compliance regime dnfbps no. 1 of 2016...financial intelligence unit -guideline no. 1 2016 6 o...

FINANCIAL INTELLIGENCE UNIT -GUIDELINE NO. 1 2016

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Compliance Regime DNFBPs

Guideline issued by the Financial Intelligence Unit under Section 9(4)(iv) of the Anti-Money Laundering Countering the Financing of Terrorism

Act No. 13 of 2009


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TABLE OF CONTENTS

NO PAGE NO

I. Table of Acronyms 3

II. Definition of Key Terms 4-5

III. Introduction 5

IV. Objectives of Guideline 6

V. Legal and Regulatory Framework 7

1. Requirements relating to DNFBPs 7

2. Customer Due Diligence 8

3. Identification and Verification Documents ( various types of Customers) 8-15

4. Verification Requirement- General Measures 15

5. Record Keeping Obligation 15-17

6. Reporting Obligation 17-20

7. Responsibility of Senior Management/Board of Directors/Proprietors 20-21

8. Monitoring Requirement 22

9. Auditing Function 23

10. Staff Training 23

11. Employee Screening 24

12. Compliance Systems 25

13. General Information-Best Practice measures for Designing a Compliance 26

Manual

14. General Information- Categories of DNFBPs 27-43

15. Appendices 44-47


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I. Table of Acronyms

AML Anti-Money Laundering

AML/CFT Anti-Money Laundering & Countering the Financing of Terrorism

CDD Customer Due Diligence

CFATF Caribbean Financial Action Task Force

CFT Countering the Financing of Terrorism

CO Compliance Officer

DNFBP Designated Non-Financial Businesses or Professions

EDD Enhanced Due Diligence

FATF Financial Action Task Force

FIU Financial Intelligence Unit

FSRB FAFT Styled Regional Body

FT Financing of Terrorism

ML Money Laundering

NGO Non-Governmental Organisation

NPO Non-Profit Organisation

PEP Political Exposed Person

RBA Risk Based Approach

RE Reporting Entity

SA Supervisory Authority

STR Suspicious Transaction Report

TCSP Trust Company or Service Providers


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II. Definition of Key terms

Beneficial ownership “Beneficial ownership” means ownership by a natural person or persons

who ultimately exercise individually or jointly voting rights representing at least twenty-five per cent of the total shares, or otherwise have ownership rights of a legal entity; or ownership by a natural person or persons who ultimately owns or controls a customer or the person on whose behalf a transaction is being conducted and includes those persons who exercise ultimate effective control over a legal person or arrangement;(AMLCFT (Amendment) No. 2 Act No. 10 of 2015).

Customer A 'Customer', for the purpose of this guideline, is a person who seeks to form a business relationship or to carry out a "one off transaction" with any of the businesses or professions that engage in any of the activities described under the definitions for Designated Non-Financial Businesses or professions (NDFBPs). The term customer includes a client of the DNFBPs, where in that context the term client so applies.

DNFBP 'DNFBP' refers to a business or profession, which carries on any of the businesses/professions/activities, as set out in the First Schedule of AML/CFT Act 2009. DNFBPs are reporting entities under the ACT.

Terrorist Financing 'Terrorist financing' means wilfully providing or collecting funds, by any means, directly or indirectly, with the unlawful intention that they should be used or in the knowledge that they are to be used in full or in part- (a) to carry out terrorist acts; (b) by a terrorist organisation; or (c) by an individual terrorist. (See AMLCFT Act for further details).

Money Laundering 'Money laundering' means conduct which constitutes an offence as described under section 3 of the AML/CFT Act 2009. “A person commits the offence of money laundering if he knowingly or having reasonable grounds to believe that any property in whole or in part directly or indirectly represents any person’s proceeds of crime:- (a)converts or transfers property knowing or having reason to believe that property is the proceeds of crime, with the aim of concealing or disguising the illicit origin of that property; (b) conceals or disguises the true nature, origin, location, disposition, movement or ownership of that property knowing or having reason to believe that the property is the proceeds of crime; (c) acquires, possesses or uses that property, knowing or having reasonable grounds to believe that it is derived directly or indirectly from proceeds of crime; or (d) participates in, associates with or conspires to commit, attempts to commit or aids and abets, counsels or procures or facilitates the commission of any of the above acts.…”

Politically Exposed Person A 'politically exposed person' takes the meaning as set out in the AML/CFT 2009, which states:- ‘any individual who is or has been entrusted with prominent public functions on behalf of a state, including a Head of State or of government, Senior politicians, senior government, judicial or military officials, senior executives of state owned corporations, important political party officials, including family members or close associates of the politically exposed person whether that person is resident in Guyana or not.

Reporting Entity A 'reporting entity' refers to any person whose profession or business involves the carrying out of any activity listed in the First Schedule of the AML/CFT Act 2009 or any other activity as may be described by the Minister responsible for Finance. Used interchangeably with the term DNFBP in this guideline.


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Risk Based Approach A 'Risk Based Approach' to AML/CFT means that the DNFBPs are expected

to identify, assess and understand the ML/TF risks to which they are exposed and take AML/CFT measures commensurate to those risks in order to mitigate them effectively.

Supervisory Authority 'Supervisory Authority' means the authority set out in column 2 of the Fourth Schedule of the AMLCFT Act 2009 who has compliance oversight over the reporting entity set out in column 1 of the Schedule or as may be appointment by the Minister of Finance.

Suspicious Transaction A 'suspicious transaction' is one for which there are reasonable grounds to suspect that the transaction is related to a money laundering offence

or a terrorist activity financing offence.

Suspicious Transaction Report A 'suspicious transaction report' is a report required to be submitted to the FIU as a consequence to observation/recognition of a suspicious

transaction/ or activity of a customer/client.

III. Introduction

This guideline is designed to provide assistance to DNFBPs which are required to comply with

specific obligations, which include, but not limited to, (a) the implementation of

customer/client due diligence measures; (b) identification and verification of all classes of

customers/clients; (c) maintenance of customer/clients records; (d) conducting of risk

assessments; (e) appointment (or where staff is less than five) designation of someone to carry

out the functions of the Compliance Officer and (f) the submission of reports to Financial

Intelligence Unit (FIU).

The information provided are broad measures, some of which may not be applicable or

appropriate for all of the DNFBPs. Simply put, a “one size fits all approach" to the DNFBPs may

not be appropriate, either in terms of how these entities are supervised, monitored or how

they manage the business relationships with their customers/clients. It must therefore be used

in conjunction with AML/CFT Act 2009, as amended by the AML/CFT (Amendment) Acts No 15

of 2010, No 1 of 2015, AML/CFT (Amendment) Act No 10 of 2015, all Regulations made under

the Act, directives, guidelines, or any other AML/CFT Act that may come into existence from

time to time.

The DNFBPs are required to apply a risk-based approach and based on the assessment of risks

associated with the particular DNFBP, it would be required to apply measures that best suit its

size, nature and complexity.

IV. DNFBPs refer to the following categories of entities as listed in the AMLCFT Act of 2009.

o Casinos (including internet casino)

o Betting shops (including internet betting)


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o Lotteries,

o Real Estate Agents ( House Agents) ,

o Dealers in Precious Metals

o Dealer in Precious and Semi-Precious Stones

o Attorneys-at-Law, Notaries, Independent Legal Professionals

o Accountants

o Trust or company service providers

o Pawn Brokers

o Friendly Societies

o Used Car or Car Parts Dealers

o Co-operative/Credit Unions

o A Non-financial business or profession prescribed by the Minister responsible for

Finance1.

V. Objectives of Guideline

1. To provide guidance on the broad requirements, which are expected to be evident in

the DNFBP's standard operational procedures and/or AML/CFT Compliance manuals

(policies and procedures).

2. To assist the DNFBPs to effectively implement a compliance regime that would enable

them to detect or identify money laundering or terrorist financing risks associated with

the specific entity and to devise measure to mitigate those risks or deter Money

Laundering or the Financing of Terrorism.

VI. Legal and Regulatory Framework

The AML/CFT Act No. 13 of 2009, as amended by the AML/CFT (Amendment) Acts No. 15 of

2010; No. 1 of 2015; No. 10 of 2015; Regulations 2010 and No 4 of 2015, amended Regulations

No. 7 0f 2015 all other Amendments or Regulations that may be enacted from time to time;

other relevant Legislation, Directives, Guidelines and general best practice measures provide,

generally, the legal and regulatory framework for detecting and preventing money laundering

and terrorist financing in Guyana.

Pursuant to Sections 22 and 23 of the AML/CFT Act 2009 (as amended by the AML/CFT

(Amendment) Act No. 1 of 2015), Supervisory Authorities for the various DNFBPs are appointed

1 AMLCFT Act No. 13 of 2009- P 97 under definition for DNFBP at (f).


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to, inter alia, examine, supervise, issue instructions and guidelines and provide training to

entities under their supervision.

In addition to the compliance obligations under the AMLCFT legislation, the DNFBPs are

regulated by other legislation which provide for their licensing and other regulatory measures.

Sections 15, 16, 18, 19 and 20 of the AML/CFT Act 2009 provide the specific obligations with

respect to the DNFBPs. As mentioned above, these obligations relate to identification and

verification of customers; record keeping; appointment or designation of a compliance officer;

reporting; training and awareness for employees and monitoring of customers of the DNFBP.

Detailed explanations and relevant information on these obligations follow:

1. Requirements relating to DNFBPs

1.1 What are the DNFBPs required to do?

As a DNFBP it is required to do (but not limited to) the following:

(a) Appoint, or where staff less than five2, designate a compliance officer;

(b) Conduct what is called customer/client due diligence measures (CDD);

(c) Conduct risk assessments, risks management and risks mitigation;

(d) Keep and maintain records of all customers/clients;

(e) Identify and conduct Enhanced Due Diligence for high risk customer/clients (e.g.

politically exposed persons, foreign nationals, Non-profit organizations (NPOs));

(f) Submit reports to FIU;

(g) Conduct ongoing monitoring, training and awareness programmes;

(h) Prepare for AML/CFT Examination/External Audit.

2. Undertake Customer/Client Due Diligence Measures

2.1 What is Customer/Client Due Diligence (CDD)?

CDD is information which comprises the facts about a customer/client that should enable a

DNFBP to assess the extent to which the customer/client exposes it to a range of risks. These

risks include money laundering and terrorist financing.

2 AMLCFT Act No. 13 of 2009 Section 19(4).


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2.2 Why is it important for the DBFBPs to know its customer/client?

The DNFBP must know its customer/client for the following reasons:

(a) To comply with the requirements of international standards and local legislation,

regulations and guidelines;

(b) To help the reporting entity to be reasonably certain that the customers/clients are who

they say they are, and that it is appropriate to provide them with the products or

services requested;

(c) To guard against fraud, including impersonation and identity fraud;

(d) To help the DNFBP to identify, during the course of a continuing relationship, what is

unusual and to enable the unusual to be examined; if unusual events do not have a

commercial or otherwise straightforward reasoning they may involve money laundering,

fraud, or handling criminal or terrorist property;

(e) To enable the DNFBP to assist law enforcement, by providing available information on

customers/clients being investigated following the making of a suspicion report to the

FIU.

3. Identification and Verification (Know Your Customer/Client)

3.1 When is it necessary to determine the identity of your customer/client?

The DNFBP (as a reporting entity) must identify the customer/client and verify the identity of

the customer/client when-

(a) The Customer/client wishes to establish a business relationship;

(b) The Customer/client wishes to conduct a transaction equal to or above the

designated threshold specified for the specific reporting entity, as stated in

AML/CFT Act, Regulations or as may be prescribed by the Minister responsible

for Finance (in accordance with the legal provisions of the AML/CFT Act );

(c) There is a suspicion that the transaction may be linked to money laundering or

terrorist financing;

(d) There are doubts about the veracity or adequacy of previously obtained

customer/client identification data;

(e) Completing a transaction for an occasional customer/client; or

(f) Completing a transaction for a high risk customer, for example, non-resident

customer/client, PEP or other.


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3.2 What Should a Reporting Entity Do If It Is -

I. Unable to Verify the Identity of a Customer/Client?

II. Unable to obtain sufficient information about the nature or purpose of a transaction?

In the case of a one-off transaction, DO NOT carry out a transaction for that customer/client or

DO NOT enter into a business relationship with the customer/client and TERMINATE any

business relationship already established and consider submitting a Suspicious Transaction

Report or a Suspicious Activity Report to the FIU. See details on how to file this report below.

3.3 General

The DNFBP must therefore ensure a system is in place for the commonly known concept,

“Know Your Customer/Client (KYC)” or as referred to as “identification and verification’ process.

In summary the DNFBP, as an Reporting Entity is essentially required to outline in detail all

classes of Customer/Client ‘Due Diligence Measures’ and ‘Enhanced Due Diligence’ measures

(where necessary), which may include the requirement for the supply of source of wealth and

source of fund documentations. A detailed list with the type of evidence in the form of

documents required for each category, (that is, all forms of identification and verification

documents necessary before establishing a business relationship) may be indicated in a manual.

The policies/procedures required to be implemented must include the gathering of information

for all types of customers/clients or dealings, which may include such information as explained

below:-

3.4 Natural Person (where the customer/client is an individual)

(a) Customer’s or Client's full name (including maiden name -where applicable

(b) Identification document-National Identification or Passport

(c) Permanent and mailing address (including PO Box numbers-if necessary

(d) Telephone Numbers, Email etc.

(e) Date and place of birth

(f) Nationality

(g) Occupation/or nature of business (where self-employed)

(h) Name and address of employer (if applicable)

(i) Signature


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3.5 Legal entity (where the customer/client is a body corporate, foundation,

association or similar body

The DNFBP must identify and verify the entity’s legal status and the nature of its business. At a

minimum the documents requested must include:

(a) The Name of the legal entity/business

(b) The Registered Address of the entity

(c) Country of Incorporation of the entity

(d) Information on the purpose and intended nature of the Business relationship for e.g. A

signed Director’s statement

(e) Identify and verify the identity of the beneficial owners within the entity using

reliable source documents

(f) Identity of Principal owners/shareholders

(g) Identity of Directors, Secretary or Partners

(h) Copies of identification documents for the directors, Secretary or partners

(i) Evidence of the authority given to enter into a business relationship (for eg. A copy of

the Board Resolution)

(j) Share Certificate issued by the entity

(k) Articles of Incorporation or continuance

(l) Certificate of Incorporation or continuance

(m) By-Laws of the entity

(n) Partnership Deed-Is business is a partnership

(o) Business operation licenses-if necessary

(p) Nature of business

3.6 Legal Arrangement (where the transaction involves dealing with express

trusts or other similar legal arrangement)

(a) Identification of person action on behalf of and the principal/settler/Donor

(b) Obtain copies of Powers of Attorney (updated)

(c) Letter of Authorisation

(d) Trust Instruments - e.g. Trust Deeds

(e) Identify beneficial owner-natural person that owns and controls the legal arrangement

As a general best practice measure where a reporting entity enters into a business relationship

with a customer/Client who acts on behalf of another person ALWAYS establish the true

identity of the person on whose behalf or benefit that customer/client acts.


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3.7 Where it appears that a person is acting on behalf of another, it is a good practice that the

DNFBP perform the following:-

(i) Request written assurance from the agent/representative that the identity of the

person has been recorded -using CDD measures;

(ii) Request at least 2 forms of evidence of the person on whose behalf the agent or

representative acts;

(iii) Ensure that the agent/representative has legal authority to act for the person;

(iv) Verify the authenticity of the identification documents provided by the

agent/representative;

3.8 If unable to obtain original identification documents, copies may be acceptable only if:-

(i) they have been certified by a suitable certifier, as being a true copy of the original

document and that the photograph is a true likeness of the person on whose behalf the

agent/representative acts;

(ii) The certifier signs the copied document (printing his name clearly underneath) and has

also indicated his position or capacity, together with a contact address and telephone

number;

(iii) The certifier produces his original identification documents;

3.9 Where it appears that the person on whose behalf the agent/representative acts is

located in another country - DO NOT PROCESS THE TRANSACTION UNLESS there are

reasonable grounds for believing that:-

• It is regulated by an overseas supervisory authority; based in a jurisdiction where there

are AML/CFT laws which give effect to FATF’s Recommendations.

3.10 Political exposed person (PEP)

3.11 Who is a politically exposed person?

A 'Politically Exposed Person' (PEP) is any individual entrusted with prominent public functions

on behalf of a State: for examples:


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A Head of State or of government

Senior politicians

Senior government, judicial or military officials

Senior executives of state-owned corporations

Important political party officials

Family members or close associates of a PEP whether the PEP is resident in Guyana or

not.

3.12. Why are PEPs (Politically Exposed Persons) deemed high risk customers/clients?

According to the FATF standards, PEPs are regarded as high risk customers/clients. Many

developing countries lose significant amounts of revenues or aid funds through public sector

corruption. A large proportion of the embezzled funds are disposed of in other countries.

The DNFBPs are therefore required, among other things, using a 'Risk Based Approach' to

develop and apply Enhanced Due Diligence (EDD) to enable it to:-

(a) Identify PEPs

(b) Maintain a PEP register (this is a best practice measure)

(c) Assign risk ratings against each PEP, example-

(i) PEPs from developing countries

(ii) PEPs from countries with higher rates of corruption

(iii) PEPs who have been the subject of adverse media coverage

(d) Obtain sufficient Customer Identification data on the PEPs

(e) Gather information on the source of wealth or funds (if necessary)

(f) Ensure that approval of senior management is granted before creating a business

relationship

(g) Ensure regular monitoring of the business relationship with the PEP.

The DNFBPs must therefore have an effective system in place to, inter alia, recognise PEPs,

obtain the necessary approval from management and ensure documentary evidence is

obtained for the enhanced measures undertaken for the PEP.

3.13 Non Face-to-Face Customer/Client

When conducting a non-face-to-face business with customers/clients (that are not physically present for

the purposes of identification and verification), the DNFBP must have policies, procedures, systems and


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controls in place to manage specific risks associated with such non face-to-face business relationships or

transactions.

The DNFBP, at a minimum, must require one form of official identification which has been authenticated

(certified appropriately) and one form of documentation that will verify the physical address of the

customer/client.

(i) Where the customer is a legal person, a DNFBP must require documentary evidence of the

continuing existence of the legal person's good standing and a certified copy of acceptable

identification and address to verify the address of the legal person.

(ii) The DNFBP must ensure that adequate procedures for monitoring the activity of non-face-to

face transactions are implemented and managed effectively.

3.14 Reliance on Third Parties/Introducers

This guide is mainly applicable to such entities as, independent legal professionals/attorneys/notaries,

trust service providers and Accountants.

What is the function of a Third Party?

A third party is an entity which introduces a customer/client to the DNFBP. Once the DNFBP is

satisfied that the third party/introducer—

(i) is regulated and supervised for AML/CFT purposes by a supervisory authority

or by an equivalent regulatory or governmental authority, body or agency in

Guyana or the jurisdiction in which he/she operates or in the case of a

company, where it is registered or licensed to operate;

(ii) is subject to the AML/CFT Law or to equivalent legislation of another

jurisdiction; and

(iii) is licensed, registered, incorporated or otherwise established, whether in

Guyana or a foreign jurisdiction that has an effective AML/CFT regime; and

(iv) is not subject to any secrecy or other law or circumstances that would

prevent the reporting entity from obtaining any information or original

documentation about the customer that the reporting entity may need for

AML/CFT purposes-


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The DNFBP, as a reporting entity may rely on the customer due diligence measures that may

have been conducted by the third party/introducer and if a business relationship is established

with the introduced customer, a certificate of introduction (an introducer’s certificate) should

be obtained, (as a best practice measure) certifying that CDD was conducted by the third

party/introducer.

The DNFBP must, in addition to the above, obtain the third party’s full CDD records, which must

include, but not limited to-

(i) Name

(ii) Address

(iii) Date of birth

(iv) Principal business or occupation

(v) Relationship between the individual and the third party

3.15 Non Resident (foreign customer)

(i) The DNFBP must pay attention to Non-Resident customers (individual and legal entity).

(ii) The same identification requirements for natural persons resident in Guyana also apply

to natural person’s resident outside of Guyana.

(iii) Where certified copies of documents are being used to conduct transactions, the DNPBP

must be satisfied that the documents are authentic and that they are the same on all

the identification documents presented. The DNFBP must obtain the reasons for the

transaction by the non-resident customer.

(iv) Where the customer is a Foreign Company, the same documents required for locally

incorporated companies should be requested and retained.

4. Verification of Documents

4.1 General measures

(i) The verification system in place must include provisions whereby the physical

appearance of a customer/clients matches the photo-identification (Passport/National

Identification card) provided by that customer/client;


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(ii) Originals must be presented and authenticated by confirming information received by

contacting alternative sources, for example, the use of open source - i.e. internet

searches, Facebook, twitter, LinkedIn, etc., checks with relevant issuing agencies;

(iii) Where photocopied documents are used, the DNFBP must ensure they are certified by

the appropriate person/issuing agencies and verify their certification by satisfying itself

that the certifier is authorised to certify such documents.

(iv) Clearly indicate via an available list the documents that may be accepted as 'proof of

address'. These must be approved by the senior management of the DNFBP, for

example, recent utility bills or bank statement or other as approved by the DNFBPs.

5. Record keeping obligation

The DNFBP is required to implement record keeping and retention systems.

5.1 Why should records of customers/clients be kept and maintained?

(i) The AMLCFT Act and Regulations made thereunder require that reporting entities,

including DNFBPs, keep sufficient records for all transactions or business relationships

with their customers/clients. The maintenance of sufficient records enable the reporting

entity to submit accurate ‘suspicious transaction reports’ and information when

requested by FIU.

(ii) It also facilitates the availability of an audit trail to support an investigation process. The

law also provides for the imposition of sanctions (administrative and legal) on a

reporting entity which breaches its obligations.

5.2 What records are required to be kept?

The DNFBP as a reporting entity is required to keep records sufficient to provide information

on the business relationship with the customer/client as follows:-

(i) Records of the evidence of the customer/client’s identity;

(ii) Records of account files and business correspondence in relation to transactions and

identities of persons involved in the transactions;


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(iii) The name, date of birth, address and occupation of the customer/client and where

appropriate, the business or principal activity of each person conducting the

transaction or if known, on whose behalf the transaction is being conducted, as well as

the method used by the reporting entity to verify the identity of each person;

(iv) The reporting entity must record the nature and date of the transaction;

(v) The type and amount of currency involved in the transaction (that is, the reporting

entity must record, which jurisdiction/country/state the currency represents-

whether, United States dollar, Canadian dollar, Guyana dollar, etc. and also include,

whether it is coin, paper money, bank notes or other negotiable instruments) and

state for example, if the cash was deposited, or the cash was used to buy traveller’s

cheques, etc.) including whether any other individuals or entities were involved in the

transaction.

5.3 How are records to be maintained?

a) The DNFBP as a reporting entity is required, in addition, to obtaining and keeping

records of all transactions, to ensure that there is in place an effective storage system

that will facilitate the protection of documents. That is to prevent records from

becoming, blurred, defaced, illegible, mutilated or in any other way deteriorated.

b) Where records are being stored digitally or electronically, they must be easily

retrievable or capable of reproduction in a printable and legible (readable) form.

5.4 When can the records be retrieved?

c) Records must be retrieved promptly or without undue delay by the reporting entity. In

other words, upon request for information by the Financial Intelligence Unit (FIU) or

other authorised authority, the reporting entity must ensure that the information is

submitted as follows: promptly, a date as may be designated by the FIU, in accordance

with the period set out in relevant legislation, an order of the court, or as may be

prescribed by administrative or legal process.

5.5 How long are records required to be kept?

d) A DNFBP as a reporting entity is required to keep and maintain records of its

customers/clients for a period of at least seven years from the date when the relevant


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transaction was completed or termination of business relationship, whichever is later or

for such period as may be determined by law or administrative proceedings.

5.6 Are there any other record keeping functions the DNFBP must perform?

e) The DNFBP must ensure that a special register for AMLCFT queries is kept.

f) The DNFBP must also keep records of customer/client risk profiles;

g) The DNFBP is required to keep records relevant, up to date and reviewed on an ongoing

basis.

h) Also the DNFBP should establish safeguards for records, that is, a place for storage of

back up, information offsite or onsite or other as may be determined by the entity.

6 Reporting Obligation

The DNFBP must ensure a system is in place to facilitate reporting of suspicious transactions,

threshold and other reports by developing an effective detection and communication system.

Reporting Procedures for Suspicious Transaction Report

6.1 When must a Suspicious Transaction Report (STR) be made?

a) A STR must be submitted to the FIU whenever a reporting entity suspects or has

reasonable grounds to suspect that funds, a transaction or attempted transaction

are connected to the proceeds of a criminal activity, money laundering or terrorist

financing offences. The STR must be submitted as soon as possible but not later than

three (3) days after forming the suspicion.

6.2 What is a transaction?

b) A transaction can be constituted by any business dealing between a DNFBP and a

customer/client. It includes negotiations or discussions that may or may not result in

an actual dealing but does not include mere inquiries. The transaction must be

something that can be reported in terms of the reportable details set out in the STR

Form, but it is not essential that all such details be available to the reporting entity

before there is a reporting obligation. The reporting entity should complete the STR

Form under as many headings as possible from the information ordinarily available

to the reporting entity.


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6.3 What is a suspicious transaction?

c) As a general principle, any transaction that causes a DNFBP (as a reporting entity) to

have a feeling of apprehension or mistrust about the transaction should be

considered as a suspicious transaction.

6.4 How to identify a suspicious transaction?

d) Suspicious transactions are likely to involve a number of factors which together raise

a suspicion in the mind of the officer of the reporting entity that the transaction may

be connected to money laundering, terrorist financing or the proceeds of a crime.

e) The factors that should be considered in assessing whether or not a transaction is

suspicious include - complex, unusual large business transactions, and unusual

patterns of transactions, whether completed or not, that have no apparent

economic or lawful purpose and are inconsistent with the profiles of the persons

carrying out such transactions.

6.5 Where to report?

f) The DNFBP must complete the Suspicious Transaction Report Form (which is

available from the FIU's Website) and delivered to:

The Director Financial Intelligence Unit (FIU)

Ministry of Finance Compound

49 Main & Urquhart Streets

Georgetown, Guyana

6.6 Who has the Onus to report?

g) Section 18(4) of the AMLCFT Act puts the onus to report a suspicious transaction

upon the reporting entity. Whilst the officers of a DNFBP (reporting entity) comprise

the actual links between the customer/client and what is ultimately reported, the

responsibility to ensure there is prompt and accurate reporting rests with the

reporting entity concerned.

6.7 Confidentiality of reporting

h) It is an offence for a person who knows or suspects that a report is being prepared

or has been sent to the FIU, to disclose that information to another person, other

than a court, or other person authorized by law.


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i) A natural person who commits this offence shall be liable to 'a fine of not less than

one million dollars ($1,000,000.00) nor more than two million dollars

($2,000,000.00) and to imprisonment for a term not exceeding three (3) years.

j) A body corporate which commits this offence shall be liable to a fine of not less

than two million dollars ($2,000,000.00) nor more than three million dollars

($3,000,000.00).

6.8 Are the DNFBP (as a reporting entity) and its officers protected under the law?

k) The AMLCFT Act 2009 contains important protection in relation to reports of

suspicious transactions made pursuant to Section 18(4) of the AMLCFT Act 2009. The

protection removes the possibility of a ‘damages claim’ for breach of client

confidentiality in complying with the reporting obligations. This protection is

contained in Section 111 of the AMLCFT Act 2009 which stipulates:- '' Subject to the

provisions of the Constitution, the provisions of this Act shall have effect

notwithstanding any obligation as to secrecy or other restriction upon the disclosure

of information imposed by any law or otherwise". Further, Section 112 of the

AMLCFT Act 2009 stipulates:- 'It shall not be unlawful for any person to make any

disclosure in compliance with this Act'.

6.9 What other reporting obligations or measures the DNFBP must apply?

(vi) The DNFBP must also ensure a system is in place which provides for the FIU to make

inquiries and give instructions where reasonable grounds exist for suspicion for a

period not more than five day or as may be determined by the FIU or as required by

law.

(vii) A good method of detecting ML or TF is to include in a AMLCFT manual a list of “red

flags/indicators”- such as, pay attention to large payments, irregular transactions,

identify transactions that do not conform to the usual pattern of business; highlight

inconsistencies with the customer profile. Pay attention to foreign high risk

customers/clients such as, politically exposed persons (PEPs). This would aid in

detecting suspicious activities and accuracy in reporting.

(viii) The DNFBP must ensure reports are prepared as prescribed by the legislation, for

suspicious reports with the three (3) days period for forming the suspicion and for

threshold reports - on the 7th day of every month for following the month in which

the transactions occurred.


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(ix) All suspicious and threshold reports must be accurately completed in accordance

with the format prescribed by the FIU.

(x) It should be evidenced in the compliance regime a clear communication structure or

procedure to show the reporting channels for both internal and external reporting.

7. Responsibility of Management/Director(s)/Proprietor/Professional

7.1 What are the responsibilities of the Management/ Director(s)/Proprietor or Professional

(as a DNFBP)?

The Management/Director(s) Proprietor or professional (as a DNFBP is required to-

(i) appoint a Compliance Officer (CO) who will ensure the entity's compliance with the

AML/CFT Act of 2009 (as amended by AMLCFT (Amendment Acts of 2015) and all

relevant legislation.

(ii) ensure that the CO functions at management level;

(iii) ensure that the CO has full access to information of the DNFPB (Reporting Entity); and

(iv) ensure the CO has the ability to submit reports to the FIU and be the liaison officer

who communicates for and on behalf of the DNFBP.

7.2 What happens if the DNFBP is a small entity with less than five staff?

a) Where a DNFBP has less than five (5) employees (including management), as the case

may be with many of these businesses or professions, it is not necessary to appoint

(employ someone from outside the DNFBPs to be the CO). The DNFBP, as a reporting

entity must, however, have someone designated as responsible for AML/CFT compliance.

In such case the proprietor/owner may be designated the CO.

7.3 Is the DNFBP (with less than five staff) still responsible for the other obligations under

the AML/CFT Act?

b) Whether the DNFBP is a large or small entity it is still obligated to comply with the

provisions of the AMLCFT Act, any amendments, regulations made under the Act and all

relevant legislation associated with regulating the DNFBPs.


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7.4 What other measures must the DNFBP do to ensure AMLCFT compliance?

c) The DNFBP through its CO must formulate compliance procedures/policies. It is

recommended that these policies and procedures be documented in an AMLCFT manual.

The compliance system or regime must contain the following provisions and may include

the application of relevant best practice measures that would strengthen the DNFBPs'

compliance regime.

d) In addition to the appointment or designation of a Compliance Officer who must ensure

compliance with provisions of the various legislation, the DNFBP should apply the

following control measures-

(i) Outline clearly the duties of Compliance Officer (CO) and to whom he/she

must report;

(ii) Create or have in place a compliance department with a clearly defined

structure. This would indicate the chain of command and the reporting

procedures within the department; this is particularly useful for a large

business or professional establishment;

(iii) The recruitment process for Compliance Officer should also be in place and

include criteria for character screening prior to employment (this may be

captured under the general integrity system for all employees of the Entity).

8 Monitoring Requirement

8.1 What does it mean to implement the monitoring Requirement?

This simply means that the business or the profession, as the case may be, must have a system

in place to review on an ongoing basis, the DNFBP's compliance system as well as the business

relationships with all of its customers/clients.

This review involves examining to assess whether the AMLCFT activities planned were

effectively carried out and being able to identify problems and provide solutions to challenges

as they arise.

Additionally, all business relations with customers/clients must be reviewed to ensure information

received are consistent with the DNFBP’s knowledge of the customer, its business and risk profile and

where appropriate, the source of funds.


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Special attention must be paid to cash based transactions, including follow up on the background and

purpose of those transactions. The findings must be documented with a view to making this information

available to the relevant competent authorities if required.

General good control mechanisms for the monitoring requirement of the entity's regime may

also include-

(i) Ensuring that, in addition to keeping customers' records up-to-date, the integrity

system is maintained, for example, job descriptions for new and existing positions;

that successful applicants are oriented and informed of the AMLCFT policies and

procedures of the DNFBP (as a reporting entity);

(ii) Ensuring that there is requirement for signing of confidentiality agreements by

employees or the inclusion of a clause on confidentiality in the employment

contract; Sample forms for this requirement may be part of the appendices of the

DNFBP's manual. This would demonstrate that a monitoring and control system is in

place.

(iii) Ensuring that there are regular checks to ensure that training sessions have been

undertaken according to schedule; reviews to ensure that appropriate measures of

disciplinary actions are taken and communicated to relevant staff. The system

should ensure that staff members are provided with the opportunity to raise

problems/concerns and document action taken to resolve those problems/issues.

9 Auditing Function

9.1 What does the audit requirement entails?

The business or profession is required to establish an audit function to test AML systems. The

system is expected to utilise the general principles applicable to the practice of auditing and be

adequately resourced, independent and provide for sample testing. This is essentially an

internal control measure that is used to forestall and prevent ML.

9.2 Why is it necessary to implement an audit function?

It is necessary for the DNFBP to implement this measure for the following reasons:

(i) To test the overall integrity and effectiveness of the AML/CFT systems and controls;

(ii) assess its risks and exposures with respect to size, type of business, customers/clients

and geographic locations;

(iii) assess the adequacy of internal policies and procedures;


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(iv) test compliance with the relevant laws and regulations;

(v) test transactions in all areas with emphasis on high-risk customers/clients, products and

services;

(vi) assess employees’ knowledge of the laws, regulations, guidance, and policies &

procedures;

(vii) assess the adequacy, accuracy and completeness of training programmes; and

(viii) assess the adequacy of the process of identifying suspicious activity.

The auditing function must also be performed to cover both internal and external auditing of

the AML/CFT regime.

For external auditing, independence of auditors must be a clear requirement. This should be

evidence in the policies/procedures or in the AMLCFT manual.

The composition of the committee of auditors/or authority conducting the audit should be

stated and auditing periods indicated.

10 Staff Training

10.1 How do employees of the DNFBP know what to do when dealing with

customers/Clients?

(i) The DNFBP must have a system in place for staff training at all levels to enable them to

recognise suspicious transactions and to be able to conduct customer/client due

diligence measures on a day to day basis. These procedures must be clearly understood

by the employees through ongoing and refreshers' training.

(ii) The training must provide information on new developments, current techniques,

trends and methods for dealing or address issues with money laundering and the

financing of terrorism.

(iii) Where customer/client due diligence measures are indicated in an AMLCFT manual, the

manual must be made available to all employees and their acknowledgement of its

existence should be clearly documented.

(iv) All relevant information relating to the form and content of training should be included

in the manual (where such a manual exists). All training materials and the frequency of

training should be recorded to evidence that training is conducted on an ongoing basis.


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10.2 What other measures must the DNFBP undertake to ensure employees obtain

knowledge of the AMLCFT requirement?

(i) The DNFBP must have a system for staff awareness or programmes to provide general

knowledge to management and other staff on all relevant laws, regulations, policies and

procedures, guidelines and other information related to Money Laundering and

Terrorist Financing.

(ii) The frequency of updates and channel of communication or dissemination of all

AMLCFT information and new legislative measures should be included in

policies/procedures or manual and updated as necessary.

(iii) All employees who have been made aware of AML/CFT policies, procedures in place

should be required to acknowledge their understanding of the contents of these

documents. This may be done by the issuance of a certificate of understanding or

acknowledgement, of these policies and procedures by the relevant employees.

11. Employee Screening

11.1 How does the DNFBP ensure its employees are reasonably competent and trust worthy?

(a) The DNFBP must ensure procedures are in place for screening of all employees prior to

employment. This may include the requirement for appropriate qualification and

experience of staff to fill job vacancies.

(b) Additionally, the requirement for police clearance, background checks and character

references should be obtained for each employee. This is a good control mechanism for

the AMLCFT integrity system.

12. Compliance Systems

12.1 Are there any other particular systems that may be reflected in the Compliance Regime?

In order to ensure the effectiveness of the Compliance Regime, the DNFBP may have in place

best practice measures by implementing the following systems-

12.1. Communication system

An effective Communication system should ensure the timely dissemination of AML/CFT

initiatives. The system should provide clearly defined reporting procedures, so that the flow of


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information to relevant employee (internally and externally to relevant authorities would be

clearly understood.

Relevant information that can be disseminated via this system may include:-

Providing updates to staff on the AML/CFT law, any regulations, directives or guidelines;

I. Providing staff with information on the Legal Sanctions as provided in relevant

legislation, for example, the legal sanctions that can be imposed for non-compliance,

the penalties for tipping off and breach of confidentiality;

II. Providing information on the 'immunity from civil and criminal proceedings for lawful

disclosure of information;

III. Providing information and the possible sanctions that may be imposed by the

Supervisory Authority under section 23 of the AMLCFT Act 2009 (as amended by the

AMLCFT (Amendment Act) 2015 and the penal provisions of other relevant legislation.

IV. Providing information on the Supervisory Authority’s role and function, including the

expectations in relation to AMLCFT examinations to be conducted by the Supervisory

Authority. For example, it may include provisions dealing with staff preparedness for the

examinations, for example how staff should respond during examinations and conduct

themselves when faced with the Supervisory Authority procedures.

This system may be included in a Compliance Manual, Policies and Standard Operating

Procedures and included in the awareness programmes conducted by the DNFBP.

12.3 Evidence Based System

This system requires the DNFBP to be able to have 'proof of compliance with all AMLCFT

Obligations" such as, the record keeping requirement and the effective maintenance of all

documentary evidence obtained for customers/clients transactions.

A good system for the retention of copies and retrieval of documents, and other data should be

present; clear evidence that employees are aware of the period of retention of records (seven

(7) years) and the conditions expected upon retrieval.


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12.4 A System for Internal Discipline

This system should make provision for discipline for employees who breach of procedures or

the regulatory mechanisms that are put in place to ensure compliance.

Employees should also be made aware of the implications of breaches of the Money Laundering

laws; (the possible penalties- legal and otherwise).

All Disciplinary action taken should be documented.

12.5 Risk Management System

The DNFBPs are expected to use a risk based approach in setting up their compliance regimes.

They should have reviews/assessments measures to mitigate possible risks. The various forms

of risk assessments to be covered, may include, but not limited to, product, jurisdictional,

interface and customer/client risk assessments.

13. General Information

13.1 What are some best practice measures that may be used in designing Compliance

Manual?

(i) Where a manual is being prepared by the DNFBP, it must, at a minimum, allow for

easy examination of key AMLCFT obligations. This could be achieved by the

inclusion of a table of content to allow examiners (the SAs) to locate AML/CFT

obligations.

(ii) The provisions which deal with procedures should entail providing step by step

instructions to employees or users of manual.

(iii) It is prudent to include a 'commencement date', which indicates when the 'Policies

and Procedures Manual' takes effect.

(iv) It should include the target audience, that is, who it is intended for (e.g. the staff

of the DNFBP).

(v) Where the DNFBP is a large entity, the manual may include the organisation

structure, inclusive of a ‘Compliance Department. This will allow for a clear

understanding of the chain of command, line of authority for

information/reporting flow within the regime.


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(vi) The AMLCFT Act 2009 (as amended) vis-a- vis Section 19 provides broad

obligations, however, these obligations need to be fleshed out by the various

entities in their independent policies/procedures/manuals to be applied by the

entity in its day to day operation.

(vii) It must be recognised in the manual that the overall responsibility for AMLCFT

regime always rests with Management/Board of Directors/Proprietor of the

DNFBP (the Reporting Entity).

14. General information on risks associated with some Categories of DNFBPs

Attorneys-at-Law, Notaries, Independent Legal Professionals and Accountants

The risks, connected to independent professions in the Money Laundering and the Financing of

Terrorism (ML/TF) field, lie basically in the potential misuse of these professions in concealing

the identities of the beneficial owners of the transactions done through them.

Countries, therefore, are required to impose certain obligations on these categories to combat

ML/TF, when they carry out the stated activities in the FATF 40 Recommendations.

Since ML/TF operations, whether executed though the financial sector or DNFBPs, are

undoubtedly connected to several risks and negative effects, these obligations therefore apply to

Attorneys-at-Law, Notaries, Independent Legal Professionals and Accountants practicing in Guyana

when they perform certain specified activities as provided in the AMLCFT Act.

It does not generally apply to Attorneys-at-Law or Accountants employed by the public service,

public authority or in-house counsel, where the nature of work of these professionals may not

involve the specified activities outlined in the Act.

Section 18(11) of the AML/CFT Act 2009 provides that subsections (4), (9) and (10) are

applicable to attorneys-at-law, notaries, other independent legal professionals and accountants

when, on behalf of or for a client, they engage in a transaction in relation to the following

activities-

i. buying and selling of real estate;

ii. managing of client money, securities or other assets;


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iii. management of bank, savings or securities accounts;

iv. organisation of contributions for the creation, operation or management

of companies; or

v. creation, operation or management of legal persons or arrangements, and

buying and selling of business entities

In summary, subsection 4 provides, inter alia, that these professionals must take reasonable

measures to-

- ascertain the purpose of the transaction,

- the origin and destination of the funds,

- identify and obtain the address of the beneficiary of the fund

- and submit reports to the FIU -if based on reasonable grounds, a transaction is suspicious

and the funds associated with the transaction(s) are connected to criminal activity, money

laundering or proceeds of crime; and

Subsections 9 and 10 require, among other things, these professionals to provide further

information, if requested by the FIU, on the suspicious transactions submitted and the FIU may

direct the professional (based on the FIU's assessment of the transaction) to cease with carrying

out the transaction with the client for a period that may be determined by the FIU.

Legal Professional Privilege

According to Section 18(12) nothing in the Act requires any attorney-at-law to disclose any

privileged communication.

Pursuant to Section 18(13) for the purposes of this section, a communication is a privileged

communication only if-

(a) it is to a person who is a professional legal adviser and the disclosure falls within

paragraph (b);

(b) a disclosure falls within this subsection if it is a disclosure-

(i) to or to a representative of a client of the professional legal adviser in

connection with the giving by the adviser of legal advice to the client, or


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(ii) to any person in connection with legal proceedings or contemplated legal

proceedings, but a disclosure does not fall within this subsection if it is made

with the intention of furthering a criminal purpose.

Legal professional privilege should be construed in accordance with the AML/CFT Act, the Legal

Practitioners Act Chapter 4:01, Amendments made under those Acts, including the ethical

obligations outlined in the Code of Conduct (in the Fourth Schedule of the Legal Practitioners

(Amendment) Act No. 26 of 2010).

If, as an Attorney-at-Law, a suspicion is formed of money laundering or terrorist financing,

there is need to carefully consider how to handle the situation to avoid disclosing any

information which is likely to prejudice any investigation, and whether or not to make a report

in light of the legal privilege exception.

Some Red flags Indicators for Attorneys-at-Law3

(i) Red flags about the client – is the client risky?

The major source of red flags is the “client” – (either as an individual or a company).

It is important to scrutinize the client's intentions behind his/her instructions to understand

more about the person to whom services will be provided.

Red flag indicators relating to client risk include:-

Client’s behaviour or identity-Client is secretive or evasive about: -

• its identity or that of its beneficial owner;

• the source of funds or money; or

• why is the client doing the transaction in the way it is:

• the client is known to have convictions, or to be currently under investigation for,

acquisitive crime or has known connections with criminals;

• related to or a known associate of a person listed as being involved or suspected of

involvement with terrorists or terrorist financing operations;

3 "A Lawyer’s Guide to Detecting and Preventing Money Laundering"- A collaborative publication of the International Bar Association, the

American Bar Association and the Council of Bars and Law Societies of Europe, October 2014)


30

• involved in a transaction that engages a highly technical or regulatory regime that imposes

criminal sanctions for breaches (increasing the risk of a predicate offence being

committed); or

• unusually familiar with the ordinary standards provided for by the law in satisfactory

customer identification, data entries and STRs, or asks repeated questions on related

procedures.

Concealment techniques

• Use of intermediaries without good reason

• Avoidance of personal contact for no good reason

• Reluctance to disclose information, data and documents that are necessary to enable the

execution of the transaction- Use of false or counterfeited documentation

• The client is a business entity that cannot be found when conducting searches on open

sources-e.g. internet web searches

• The relationship between the client and counter parties - ties between the parties of a

family, employment, corporate or any other nature generate doubts as to the real nature/

reason for transaction

• Multiple appearances of the same parties in transactions over a short period of time

• The parties attempt to disguise the real owner or parties to the transaction

• The natural person acting as a director or representative does not appear to be a suitable

representative

• The parties are native to, resident in, or incorporated in a higher-risk country, connected

without apparent business reason; of an unusual age for executing parties not the same as

the persons actually directing the operation.

(ii) Red flags in the services provided – are the services risky?

Examine the service requested -does it sought to create a structure in which money can be

concealed (e.g., complicated company and trust structure)?

Or does the service require depositing money into the attorney's client account (e.g. real

estate transactions)? Criminals may attempt to avoid suspicion by appearing to conduct a

purported legitimate transaction and request to transfer the illegitimate funds into a

lawyer’s client account.

Consider these circumstances where the client:-

A. indicates that funds are coming from one source and at the last minute changes the

source of funds; or


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B. makes request for the lawyer to send money received into the lawyer's client account

back to its source, to a third party or multiple recipients, sometimes according to the

direction of a third party (in order to conceal the identity of the real criminal client).

(iii) Red flags relating to our clients’ funds- The third major source of red flag indicators that

lawyers should be aware of are the funds received from clients in connection with transactions

and legal proceedings. The attorney should consider whether there is anything unusual about

the amount of funds involved, their source or the mode of payment used by the client.

Consider the following factors:-

1. Size of funds

• There is no legitimate explanation for:-

-a disproportionate amount of private funding, bearer cheques or cash (consider

individual’s socio-economic, or company’s economic, profile);

-a significant increase in capital for a recently incorporated company or successive

contributions over a short period of time to the same company;

• receipt by the company of an injection of capital or assets that is high in comparison with

the business, size or market value of the company performing;

• an excessively high or low price attached to securities being transferred;

• a large financial transaction, especially if requested by a recently created company, where

it is not justified by the corporate purpose, the activity of the client or its group companies;

or the client or third party contributing a significant sum in cash as collateral provided by

the borrower/debtor rather than simply using those funds directly.

2. Source of funds

• the source of funds is unusual because: -

• third party funding either for the transaction or for fees/taxes involved with no apparent

connection or legitimate explanation;

• funds are received from or sent to a foreign country when there is no apparent connection

between the country and the client;

• funds are received from or sent to higher-risk countries;

• the client is using multiple bank accounts or foreign accounts without good reason;

• private expenditure is funded by a company, business or government; or

• the collateral being provided for the transaction is currently located in a higher-risk

country.


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3. Mode of payment

• The asset is purchased with cash and then rapidly used as collateral for a loan. There is no

legitimate explanation for:-

• An unusually short repayment period having been set;

• Mortgages being repeatedly repaid significantly prior to the initially agreed maturity date;

or finance being provided by a lender, either a natural or legal person, other than a credit

institution.

(iv) Red flags relating to the client’s choice of lawyer -

I. lawyers should tread with caution whenever clients are instructing them from a

distance about transactions without legitimate reason for doing so.

II. lawyers being engaged although they lack competence in the relevant area of law or

experience in providing services in complicated or especially large transactions;

III. a client being prepared to pay substantially higher fees than usual, without

good reason;

IV. a client changing legal advisors a number of times within a short span of time;

V. engagement of multiple legal advisers without good reason; and

VI. another lawyer refusing to enter into, or termination of, a relationship with

the client.

Trust and Company Service Providers

The term 'Trust and Company Service Providers’ has the meaning used by the Financial Action

Task Force (FATF) and thus includes all those persons and entities that, on a professional basis,

participate in the creation, administration and management of trusts and corporate vehicles.

As such, these obligations apply to Trust and Company Service Providers (TCSP) if by way of

business, they provide services or prepare for and carry out transactions for a third party in

relation to the following activities:

a) formation or management of legal persons;

b) acting as or arranging for another person to act as a director or secretary of a company,

a partner of a partnership, or a similar position in relation to other legal persons;

c) providing a registered office, business address or accommodation, correspondence or

administrative address for a company, a partnership or any other legal person or

arrangement;


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d) acting as or arranging for another person to act as a trustee of an express trust; or

e) acting as or arranging for another person to act as a nominee shareholder/Director for

another person.

General Information on -Directors, Shadow Directors and Nominee Directors/Shareholders

To be considered a director of a company the following are possible situations:-

- a person has been formally appointed as a director and his/her name is registered at

the Companies Registry;

- a 'shadow director' - who directs or controls the business but not formally appointed

as a director;

- a nominee director if appointed by a third party instead of the shareholders in general

meeting. This manner of their appointment distinguishes nominee directors from the

ordinary director.

A nominee shareholder holds shares on behalf of the actual owner (the beneficial owner)

under a contractual agreement. The shares will be recorded in the name of the nominee; if

simply called a director as part of the job title without being formally appointed the person may

not fall within this remit.

Trusts and Company Service Providers pose a high risk for ML and TF, as they can be misused by

criminals for illegal purposes, for example, they can facilitate the hiding of the ultimate

beneficial owners of assets or legalise criminal proceeds integrated into the financial system.

Layering opportunities through various forms of investments, such as in the stock markets can

also be facilitated by this category of DNFBP.

Additionally, trusts and corporate vehicles may be set up by terrorists and used wholly or partly

for financing of terrorist activities.

Due to the risks associated with this sector, trust and company service providers must therefore

be vigilant and submit suspicious reports to FIU.

Some of the common red-flag indicators associated with this sector are listed below:

i. Multi-jurisdictional and/or complex structures of corporate entities and/or trusts are

established without valid grounds.

ii. Payments (local or foreign) are made or received without a clear connection to the

actual activities of the corporate entity.


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iii. Use of off-shore bank accounts without legitimate economic necessity.

iv. Customer’s unwillingness or refusal to provide information/documentary proof on

himself/herself or beneficial owner(s) of trusts/companies.

v. Sources and/or destinations of funds are unknown.

vi. Transactions are heavily cash-based which should normally be carried out through other

payment facilities.

vii. Customer’s background is not commensurate with the value of transactions carried out

by the customer or on behalf of the company.

viii. A company is established primarily for the purpose of collecting funds from various

sources which are then transferred to local/foreign bank accounts that have no

apparent ties with the company.

ix. Incorporation of a company by a non-resident with no links or activities in the

jurisdiction where the company is established.

x. The money flow generated by a company is not in line with its underlying business

activities.

Real Estate Agents/House Agents

The AMLCFT Act requires Real Estate Agents (House Agents), when they are involved in

transactions for their client relating to the buying and selling of real estate.

Generally, the specified activity of buying and selling of real estate applies to both residential

and commercial purchase and sale, lease and mortgage transactions and transactions which

finance a purchase or sale of real estate.

Money Laundering (ML) through the real estate sector is considered a traditional way of ML,

especially in cash-based societies. ML through real-estates may have several forms, for

example, engaging in a series of transactions designed to conceal the illicit source of funds,

investing in tourist complexes in order to acquire a legitimate appearance and Buying and

selling of real estate properties in fictitious names.

Consider the following red flags indicators when conducting business with customer/client:

a) Customer purchases property in the name of a nominee such as an associate or a relative

(other than a spouse), or in the name of minors or incapacitated persons or other persons

who lack the economic capacity to carry out such purchases.


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b) Customer does not want to put their name on any document that would connect them with

the property or uses different names on offer letters to Purchase, or closing documents and

deposit receipts.

c) Customer attempts to hide the identity of the beneficial owner or requests that the

transaction be structured to hide the identity of the beneficiary.

d) Buyer is a shell company and representatives of the company refuse to disclose the identity

of the beneficial owner.

e) Address given by customer is unknown, believed to be false, or simply a correspondence

address.

f) Customer does not satisfactorily explain the last minute substitution of the purchasing party’s

name.

g) Customer pays substantial down payment in cash and balance is financed by an unusual

source or offshore bank.

h) Customer purchases property without inspecting it.

i) Customer purchases multiple properties in a short time period, and seems to have few

concerns about the location, condition and anticipated repair costs, etc., of each property.

j) Customer pays rent or the amount of a lease in advance using a large amount of cash.

k) Customer is known to have paid large remodeling or home improvement invoices with cash,

on a property for which property management services are provided.

l) Transaction does not match the business activity known to be carried out by the customer.

m) Transaction is entered into at a value significantly different (much higher or much lower)

from the real or market value of the property.

n) Property is sold in a series of successive transactions each time at a higher price between the

same parties.

o) Buyer takes on a debt significantly higher than the value of the property.

p) Customer suddenly cancels/ aborts transaction and requests refund either back to

himself/herself/itself or to a third party.


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Dealers in Precious and Semi-Precious Stones and Metals

The risks of misusing the dealers in precious stones and metals are due to the fact that precious

metals, particularly gold, attracts money launderers, as it has a high actual value and can be

found in relatively small sizes, thus facilitating its transport, purchase and sale in several regions

around the world.

Gold also preserves its value regardless of its form whether it comes in the form of bullions or

golden articles. Dealers are often interested in gold more than gems as it may be melted to

change its form while preserving its value.

Gold is used in ML operations whether it is acquired in an illicit manner (like theft or smuggling)

where it constitutes proceeds of a crime and is therefore deemed to be an illicit fund, or is used

as a ML means through the purchase of gold against illicit funds.

Diamonds can also be traded around the world easily as the small size of diamond stones and

their high value facilitate their concealment and transport and make it one of the most gems

and jewels with the risk of being misused as a ML means. In some cases, it was noted that

diamonds are used as a means to finance terrorist acts and groups.

Red Flag Indicators associated with Dealers in Precious Metals and Stones:

Customers Transaction Patterns

(i) Transactions that are not consistent with the usual profile of a customer:

a. Transactions that appear to be beyond the means of the customer based on

his/her stated or known occupation or income; or

b. Transactions that appear to be more than the usual amount for a typical

customer of your business.

(ii) Transactions where customer does not consider the value, size and/or colour of the

precious stone, precious metal, or precious product.

(iii) Unusual payment methods, such as large amounts of cash, traveller’s cheques, or

cashier's cheques.

(iv) Large or frequent transactions that are in a foreign currency.


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(v) Numerous transactions by a customer, especially over a short period of time, such

that the amount of each transaction is not substantial (e.g. below the regulatory

threshold for customer due diligence), but the cumulative total of which is

substantial.

(vi) Use of third parties in transactions related to precious metals and precious stones,

for example:

(a) Payments received from a third party, who is not the owner of the funds, without

legitimate business purpose;

(b) Precious stones/metals product delivered to a third party, who is not the owner

or payer of funds, without legitimate business purpose.

Customer Behaviour

(i) The customer enquires about refund policies and requests for large refunds

subsequently.

(ii) The customer is suspected to be using forged, fraudulent or false identity documents

for due diligence and record keeping purposes.

(iii) The customer is unusually concerned with the AML/CFT policies and procedures.

(iv) The customer pays for precious metals, precious stones or precious products with

cheques, but noted on the cheque that the payment is for something else.

(v) The customer attempts to maintain a high degree of secrecy with respect to the

transaction, for example –

(a) To request that normal business records not to be kept; or

(b) The customer is unable or unwilling to provide information for due diligence

and record keeping purposes.

(vi) The customer or the declared owner of the funds is traced to negative news or crime

e.g. he is named in a news report on a crime committed, or detected when screened

against UN Security Council Resolutions (UNSCRs).

vii) The customer appears to be related to a country or entity that is associated with money

laundering or terrorism activities or a person that has been designated as terrorists.


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Suppliers Transaction Patterns

i) Transactions that are not consistent with the usual profile of the supplier:

(a) Over or under-invoicing, structured, complex, or multiple invoice requests, and

high-dollar shipments that are over or underinsured; or

(b) Transactions which are excessive, given the amount or quality, or potential profit

from the sale of precious metals and stones; or

(c) Consignment size or type of precious stone, precious metals or precious product

being shipped appears inconsistent with the capacity of the exporter or importer, i.e. the

shipment does not make economic sense.

ii) Use of third parties in transactions related to precious metals and precious stones, for

example:

(a) Funds paid to a third party who is not related to the supplier, without legitimate

business purpose; or

(b) Precious stones, precious metals or precious products delivered from a third

party who is not related to the supplier, without legitimate business purpose.

Supplier Behaviour

(c) The supplier is unable to provide information for due diligence and record keeping

purposes.

(d) The supplier is suspected to be using forged, fraudulent or false identity documents

for due diligence and record keeping purposes.

iii) The origins of the precious stone, precious metal or precious product appear to be fictitious.

iv) The supplier is unusually concerned with the AML/CFT policies and procedures.

v) The supplier attempts to maintain a high degree of secrecy with respect to the transaction,

for example –

(a) Request that normal business records not to be kept; or

(b) Unwillingness to identify beneficial owners or controlling interests, where this would

be commercially expected; or

(c) Request for payments to be made through money services businesses or other non-

bank financial institutions for no apparent legitimate business purposes.

vi) (For diamonds only) Rough diamonds are not accompanied by a valid Kimberley Process

(KP) certificate. For example:

(a) No KP certificate attached to the shipment of rough diamonds; or

(b) The KP certificate is or appears to be forged; or

(c) The KP certificate has a long validity period.


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vii) The supplier is traced to negative news or crime e.g. he is named in a news report on a

crime committed, or detected when screened against UN Security Council Resolutions

(UNSCRs).

viii) The supplier appears to be related to a country or entity that is associated with money

laundering or terrorism activities or a person that has been designated as terrorists.

ix) The supplier transports precious stones or metals through a country that is associated with

money laundering or terrorism activities for no apparent economic reason.

The Gambling Sector (Casinos /Betting Shops/ Lotteries)

The entities which comprise the gambling sector in Guyana include, betting shops, lotteries and

casinos (including when these activities are conducted through the internet).

These entities are by nature cash intensive businesses and hence majority of transactions are

cash based.

Criminals attempt to infiltrate or influence these businesses to facilitate theft, fraud, money

laundering and other crimes and, in many instances, these venues attract ancillary criminal

activities.

Usually, gambling in Casino, for example, takes place in cash (not necessary the case in

Guyana), which encompasses high risks that gamblers may use them in ML since they give

money launderers a ready justification for obtaining a fortune with no legitimate source.

Casinos are misused in ML operations in the first phase of ML (placement) where the funds

intended to be laundered are transformed from cash money into cheques by the money

launderer purchasing chips with the proceeds of a crime. The money launderer will later

request repayment through a cheque drawn on the account of the casino.

Among red flags to watch for are:-

(i) Gamblers who don't gamble much despite big spending;

(ii) Not willing to offer personal information when asked;

(iii) Make bets that cancel each other out such as betting on both red and black at the

same time in roulette.


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Non-Profit Organisation/Registered Charities (Friendly

Societies)

FATF’s Recommendation 8 touches on combating the abuse of NPOs, as they play an important role in

the global economy. They complement the activities of the governmental and business sectors in

providing services, comfort and hope to the needy.

However, the NPO sector has been exploited by terrorist organisations to provide financial and logistical

support, or otherwise support terrorist recruitments or terrorist operations. This has not been so far

evidenced as a situation which exists in Guyana.

The Interpretative Note to FATF’s Recommendation 8 requires domestic reviews of the NPO

sector. It suggests a four pronged approach to identifying, preventing and combating terrorist

misuse of NPOs:

(a) outreach to the sector,

(b) supervision or monitoring,

(c) effective investigation and information gathering and

(d) effective mechanisms for international cooperation.

It must be noted that Recommendation 8 does not apply to the NPO sector as a whole. It is also

not a 'one size fit all' approach to be taken when addressing measures to deal with NPOs. It

should be a targeted approach to implementing the measures called for in Recommendation 8,

including oversight and regulatory mechanisms, based on an understanding of the diversity of

the NPO sector and the terrorism risks faced by the domestic NPO sector.

Why are Charities/Registered Charities/Friendly Societies Vulnerable to Abuse?

a. The abuse of charities/Friendly Societies for ML or terrorist purposes may take various

forms, including exploiting charity funding, abusing charity assets, misusing a charity

name and status, and setting up a charity for illegal purposes.

b. Although there has been little evidence that the charities/Friendly Societies in Guyana are

exploited by terrorist organisations or money launderers, they may still be vulnerable due


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to the inherent risks related to fund raising, provision of services and other charitable

activities.

c. Charities/Friendly Societies enjoy high levels of public trust and confidence and often

rely on goodwill and volunteer support. As they are usually diverse in nature, reaching

out to all parts of the society, this extensive reach potentially includes terrorist

organisations or money launderers who may abuse them, through their services, the use

of their property or through their trustees, volunteers or even donors.

d. Due to limited financial resources, charities/Friendly Societies tend to minimise their

expenditure on governance, internal administration and regulatory compliance

processes, to maximise available funds for charitable projects. As a result, some Friendly

Societies may have weak financial administration practices and may overlook due

diligence checks on donors and recipient organisations to ensure the source and use of

donated funds are legitimate and lawful.

e. Individuals may act as fundraisers to raise funds in the name of a charities/Friendly

Societies to support terrorist purposes, with or without the knowledge of the charity.

Funds that are raised are diverted to support terrorism at some point, and may never

reach the intended beneficiaries. A charity might also be used to launder money or be

used as a legitimate front to move funds from one place to another.

f. Individuals supporting terrorist organisations may work in the capacity of a staff in the

charity while using the charity’s assets to contact or meet with fellow terrorist

representatives in high risk areas. This exploitation of communications network may be

carried out with or without the knowledge of the charity. Terrorists may try to set up

organisations as a sham charity, by raising funds, promoting causes and carrying out

activities in support of terrorism.

g. Charities/Friendly Societies may also be set up as a shell or front company to launder

taxable or illegal funds.

What can Charities/Friendly Societies do to prevent the Financing of Terrorism?

a. Strong Supervision and Financial Transparency - charities/Friendly Societies which have in

place good financial management and maintain robust internal processes of transparency

and accountability will be better safeguarded against all types of abuse.


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b. Sound written policies and financial procedures are critical preventive measures – as such, it

is important to ensure that they adhere to:-

(i) Know Your Key Donors and Beneficiaries - Friendly Societies should carry out proper

due diligence procedures on their key donors and beneficiaries. Resource permitting,

charities should put in their best efforts to confirm the identity, credentials and good

standing of the beneficiaries. Similarly, charities should confirm the identity of

significant donors while respecting donor confidentiality.

(ii) Transactions Conducted Via Regulated Financial Channels -As far as possible, Friendly

Societies should also ensure that transactions are conducted via regulated financial

channels to minimise any potential terrorist abuse while the funds are in transit.

(iii) Funds Applied in a Manner Consistent with the Friendly Societies' Mission and

Objects- Friendly Societies should always review its expenditure to ensure that funds

are channeled towards causes which are congruent with their missions and objects.

Charities should also not accept donations which are directed for purposes that are not

consistent with the charities’ missions and objects.

(iv) Report Suspicious Transactions to FIU - Friendly Societies should submit a STR if there

is a reasonable suspicion of ML or TF activity during the course of the Friendly

Societies’ administration or operations.

Used Car or Car Parts Dealers

Used car dealers have been an attraction to money launderers for many reasons. Apart from

the fact that large amounts of dirty cash can be used to purchase luxurious vehicles without

going through the regulated system, launderers can use dirty money to purchase car parts/or

even an entire vehicle (disguising as parts) from overseas suppliers. This method may not

attract the same standard of import tax, thereby providing the opportunity for tax evasion.

These dealers therefore need to be regulated, independently as well as the customers/clients

with whom they transaction business with.

Consider the following red flags when you buy, sell or lease motor vehicles:

(a) Customer attempts to purchase vehicle with a significant amount of cash.

(b) Customer is reluctant or refuses to produce personal identification documents for the

transaction to be completed.


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(c) Customer pays substantial down payment in cash and balance is financed by an

unusual source for example a third party or private lender.

(d) Purchases carried out on behalf of persons who appear to lack the economic capacity

to make such purchases.

(e) Last minute cancellation of order, which means that funds would have to be

reimbursed to the customer via a business cheque.

(f) Customer purchases vehicle without inspecting it.

(g) Customer purchases multiple vehicles in a short time period, and seems to have few

concerns about the type, cost, condition, etc.

(h) Customer purchases vehicles and registers them in “Rental”.

(i) Customer is known to have a criminal background.

(j) Customer uses or produces identification documents with different names.

(k) Customer does not want to put his/her name on any document that would connect

him/ her with the purchase of the vehicle.

(l) Purchase appears to be beyond the means of the Customer based on his/her stated or

known occupation or income.


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Appendices

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Main Features of a Reporting Entity Compliance Regime (Obligations and Systems)

Appointment of Compliance Officer

-responsible for compliance with provision of Act,

regulations &

Subsiduary Legislations

Operational manual

(policy and procedure, systems and controls) to deal with Sections 15,16,18, etc of

AMLCFT Act 2009(as amended ) Regulations made under the

Act

-KYC, -record keeping

reporting, screening and

awareness

Training Programmes

Training for staff on AML/CFT and to

detect Suspicious Transactions

-Ongoing and Refresher's training

Audit Functions.

Internal and External

-regular audits to assess AMLCFT compliance;

External audits to be done by independent committee- not inclusive of directiors or

managers of company. Auditors to be identified in

operating manuals

Section 19

Reporting Entity's overall Responsibility

-approve policy and procedure; periodic monitor/reveiws of

system; risk assessment; allow CO to access

relevant information; require CO to make report under sect 18

Compliance

Regime

Sanctions systems

of Control

safeguards,

provision for sanctions both internal and

legislative;

disciplinary process, security of data &

evidence of Compliance

Human Resource

system

-integrity system, screening process

Communication system

timely dissemination of AML/CFT initiatives; Communication flow to relevant parties-internal and external-awareness

and updating on AML/CFT measures to

staff

Sections 18 & 19

Evidence of

Compliance system

-copies and retention of information,

documents, data, special register and

system of safeguards of the evidence obtained.

Monitoring system

to test AMLCFT policies and procedures

Risk Management

review, assessment, measures to mitigate

Guyana Legislative Framework AMLCFT Act 2009; AMLCFT 2015 Regulations 2010 & 2015 Directives 2014

Guidelines

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Sample: ‘Compliance Regime’ for small reporting entity.

Identify Compliance Officer to be responsible for compliance

with provision of Act.

Must have operational manual (policy and procedure) to deal

with Sections 15,16,18,19,20 of AMLCFT Act 2009, Regulations

2010 and any Subsidiary Legislations

Proprietor/owner to be responsible for overall

AMLCFT-COMPLIANCE

-approve policy and procedure; periodic

reviews of system; risk assessment

Integrity system- screening process;

proprietor to ensure he has ongoing and refresher's training, awareness and updating on AML/CFT

measures

Reporting Procedures

timely dissemination of AML/CFT initiatives;

Communication flow to relevant parties-internal

and external

Compliance Regime

Audit Function.

-regular audits to assess AMLCFT compliance;

External audits to be done by independent source-not

inclusive of owner/proprietor of

company. Auditors to be identified in operating

manuals

Must have Evidence of compliance

Identification/verification & record keeping systems

-copies of information, documents, data and

system of safeguards of the evidence obtained.

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Sample -Structure of Compliance Department-(large reporting entity)

BOARD OF DIRECTORS

COMPLIANCE OFFICER

COMPLIANCE ASSISTANT

(ADMIN)


REPORTING -LIASON

AWARENESS - TRAINING

COMPLIANCE ASSISTANT REVIEW,

AUDIT, RISK ASSESSMENT

EXAMINATION

Sample -Structure of Compliance Department-(DNFBP-less than 5 Staff)

Proprietor/owner(s)

COMPLIANCE OFFICER

-may be the owner(s)


REPORTING -LIASON

AWARENESS - TRAINING

may be done by owner(s)

External Auditor

REVIEW, AUDIT

EXAMINATION -by Supervisory Authority