Reporting Suspicious Transactions to the FIU

Indicators, Trends, Sanitised case

By Guillaume Ollivry

28 October 2020
THE PILLARS IN THE FATF 40 RECS
A- AML/CFT Policies and Coordination (R1- R2)
B- Money Laundering and Confiscation (R3-R4)
C- Terrorist Financing & Financing of Proliferation (R5-R8)
D- Preventive Measures (R9-R23)
E- Transparency and Beneficial Ownership (R24-R25)
F- Powers & Responsibilities of Competent
Authorities (R26-R35)
G- International Cooperation (R36-R40)
THE INCEPTION OF THE AML/CFT FRAMEWORK

Prevention Investigation
& Detection & Confiscation
Prosecution
✓preventive ✓ Confiscation and
measures – CDD, ✓ Money laundering provisional
EDD, SDD, STR offence measures
Reporting, Records ✓ Terrorist financing
✓Targeted financial
keeping, Internal offence sanctions related to
controls terrorism & terrorist
✓ Targeted financial
✓AML/CFT policies sanctions related to financing
and coordination – terrorism & terrorist ✓Targeted financial
assess risk and financing sanctions related to
apply RBA ✓ Targeted financial
proliferation
✓Transparency and sanctions related to
beneficial ownership proliferation
OVERVIEW OF INSTITUTIONAL AML/CFT
FRAMEWORK IN MAURITIUS

Chain of Responsibilities
Prevention Detection Investigation Prosecution Deterrence Confiscation

Investigative
Analysis ARID
Complianc
e Division
Guidelines Financial Gathering of
Prosecu-
Judgments
and
Asset
Invest- Evidence Recovery
Compliance igative tion Penalties

Regulatory
Analysis
Sanctions

Regulators Reporting Investigatory Public Prosecution Magistrates/Jud Asset Recovery Office

BoM, FSC, Persons Bodies Office of the DPP ges Assets Recovery
GRA, FIU, RoC (Banks, FIs, Police, ICAC, Intermediate Investigation Division
DNFBPs ARID, Court
etc) Court of Appeal
/FIU in in Appellate
jurisdiction
REPORTING OBLIGATION S14 FIAMLA
 Section 14(1) of FIAMLA
Notwithstanding section 300 of the Criminal Code and
any other enactment, every reporting person or auditor
shall, as soon as he becomes aware of a suspicious
transaction, make a report to FIU of such transaction not
later than 5 working days after the suspicion arose.

What is a reporting person?

“reporting person” means a bank, financial institution,
cash dealer or member of a relevant profession or
occupation
“member of a relevant profession or occupation” means a
person specified in Column 1 of Part I of the First
Schedule and performing any transaction in the manner
specified in Part II of that Schedule;
REPORTING OBLIGATION S14 FIAMLA
 First Schedule of FIAMLA
Part I
Member of a relevant profession or occupation Regulatory body
1. Professional accountant, public accountant Mauritius Institute of Professional
and member firm under the Financial Reporting Act Accountants established under the
Financial Reporting Act

Part II
(1)(e) …. a professional accountant, a public accountant and a member firm licensed under the
Financial Reporting Act, who prepares for, or carries out, transactions for his client concerning
the following activities –
(i) buying, selling or rental of real estate;
(ii) managing of client money, securities or other assets;
(iii) management of bank, savings or securities accounts;
(iv) organisation of contributions for the creation, operation or management of legal
persons such as a company, a foundation, a limited liability partnership or such other
entity as may be prescribed;
(v) creating, operating or management of legal persons such as a company, a
foundation, an association, a limited liability partnership or such other entity as may be
prescribed, or legal arrangements, and buying and selling of business entities; or
(vi) any activity specified in item (f) → activities of a company service provider;
REPORTING OBLIGATION UNDER FIAMLA
 Section 10(2)(c) of FIAMLA
For the purposes of this Act, the FIU shall –
….
(c) issue guidelines to auditors, reporting persons and
internal controllers of credit unions as to the manner
in which –
(i) a report under section 14 shall be made;
.....
 Guidance Note 3: STR (2014) – filing of STRs
via the goAML Web platform
 Statistical info
Statistical data on STRs,
diversity of STRs, Trends,
Quality issues on STRs,
Indicators
DIVERSITY OF STRS REPORTED 01 JAN 2017 – 30 SEP 2020
700

600

500

400

300

200

100

2017 2018 2019 2020

TRENDS IN STRS – MEMBERS OF RELEVANT PROFESSIONS….

 Period: 01 Jan 2017 to 30 Sep 2020

120

100

80

60

40

20

0
Total

2017 2018 2019 2020

 OBSERVATIONS ON DETECTION MODE
(SAMPLE PERIOD: MAY 2019 – JUL 2020)

Members
Funds Non-Bank of a S14 -
Foreign Manageme
(Including Deposit Investment relevant Payment Grand
Mode of Detection BANK Exchange nt
CIS and Taking Dealers profession Intermedia Total
Dealer Companies
CEF) Institutions or ry Services
occupation

IDD Manually identified 276 - 1 18 2 2 25 - 324

IDA Automated rules based

239 - - 6 - - - 7 252
account monitoring

IDC Manual account monitoring 133 - - 1 1 2 - - 137

IDB In-branch/Teller identified 89 2 - - - - - - 91

Grand Total 737 2 1 25 3 4 25 7 804

STRs filed during sample period 791 26 5 106 16 5 50 9

QUALITY OF STRS (REJECTION)

 Incomplete info on report: Reason/ Action field incomplete

 Incomplete transaction info: Incorrect values/ date/ transaction type
 Incorrect scenario: missing parties, wrong scenario
 Missing Party Details (KYC issues): name, ID, address missing
 Incomplete account info: missing account information

Grand
Categories of Rejection 2017 2018 2019 2020
Total
Incomplete Information in Report 145 134 147 124 550
Incomplete Transaction Section 218 169 199 220
806
Incorrect Scenario 194 142 174 299 809
Missing Party Details (KYC issues)
109 38 76 33 256
Incomplete/Incorrect Account Information
111 29 42 50 232

 Remedial actions: Scenario Booklet, goAML Helpdesk, STR filing video

tutorials, Refresher courses
 INDICATORS – BY REPORTING PERSONS (MAY 2019 – JUL 2020)
Members
Non-Bank of a
Funds Managem S14 -
Foreign Deposit Insurance relevant
(Including ent Investmen Payment Grand
Indicator BANK Exchange Taking Companie profession
CIS and Companie t Dealers Intermedia Total
Dealer Institution s or
CEF) s ry Services
s occupatio
n
TA Activity does not match client profile 387 1 7 2 2 1 400
TR Suspicious behaviours / Reluctance to
265 5 28 4 3 2 2 309
provide details and documents
TD Structuring 12 5 24 41
TF Use of casinos and gaming activities 9 27 36

TI Use of offshore financial services 7 1 10 18

TK Use of family members and third parties 11 4 1 16

TC Smurfing 2 3 10 15
TG Use of nominees and trusts 1 6 1 2 10
TJ Use of shell companies 2 5 7

TE Trade based money laundering 4 1 1 6

TM Use of new payment technologies /

3 3
methods
TN Denomination Conversion 1 1 2
TB Purchase of securities or high value
1 1
goods
Grand Total 704 5 2 67 10 5 5 63 3 864

STRs filed during sample period 791 26 5 106 16 16 5 50 9

FIU INITIATIVES TO IMPROVE REPORTING CULTURE

 Quarterly Bulletin
 Scenario Booklet

 Video Tutorials

 Strategic Products

 goAML Helpdesk

 Collaboration with other government agencies

in Outreach sessions
SANITISED CASE
 In year 20XX, the FIU received a referral from a
local LEA about foreign natural persons JS and CS
suspected of operating via a company in Mauritius
to launder the proceeds of crime committed in their
country of origin EU Jurisdiction 1.
 The LEA referral took place following a request the
local LEA received from a counterpart LEA in EU
Jurisdiction 1. The FIU was informed that JS and CS
were the subject of a red notice issued by Interpol
because of their fraudulent activities in EU
Jurisdiction 1.
 Beneficiaries of Trust

SANITISED CASE
Child 1 of CS & JS

Child 2 of CS & JS

Mauritius

CS

JS

Leg end
Link Inward Transfer Inter A ccount Transfer O utward Transfer
 Island Jurisdiction 3
Beneficiaries of Trust

SANITISED CASE 1 Child 1 of CS & JS

bene ficiaries
TCSP foreign as trustee of VVV Trust
Child 2 of CS & JS

Mauritius Shareh older

CS

A/c 01 at Bank AA

A/c No 02 at Bank AA 2
a/c of Co Dire ctor

A/c 12 at Bank BB Domestic Co BT Resident front

A/c No. 03 at Bank AA
for subject FF

Shareh older

3
a/c of Co Dire ctor
JS
A/c 13 at Bank BB Domestic Co ST

A/c 07 at Bank AA

A/c 08 at Bank AA

Leg end
Link Inward Transfer Inter A ccount Transfer O utward Transfer
 EU J urisdiction1 SEA Jurisdiction 2 Island Jurisdiction 3
Beneficiaries of Trust

SANITISED CASE 1
Overseas Co Child 1 of CS & JS
bene ficiaries
TCSP foreign as trustee of VVV Trust

5 Child 2 of CS & JS

approximately MUR16.7M

Appr MUR12M

Mauritius Shareh older

TCSP CC
CS 6
approximately MUR 2.8M
A/c 01 at Bank AA A/c 04 at Bank AA

A/c No 02 at Bank AA 2
8 MUR 1.9M a/c of Co Dire ctor

A/c 05 at Bank AA A/c 12 at Bank BB Domestic Co BT Resident front

A/c No. 03 at Bank AA
for subject FF

4
approximately MUR17M

approximately MUR3.5M
9 MUR 1.9M
Shareh older
MUR 1.4M

3
JS 7 MUR 17M a/c of Co Dire ctor

A/c 06 at Bank AA A/c 13 at Bank BB Domestic Co ST

A/c 07 at Bank AA

A/c 08 at Bank AA

App MUR 3.6M

Appr MUR 3.7M

Proceeds from Sale of

Product s/ Services
Domestic Co DD

A/c 09 at Bank AA
A/c 10 at Bank AA

A/c 11 at Bank AA

Leg end
Link Inward Transfer Inter A ccount Transfer O utward Transfer
 SANITISED CASE EU Jurisdiction1 SEA Jurisdiction 2 Island Jurisdiction 3
Beneficiaries of Trust

Overseas Co
1 bene ficiaries
Child 1 of CS & JS

TCSP foreign as trustee of VVV Trust

5 Child 2 of CS & JS

approximately MUR16.7M

Appr MUR12M

Mauritius Shareholder
TCSP CC
CS 6
approximately MUR 2.8M
A/c 01 at Bank AA A/c 04 at Bank AA
Major Expenses

A/c No 02 at Bank AA 2
High end car MUR1.4M
8 MUR 1.9M a/c of Co Dire ctor

A/c 05 at Bank AA A/c 12 at Bank BB Domestic Co BT Resident front

A/c No. 03 at Bank AA
for subject FF

4
approximately MUR17M
Refill for 3rd Party
approximately MUR3.5M
9
App MUR97K
MUR 1.9M
Shareholder
MUR 1.4M

3
JS 7 MUR 17M a/c of Co Dire ctor

A/c 06 at Bank AA A/c 13 at Bank BB Domestic Co ST

A/c 07 at Bank AA
Major Expenses
MUR19M
10 For Purchase
of property
Acquisition
of property
Debit Card Purchases
A/c 08 at Bank AA

no tary
Client exe cuting
Standing Orders a /c deed of
Refill for 3rd party A/c 14 at Bank AA Me Notary sa le High Value
App MUR 3.6M Property acq
MUR100K

11
under scheme

Appr MUR 3.7M

Proceeds from Sale of

Products/Services
Domestic Co DD
Major Expenses
A/c 09 at Bank AA
A/c 10 at Bank AA

High end car 2 (MUR 1.2M)

A/c 11 at Bank AA

Other payments (inc Suppliers)

Leg end
Link Inward Transfer Inter A ccount Transfer Outward Transfer
RED FLAGS
 Use of complex web of legal persons and legal
arrangements
 Use of different jurisdictions
 Combine complex web of entities and different
jurisdictions to detract audit trail
 Use of minors to hide beneficial ownership
 Use of gatekeepers
 Commingling of funds from business accounts
into personal bank accounts
 Integration stage involving high value assets
Guillaume Ollivry
Director

Email: [email protected]

Financial Intelligence Unit

10th Floor, SICOM Tower
Wall Street
Ebene Cybercity
Ebene 72201
Republic of Mauritius

Tel No: (230) 454 1423

Fax No: (230) 466 2431

Website: www.fiumauritius.org