of financing terrorist groups.

- 27.11.2001: Law 415/2001 (Gazetta Ufficiale n° 277, 28.11.2001) ratifying Decree-Law 353/2001.

- The only amendments with respect to the text of the decree-law involve modifications of the procedures for reporting to the competent authorities of frozen goods.


- The law amends the text of the decree law in the provisions governing certain procedures.


- Among other amendments to the decree-law, the law rewords the crime of "Association for purposes of international terrorism".

Money laundering - 13.12.2001: decree-law 485 (Gazetta Ufficiale n° 40) enacting the “Regulation issued pursuant to Article 3 of Legislative Decree 374 of 25 September 1999 on financial agencies”.

The measures establish the content of the activity performed by a financial agency, and the requirements for entry into the register of persons exercising such activity. These persons are subject to the requirement of customer identification and antimoney laundering registration, as well as the reporting of suspicious transactions.

XV

Luxembourg

Terrorism Circulars: 19.09.01: CSSF (Financial Sector Supervisory Commission) circular 2001/33 concerning identification and reporting of business relationships with terrorist groups

Reminds CSSF circulars 2001/13 and 2001/25 concerning the introduction of sanctions at European level against the Taliban of Afghanistan and the terrorist Usama bin Laden Requires financial sector professionals to: • provide the CSSF with any information which might assist in the detection and freezing of funds held by the groups concerned, • co-operate with the Ministry of Foreign Affairs in the implementation of any measures taken pursuant to the sanctions as agreed.

19.10.01: CSSF circular 2001/38 concerning identification and reporting of business relationships with terrorist groups.

Communication of Commission Regulation (EC) No 1996/2001 of 11 October 2001 amending, for the second time, Council Regulation (EC) No 467/2001 prohibiting the export of certain goods and services to Afghanistan, strengthening the flight ban and extending the freeze of funds and other financial resources in respect of the Taliban of Afghanistan and repealing Regulation (EC) No 337/2000. Reminds: • Commission Regulation (EC) No 1354/2001 of 4 July 2001 amending Council Regulation (EC) No 467/2001 as regards the persons and entities covered by the freeze of funds and the organisations and agencies exempted from the flight ban in respect of the Taliban of Afghanistan; • Council Regulation (EC) No 467/2001 of 6 March 2001 prohibiting the export of certain goods and services to Afghanistan, strengthening the flight ban and extending the freeze of funds and other financial resources in respect of the Taliban of Afghanistan, and repealing Regulation (EC) No 337/2000.

08.11.01: CSSF circular 2001/39 concerning identification and reporting of business relationships with terrorist groups

Communication of Commission Regulation (EC) No 2062/2001 of 19 October 2001 amending, for the third time, Council Regulation (EC) No 467/2001 prohibiting the export of certain goods and services to Afghanistan, strengthening the flight ban and extending the freeze of funds and other financial resources in respect of the Taliban of Afghanistan and repealing Regulation (EC) No 337/2000.


Communication of Commission Regulation (EC) No 2199/2001 of 12 November 2001 amending, for the fourth time, Council Regulation (EC) No 467/2001 prohibiting the export of certain goods and services to Afghanistan, strengthening the flight ban and extending the freeze of funds and other financial resources in respect of the Taliban of Afghanistan and repealing Regulation (EC) No 337/2000.


Communication of Commission Regulation (EC) No 2373/2001 of 04 December 2001 amending, for the fifth time, Council Regulation (EC) No 467/2001

XVI

prohibiting the export of certain goods and services to Afghanistan, strengthening the flight ban and extending the freeze of funds and other financial resources in respect of 2001 the Taliban of Afghanistan and repealing Regulation (EC) No 337/2000.

Luxembourg


Communication of Commission Regulation (EC) No 2604/2001 of 28 December 2001 amending, for the sixth time, Council Regulation (EC) No 467/2001 prohibiting the export of certain goods and services to Afghanistan, strengthening the flight ban and extending the freeze of funds and other financial resources in respect of the Taliban of Afghanistan and repealing Regulation (EC) No 337/2000.


Communication of Commission Regulation (EC) No 65/2002 of 14 January 2002 amending, for the seventh time, Council Regulation (EC) No 467/2001 prohibiting the export of certain goods and services to Afghanistan, strengthening the flight ban and extending the freeze of funds and other financial resources in respect of the Taliban of Afghanistan and repealing Regulation (EC) No 337/2000.


Communication of Commission Regulation (EC) No 105/2002 of 18 January 2002 amending, for the eighth time, Council Regulation (EC) No 467/2001 prohibiting the export of certain goods and services to Afghanistan, strengthening the flight ban and extending the freeze of funds and other financial resources in respect of the Taliban of Afghanistan and repealing Regulation (EC) No 337/2000.


Communication of Commission Regulation (EC) No 362/2002 of 27 February 2002 amending, for the ninth time, Council Regulation (EC) No 467/2001 prohibiting the export of certain goods and services to Afghanistan, strengthening the flight ban and extending the freeze of funds and other financial resources in respect of the Taliban of Afghanistan and repealing Regulation (EC) No 337/2000.

10.05.02: CSSF circular 2002/59 concerning the fight against terrorism.

Communication of Commission Regulation (EC) No 280/2001 of 27 December 2001.

03.06.02: CSSF circular 2002/60 concerning the fight against terrorism.

Communication of Council Decision 2002/334 of 2 May 2002.


Communication of Commission Regulation N°881/2002 of 27 May 2002.


Communication of Commission Regulation (EC) No 951/2002 of 3 June 2002

28.06.02: BCL circular 2002/172 concerning protection of payment and securities settlement systems against crime and terrorism. 01.07.02: CSSF circular 2002/64 concerning fight against terrorism.

Communication of Council Decision 2002/460/EC of 17 June 2002


Communication of 4 September 2002.

Commission

Regulation

(EC)

No

1520/2002

XVII

of

Luxembourg


Communication of Commission Regulation (EC) No 1644/2002 of 13 September 2002.


Communication of Commission Regulation (EC) No 1754/2002 of 1 October 2002.


Communication of Commission Regulation (EC) No 1823/2002 of 11 October 2002.

Legislation: Draft law tabled in the Chamber of Deputies embodying approval of the international Convention for the suppression of terrorist bombings adopted by the General Assembly of the United Nations on 15 December 1997. Draft law tabled in the Chamber of Deputies concerning suppression of terrorism and of its financing and embodying approval of the international Convention for the suppression of terrorism financing, New York,10 January 2000. Money laundering 04.10.01: CSSF circular 2000/37 14.11.01: CSSF circular 2001/40

20.12.01: CSSF circular 2001/48 15.07.02: CSSF circular 2002/66

15.10.02: CSSF circular 2002/73

Supplement to circulars IML 94/112, CSSF 00/16 and 01/31 Concerns non co-operative countries and territories (NCCT). Precisions on the scope of professional obligations under Part II of the law of 5 April 1993 on the financial sector (as amended) and of IML circular 94/112 concerning measures to combat money laundering and prevention of the use of the financial sector for the purposes of money laundering. Supplement to circulars CSSF 00/16, 01/31, 01/37 and IML 94/112 Concerns non co-operative countries and territories (NCCT) (in particular Nauru). Supplement to circulars CSSF 2000/16, 2001/31, 2001/37, 2001/48 and IML 94/112 on measures to combat money laundering and the use of the financial sector for money laundering purpose Concerns recent FATF decisions non co-operative countries and territories (NCCT). Supplement to circulars CSSF 2000/16, 2001/31, 2001/37, 2001/48, 2002/66 and IML 94/112 on measures to combat money laundering and the use of the financial sector for money laundering purpose Concerns recent FATF decisions non co-operative countries and territories (NCCT).

XVIII

Norway

Terrorism - 05.10. 2001: Provisional Law

- Implementing UN Security Council resolution of 28 September 2001

- 20.12. 2001: Bill

- Bill on actions against terrorism. Submitted for opinion, deadline was 15 February 2002

- 18.01.2002: amendments to regulations dated 22 December 1999.

- Sanctions against Usama Bin Laden, Al-Qaida and Taliban.

XIX

Portugal

Financial sanctions - Law n° 11/2002 dated 16 February 2002

- Defines the legal regime for the non-fulfilment of the financial or commercial sanctions determined by decision of the UN Security Council or by regulation of the EU, that had determined restrictions to the establishment or maintenance of financial or commercial relations with States, other entities or individuals expressly identified by those decisions or regulations. Those who disrespect the above-mentioned law, are subject to 5 years’ imprisonment penalty. Negligence is punishable.

XX

Spain

Financial sanctions - 30.11. 2001: agreement of the Council of Ministers

- 01.03.2002: Council of Ministers approved a law project on the prevention and freezing of terrorism funds

- Application of the resolutions from the UN Security Council and from the EU Rules on freezing funds and prohibiting any operations with Afghanistan-related persons or entities. - Main aspects are: •

a new legal body – Commission for the Surveillance of the Terrorist Funds Activities – will be entitled to freeze funds and use of bank accounts from any persons or entities related to terrorism. Judiciary check, power to lift the freeze totally or in relation with concrete operations.

•

Obligation to report information to the Surveillance Commission: communicate any suspicious operation; communicate any request or petition coming from a person or entity related to terrorism; communicate any information given by the Surveillance Commission.

•

The actual Executive Service will support the Surveillance Commission.

•

The Administration of Tributs and the General Treasury of the Social Security will have to rigorously exchange information with the Surveillance Commission.

•

The Surveillance Commission will be presided by the Secretary of Security State and will consists of a member from the Fiscal Ministry, a delegate from the Ministry of Justice, one from the Ministry of Interior and one from the Ministry of Economy.

XXI

Sweden

Terrorism - Draft legislation presented by the Swedish government to the Parliament in order to implement the United Nations International Convention for the Suppression of Financing of Terrorism (from 09.12.1999). - New law entered into force on 1 July 2002.

- According to the new law it will be illegal to finance, directly or indirectly, certain serious crimes defined in the law (can be regarded as terrorist acts although this term is not used). When a bank (or other businesses covered by the money laundering legislation) has reason to believe that a specific transaction could be against the law, the bank shall examine the transaction in more detail. If there are still grounds for suspicion, the bank shall refuse to carry out the transaction and report to the National Financial Intelligence Service. - The new law refers to the "Measures against Money Laundering Act" and the provisions in that law will apply to transactions that are suspicious according to the new law. This is the only initiative in Sweden that directly affects banks.

XXII

Switzerland

Terrorism - No new national legislation. - Based on UN convention on financing terrorism, the government considers the introduction of a criminal statute against terrorist financing. - Circulation of lists of identified or suspected terrorists within banks

- Banks have checked their accountholders, beneficial owners and holders of proxies against these lists; in case of matches, accounts have been blocked and reports have been addressed to the Money Laundering Reporting Office which is in contact with the Federal Prosecutor's office.

- The Federal Banking Commission's Money Laundering Directive of 1998 and the Swiss Bankers Association's Due-Diligence Convention of 1998 are under revision and will be replaced by new versions on 1/7/2003 which will take into account the importance of the fight against terrorism.

XXIII

The Netherlands

Terrorism - Publication of a policy document "Integrity of the Financial Sector and the Fight Against Terrorism"

- Three basic premises, one of which is of importance to financial institutions, namely systematic access to the financial flows. Provision is made for this by means of financial regulation and supervision, in which integrity has become a separate aim of supervision. The following are successively regulated in the policy document by law or (supervision) rules: integrity is to become a separate aim of regulation and supervision; trust companies are to be placed under supervision and made subject to a duty to report money laundering; supervision of money transfer offices is to be strengthened; supervision of enforcement of the money laundering legislation is to be extended; the directive on share price manipulation / insider trading is to be tightened up even further on the basis of the EU Directive; the FATF Recommendations on the financing of terrorism are to be adopted; the sanctions legislation is to be reviewed; the duty to report money laundering is to be extended to other professional groups and traders in large securities; research into the duty to report life insurance policies and non-life insurance; termination of grandfathering for the identification of old accounts; introduction of KYC procedures for customer acceptance in accordance with the BIS; the tax authorities are to be given the possibility reporting money laundering activities; the derived (non-face-to-face) identification of the Gulf Cooperation Council countries is to be reviewed; the use of bearer securities is to be limited; money laundering is to be a separate criminal offence; there is to be a law to combat the abuse of corporate entities; the possibility of a central database of accounts is to be studied; the tax authorities is to be strengthened; investigation of financial and economic crime is to be stepped up; the Public Prosecution Service is to be reinforced; there is to be a cooperative arrangement between investigating agencies and the tax authorities for the provision of advice on white collar crime; the anti-money laundering legislation is to be strengthened, the quality of the reports is to be improved and the indicators are to be simplified. Greater focus on layering and integration stage. More exchange of information between reporting centre and investigating authorities.

XXIV

United Kingdom

Money laundering - June 2002: new regulatory regime for Money Service Businesses (foreign exchange bureaux, cheque cashiers and money transmission agents) came into effect.

The regulations require all Money Service Businesses that are not regulated by the Financial Services Authority to register with HM Customs and Excise (HMCE) and grant HMCE the power to inspect their premises and records to ensure compliance with the law. These provisions apply also to so called “hawala” arrangements and other alternative remittance systems. Money Service Businesses were already obliged under the Money Laundering Regulations 1993 and the Terrorism Act 2000 (see below) to report transactions suspected to be connected with money laundering or terrorism. HMCE have published Guidance Notes on compliance with the regulations.

- 01.12.2001: Financial Services Authority (FSA) Money Laundering Sourcebook came into force.

The Sourcebook contains rules that mirror the provisions of the 1993 Money Laundering Regulations, requiring proper systems and controls to help in the fight against money laundering. Every financial institution is required to appoint a properly authorised Money Laundering Reporting Officer (MLRO). The FSA has powers to impose civil penalties, including unlimited fines, and can also take action under criminal law.

- Proceeds of Crime Act 2002

-

This Act became law in July 2002. The money laundering provisions of the Act are expected to come into force by the end of 2002. The confiscatory powers are expected to come into force in the first half of 2003.

-

The Bill is largely concerned with confiscation of criminal funds but also makes important changes to money laundering legislation:

-

-

Simplifies the multiplicity of reporting requirements Creates a single offence of money laundering and requires all suspected money laundering to be reported Extends the definition of money laundering to cover all crimes from which financial benefit, of whatever size, is derived; Includes any conduct, wherever it takes place, which would constitute a criminal offence if committed in the UK. Gives the authorities new powers to monitor suspicious accounts; Makes it a criminal offence for regulated institutions not to report a transaction if there are reasonable grounds (not just knowledge or suspicion) for knowing or suspecting that it is related to a criminal transaction; Allows law enforcement agencies to freeze assets at an early stage. Provides for confiscation of assets derived from criminal activities

•

Consultations are currently in progress with the UK Treasury on disclosure of beneficial ownership of unlisted companies.

•

Consultations are in progress with the Home Office on proposals to implement aspects of the Proceeds of Crime Act (form of reporting suspicious transactions, code of practice for confiscation, civil recovery and money laundering investigations) and on implementation of the Protocol to the Convention on Mutual Assistance in Criminal Matters.

XXV

United Kingdom

•

Consultations are expected to take place at the end of October on regulations to implement, inter alia, the Second Money Laundering Directive.

•

The UK Treasury is currently consulting on implementation of the FATF special recommendation VII on terrorist financing (wire transfers). Secondary legislation on this issue is expected at the end of 2002.

The Act includes: -

Terrorism •

The Anti—Terrorism, Crime and Security Act 2001.

Police powers to seize terrorist cash anywhere in the UK Police powers to freeze funds at the outset of any investigation Police powers to monitor accounts that may be used to facilitate terrorism Tougher obligations to report suspicions that funds are destined for terrorism (an obligation to make reports where there are “reasonable grounds to suspect” (as well as knowledge or suspicion) that funds are destined for terrorism.

The Act further strengthens the provisions of the Terrorism Act 2000, which provides the following: -

-

It is unlawful to invite someone to give money or other property with the intention or belief that it will be used for the purposes of terrorism or to invite support for a proscribed organisation It is unlawful to receive money in the above circumstances It is unlawful to provide, or process money or other property knowing or having reasonable grounds to suspect that it will or may be used for the purposes of terrorism. An obligation to report to the authorities a belief or suspicion that a transaction was intended to finance terrorism Powers to seize cash at the border on suspicion that it was to be used for terrorist purposes or was part of the finances of a proscribed organisation and a power to order forfeiture of seized cash on the civil standard of proof of the balance of probabilities Powers to freeze a country’s assets if that country was acting to the detriment of the UK economy.

XXVI

United Kingdom

•

A new multi-agency Terrorist Finance Unit was established in November 2001 within the National Criminal Intelligence Service.

•

Key anti-terrorist United Nations Security Council Resolutions (UNSCRs) were implemented as follows: -

UNSCR 1373 of 28 September 2001 (regarding terrorism) is implemented in the UK by the Terrorism (United Nations Measures) Order 2001, which came into force on 10 October 2001 UNSCR 1390 of 16 January 2002 (regarding Usama bin Laden, Al Qa’ida and the Taliban) is implemented in the UK by the Al Qa’ida and the Taliban (United Nations Measures) Order 2002, which came into force on 25 January 2002. This revoked the earlier Afghanistan (United Nations Sanctions) Order 2001, which had implemented UNSCRs 1267 (Taliban) and 1333 (bin Laden and the Taliban).

Full information on financial sanctions, including a consolidated list of targets that have been listed by the UN, EU and UK can be found at the Bank of England website: http://www.bankofengland.co.uk. (click on Financial Sanctions). •

Further details of the UK’s measures against terrorism can be found in a paper issued by the UK government in October 2002. It can be found at http://www.hmtreasury.gov.uk/mediastore/otherfiles/combat_terrorism.pdf

XXVII

LIST OF ADDRESSES

FBE MEMBERS

AUSTRIA

BELGIUM

The Austrian Bankers' Association

The Belgian Bankers' Association

Börsegasse, 11 Postfach 132 A - 1013 WIEN

Rue Ravenstein, 36 - Bte 5 B - 1000 BRUXELLES

+43.1 535 17 71 +43.1 535 17 71 38 e-mail: [email protected] www.voebb.at/

+32.02 507 68 11 + 32.02 512 58 61 e-mail [email protected]

http://www.abb-bvb.be/

DENMARK

FINLAND

The Danish Bankers' Association

The Finnish Bankers' Association

7, Amaliegade DK - 1256 COPENHAGEN K

Museokatu, 8 A P.O. Box 1009 FI - 00101 HELSINKI

+45.33 70 10 00 +45.33 93 02 60 e-mail [email protected] http:// www.finansraadet.dk

+358.9 405 61 20 +358.9 405 61 291 e-mail: [email protected] http:// www.pankkiyhdistys.fi

FRANCE

GERMANY

18, rue La Fayette F - 75009 PARIS

Postfach 04 03 07 D - 10062 BERLIN

+33.1 48 00 52 52 + 33.1 42 46 76 40 e-mail: [email protected] http://www.afb.fr/

+49.30 16 63 10 01 + 49.30 16 63 13 99 e-mail: [email protected] http:// www.bdb.de/

GREECE

ICELAND

The Hellenic Bank Association

The Iceland Bankers’ Association

Massalias Street, 1 GR - 106 80 ATHENS

Austurstraeti, 5 IS - 101 REYKJAVIK

+30.1364 41 36/61 21 + 30.1361 53 24 e-mail [email protected] http:// www.hba.gr

+354.525 60 75 +354.525 61 19 e-mail: [email protected] http:// www.sbv.is

IRELAND

ITALY

The Irish Bankers' Federation

The Italian Bankers’ Association

Nassau House Nassau Street, 40-43 IRL - DUBLIN 2

Piazza del Gesù, 49 I - 00186 ROMA

The French Bankers’ Association

+353.1 671 53 11 +353.1 679 66 80 e-mail [email protected] http:// www.ibis.ie

The German Bankers’ Association

+39.06 67 67 1 +39.06 67 67 80 14 e-mail: [email protected] http:// www.abi.it 155

LUXEMBOURG

THE NETHERLANDS

The Luxembourg Bankers' Association

The Netherlands Bankers' Association

B.P. 13 L - 2010 LUXEMBOURG (G.D.)

Postbus 3543 NL - 1001 AH AMSTERDAM

+352.46 36 601 +352.46 09 21 e-mail [email protected] http:// www.abbl.lu

+31.20 550 28 88 +31.20 623 97 48 e-mail [email protected] http:// www.nvb.nl/

NORWAY

PORTUGAL

The Norwegian Association

Financial

Services The Portuguese Bankers’ Association

Postboks 2473 Solli N - 0202 OSLO +47.23 28 42 00 +47.23 28 42 01 e-mail [email protected] http:// www.fnh.no

SPAIN The Spanish Bankers’ Association Velazquez, 64 y 66 E - MADRID 28001 +34.91 577 70 15-21 + 34.91 577 70 22 e-mail: [email protected]

Avenida da República, 35 - 5º P - 1050 - 186 LISBOA +351.21 351 00 70 +351.21 357 95 33 e-mail: [email protected]

SWEDEN The Swedish Bankers' Association Regeringsgatan, 38 Box 7603 S - 103 94 STOCKHOLM +46.8 453 44 00 +46.8 453 44 18 e-mail: [email protected] http:// www.bankforeningen.se

SWITZERLAND

UNITED KINGDOM

The Swiss Bankers’ Association

The British Bankers' Association

Aeschenplatz 7 Postfach 4182 CH - 4002 BASLE

Pinners Hall 105-108, Old Broad Street GB - LONDON EC2N 1EX

+41.61 295 93 93 +41.61 272 53 82 e-mail: [email protected] http:// www.swissbanking.org

+44.20 7216 88 00 + 44.20 7216 88 11 e-mail: [email protected] http:// www.bba.org.uk

156

ASSOCIATE COUNTRIES

ANDORRA

BULGARIA Association of Commercial Banks

The Andorran Banks Association C.Ciutat de Consuegra 16, Edifici l’Illa, esc. AND-ANDORRA LA VELLA

A,

36, Vitosha Blvd. BG - 1000 SOFIA 2n.pis

+376.82 49 55 + 376.86 17 33 E-mail: [email protected]

+359.2 987 68 45 +359.2 981 43 91 E-mail: [email protected] http:// www.acb.bg

CROATIA

CYPRUS

Croatian Banking Association Centar Kaptol Nova Ves, 17 HR - 10000 ZAGREB +385.1 48 60 080 +385.1 48 60 081 E-mail: [email protected] http://www.hub.hr

Association Banks

of

Cyprus

Commercial

1E Menandrou Street, 1st Floor P.O. Box 23363 CY-1682 NICOSIA +357.2 66 42 93/94 +357.2 66 41 35 E-mail: [email protected]

http:// www.accb.com.cy/

CZECH REPUBLIC

ESTONIA

Association of Banks Prague

Estonian Banking Association

Vodickova, 30 CZ - 111 21 PRAHA 1

Ahtri, 12 RES - EE 10151 TALLINN

+420.2 242 25 926 +420.2 242 25 957 E-mail: [email protected] http:// www.bankovni-asociace.cz

+372.6 11 65 67 +372.6 11 65 68 E-mail: [email protected] http:// www.pangaliit.ee

HUNGARY

LATVIA

Banking Association Pf. 242 H - 1368 BUDAPEST +36.1 483 18 66 +36.1 266 19 89 E-mail: [email protected] http:// www.bankszovetseg.hu

Association of Commercial Banks Pērses iela, 9/11 LV - 1011 RIGA +371.7 28 45 28 +371.7 82 81 70 E-mail: [email protected] http:// http://eng.bankasoc.lv

LITHUANIA

MALTA

Association of Lithuanian Banks

Malta Bankers’ Association

4/35, Vilniaus Str. LT - 2600 VILNIUS

2/191, Merchants Street MLT - VALLETTA VLT 10

+370.2 22 70 63 +370.2 22 70 65 E-mail: [email protected]

+356.21 251 192/21 251 203 +356.21 248 448 E-mail: [email protected] 157

POLAND

SLOVAK REPUBLIC

Polish Bank Association

Association of Banks Bratislava

Smolna, 10 A PL - 00-375 WARSZAWA

Tallerova, 1 SQ - 814 99 BRATISLAVA 1

+48.22 828 14 09/826 88 09 +48.22 828 14 06 E-mail: [email protected] http:// www.zbp.pl

+421.7 52 93 12 87 +421.7 52 93 12 86 E-mail: [email protected] http:// www.asocbank.sk

SLOVENIA

TURKEY

of Banks Subiceva Ulica, 2 p.p. 261 SL - 61000 LJUBLJANA +386.1 252 72 67 / 252 72 69 +386.1 425 21 06 E-mail: [email protected] http:// www.zbs-giz.si/default_eng.htm

The Banks Association of Turkey Nispetiye Cad. Akmerkez B3 K:13 Etiler TR - 80630 ISTANBUL +90.212 282 09 73 +90.212 282 09 46 E-mail: [email protected] http:// www.tbb.org.tr/english/default.htm

158

THIRD COUNTRIES

AUSTRALIA

JAPAN

ian Bankers' Association

ese Bankers Association

56, Pitt Street Sydney 2000 Australia

(ZENGINKYO) 3-1, Marunouchi 1-Chome Chiyoda-Ku, TOKYO 100-8216 Japan

+61 (2) 82 98 04 00 +61 (2) 82 98 04 02

+81 (3) 52 52 43 16 +81 (3) 32 14 02 30

http://www.bankers.asn.au/

http://www.zenginkyo.or.jp/

CANADA

GIBRALTAR

an Bankers' Association

ar Bankers' Association

Commerce Court West, 30th Floor 199, Bay St., Suite 3000 Toronto, Ontario M5L 1G2 Canada

P.O. Box 380 Gibraltar

+1 (416) 362 60 92 +1 (416) 362 89 03

+350 52 340 +350 79 509

http://www.cba.ca/

http://www.gba.gi/

MONACO

NEW ZEALAND New Zealand Banking Group Ltd.

Monégasque des Banques

Level 8 100, Queen Street Melbourne, VIC 3000 Australia

Gildo Pastor Centre 7, rue du Gambian MC - 98000 Monaco

+37 (7) 97 97 84 97 +37 (7) 97 30 32 16

+37 (7) 97 97 84 97 +37 (7) 97 30 32 16 http:// [email protected]

UNITED AMERICA

STATES

http:// [email protected]/

OF

ankers Association 1120 Connecticut Avenue NW Washington, D.C. 20036 United States of America +001.202 663 53 18 +001.202 828 45 48

http://www.aba.com/

159

INTERNATIONAL ORGANISATIONS

FINANCIAL ACTION TASK FORCE (FATF) - OECD

INTERPOL

2 Rue André-Pascal F - 75775 PARIS

200, quai Charles de Gaule F - 69006 LYON

+33 (1) 45 24 79 45 +33 (1) 45 24 17 60

+33 (4) 72 44 71 22 +33 (4) 72 44 72 57

http://www.oecd.org/fatf/

Secrétariat Général

http://www.interpol.com/

160