Drug trafficking suspected

This was revealed last week at the FIU Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) Awareness session held at the Courtyard Marriott Hotel, Port-of-Spain.

FIU Director Susan Francois raised the issue while speaking about multiple wire transfers, one of the methods of money laundering.

She reported that the FIU is seeing a lot of intra-island transfers in small amounts between people who are not too far from each other. She noted this was indicative of drug trafficking and it could be “runners” who collect proceeds from drug retailers. She said it is also indicative of fraud scams, such as telling someone they won the lottery and have to send money for “legal fees”, and extortion. Francois noted that for money laundering cash is a mainstay as drug traffickers “do not accept LINX (debit card) or cheques”.

According to the FIU 2014 annual report for suspected specified offences in Suspicious Transaction Reports/ Suspicious Activity Reports (STRs/SARs) there were 93 reports of drug trafficking. The highest suspected offence, however, was money laundering at 199, followed by 102 reports of suspicious activity, 94 reports of tax evasion and 88 reports of fraud related matters.

On the lower end of the spectrum was eight reports of suspected extortion, five reports of suspected human trafficking and five reports of suspected financing of terrorism. The total value of these STRs/SARs is a whopping $698 million and the geographical location with the highest number of reports was Port-of-Spain and environs at 33 per cent followed by Central at 17 per cent. Diego Martin/Westmoorings was the lowest with three per cent.

The FIU became operational in February 2010 and it is the “primary institution for the collection of financial intelligence and information and the analysis, dissemination, and exchange of such financial intelligence this will also include information among law enforcement authorities, financial institution and listed businesses locally and internationally”.

Non-regulated financial institutions that are under their purview are: credit unions, building societies, postal services and cash remitters. The listed businesses under their purview are: real estate, motor vehicle sales, money or value transfer services, gaming houses, pool betting, National Lotteries online betting games, jewelry, private members’ clubs, accountant, attorney or other independent legal professional, art dealer and trust and company service providers.

WHO CAN’T HEAR

After more than five years in operation the FIU reports that almost all of the entities under their purview have responded to FIU warnings and directives about non-compliance and gotten their houses in order. Only two businesses, two gambling institutions, had to be taken to Court for non-compliance and two large entities are in the FIU cross hairs and may be facing Court action soon.

The FIU has a four tier enforcement process: first warning letter, second warning letter, directive and finally Court order. According to the FIU 2014 annual report last year enforcement action in 281 instances: 177 first warnings; 74 second warnings; 28 directives and two, the aforementioned gambling institutions, were taken to Court. In the case of gambling institutions the Court issued an order directing them to comply with the FIU directives to register and develop and implement a AML/CFT compliance programme. Counsel for the gambling institutions reported that the businesses were no longer in possession of licences and were closing down.

Francois noted that the institutions under their purview take the FIU seriously from an enforcement and compliance perspective and most respond to the first warning letter.

“We have only had so far to take two entities to Court and we are looking at two more entities within the next month,” she said.

Francois noted these entities, which are “pretty large”, may be taken to Court in the near future if they do not become compliant. The names of the two gambling institutions and the two other entities were not disclosed.

Francois said that she is prohibited under law to disclose publicly information received as director.

“So that is why when you (the media) come to ask me...’did you receive any STRs on this particular person?’ I cannot give that information,” she explained.

Last month she was questioned by the media about FIFA-related wire transfers involving indicted former FIFA vice-president Jack Warner; two local banks, First Citizens and Republic Bank Ltd, are listed in a US document among banks through which large wire transfers were completed.

Francois had responded then that the FIU does not investigate matters and she could not comment on the FIU’s role in the matter. Last week at the session she explained that the STR is only a suspicion that a person might involved in criminal activity and she said they have received more than 1,000 STR reports over the past five years and they have contained names of various people and companies.

She said one of the biggest challenges facing the FIU is getting the message out that the FIU produces intelligence, gets information and sends intelligence reports to law enforcement but do not conduct investigations. The other big challenge is getting resources in a timely manner - both human resources and IT infrastructure.

FIU Deputy Director Nigel Stoddard in his presentation said that there has been a steady increase in the reports of SARs from 111 in 2010 to 617 in 2014..

On the sharp increase in SARs after 2010 Francois reported that before 2012 they had two analysts and did not have other members of staff so the analysts were also doing outreach, compliance and other activities. She noted that as they started to get the staff they needed they were able to improve their operations. She said that once they get a SAR in remains on their database so even though there was not an in depth anaylsis when they had less staff if other information comes about any person they can search their database for previous SARs.

MILESTONES AND

MORE POWERS

Francois cited as one of their major accomplishments when they got the FIU up and running to meet the Financial Action Task Force (FATF) requirements in 2012; FATF is an inter-governmental body developing and promoting policies to combat money laundering and terrorist financing.

“Because at that time (in 2012) FATF had threatened to blacklist Trinidad and Tobago because one of the deficiencies is that we did not have a fully operational FIU. So we had to make sure that we were operational in every area of the law,” she said. She noted that the FIU had to conduct analysis, begin supervision, outreach, awareness and sharing of information “in a very, very short time we had to show successes”.

Questioned whether the FIU requires additional powers Francois said that once they fulfill all FATF functions then they are okay but they have been given additional responsibilities under FATF - to conduct strategic analysis and create a profile of serious crime concerns in the country.

Francois said they were in the process of meeting these additional responsibilities.

She noted, however, that with the steady increase in STRs, which is an indication that businesses are more aware of their responsibility to the FIU, and more complex STRs they will need more resources and are seeking additional staff.

Continuing on the issue of powers she noted that the FIU cannot fine persons for non-compliance like the other regulators the Central Bank and the Trinidad and Tobago Securities and Exchange Commission.

“So in that sense I would admit here that maybe we do not have enough power because we should have at least have the same as the other regulators,” she said.

Questioned whether it would have been better for the five year-old FIU to have had the investigative function Francois said it is not about simply moving the investigative responsibility from one agency to another to have success as the second agency may have the same challenges.

She noted, however, that it must be enquired whether these law enforcement agencies have the resources and whether people are trained in financial investigations.

She cited another milestone of the FIU as the admission of this to the Egmont Group of Financial Intelligence Units which is an informal international gathering of FIUs. She recalled the FIU had applied for admission in 2010 but was only admitted in 2013 when they had fulfilled all the requirements. Francois explained that the FIU needed to show it was operationally independent and their work was not controlled by anyone.

Stoddard chimed in that being a part of Egmont creates a unique opportunity as they have access to the Egmont secure website where FIUs exchange information.

Francois reported that they have Memoranda of Understanding with 11 regional FIUs and three international FIUs and they are in the process of entering into agreement with FIUS in South Africa, Japan and the United Arab Emirates. They have also begun negotiations with Australia’s FIU AUSTRAC.