IIA. Guidelines on the Identification of Suspicious Financial Transactions for Foreign Currency Traders and Money Transfer Service Businesses

Transcription

1 Attachment to the Decision of the Head of the Indonesian Financial Transaction Reports and Analysis Center Number: 2/5/KEP.PPATK/2003 Guideline IIA FIRST EDITION INDONESIAN FINANCIAL TRANSACTION REPORTS AND ANALYSIS CENTER (PPATK) Guidelines on the Identification of Suspicious Financial Transactions for Foreign Currency Traders and Money Transfer Service Businesses

2 INDONESIAN FINANCIAL TRANSACTION REPORTS AND ANALYSIS CENTER (PPATK) GUIDELINE IIA Guidelines on the Identification of Suspicious Financial Transactions for Foreign Currency Traders and Money Transfer Service Businesses First Edition Indonesian Financial Transaction Reports and Analysis Center (PPATK) Tel: Fax: Jakarta 2003

3 Table of Contents CHAPTER 1: GENERAL... 1 A. INTRODUCTION... 1 B. THE USE OF GUIDELINES... 2 CHAPTER 2: IDENTIFICATION OF CUSTOMERS Examination on Customers' Identity Transaction Recording Storage of Transaction Documents... 5 CHAPTER 3: IDENTIFICATION TRANSACTIONS Definition of Suspicious Financial Transaction The importance of Identification of Suspicious Financial Transactions Elements and indicators of Suspicious Financial Transactions... CHAPTER 4: SUSPICIOUS FINANCIAL TRANSACTION REPORTING CHAPTER 5: INFORMATION AND INQUIRIES ATTACHMENT: CASE SAMPLES... 13

4 OF SUSPICIOUS FINANCIAL TRANSACTIONS FOR FOREIGN Chapter 1 CHAPTER 1: GENERAL A. Introduction Based on Article 1 item 5 of Law Number 15 Year 2002 regarding Criminal Acts of Money Laundering as amended by Law Number 25 Year 2003 ( TPPU Law ), Financial Dealer ( PJK ) is any person providing financial services or other services related to finance including but not limited to banks, financing institutions, securities companies, mutual fund managers, custodians, trust agents, custody and settlement institutions, foreign currency traders (PVAs), pension funds, and insurance companies as well as post offices. Pursuant to the above provision, money transfer service business ( UJPU ), the activity of which is to provide financial services, is included in PJK. For this moment, referred to herein as UJPUs or money remittances shall be UJPUs performed by Post Offices and Western Union. As financial dealers, PVAs and UJPUs may also be used, whether directly or indirectly, by criminals as the facilities for committing money laundering acts. As one of the efforts to prevent such matter, PVAs and UJPUs need to identify their customers along with their activities in utilizing the financial services provided by the PVAs and UJPUs concerned. This, in turn, can help the PVAs and UJPUs in identifying Suspicious Financial Transactions. Furthermore, in accordance with Article 13 paragraph (1) subparagraph a of the TPPU Law, PVAs and UJPUs are obligated to report Suspicious Financial Transactions to the Indonesian Financial Transaction Reports and Analysis Center (the PPATK ). In the event that bank-form PJKs conduct PVA and UJPU activities, the Know-Your-Customer Principles (KYC) applied in banks shall be applicable to both activities. 1

5 In order to help PVAs and UJPUs identify Suspicious Financial Transactions, the PPATK has issued Guidelines on the Identification of Suspicious Financial Transactions for PVAs and UJPUs. These guidelines are the continuation of the General Guidelines on the Prevention and Eradication of Criminal Acts of Money Laundering for Financial Dealers. B. The Use of Guidelines These guidelines are issued to provide comprehension and references for PVAs and UJPUs on the methods for identifying suspicious financial transactions accurately, in order to produce quality Suspicious Financial Transaction Reports. These guidelines will explain when and how the principles for the identification of customers and Suspicious Financial Transactions are applied, which include the following matters: 1. Examination on the Identities of Customers. 2. Transaction recording 3. Storage of transaction records 4. Definition of Suspicious Financial Transaction 5. The importance of identification of Suspicious Financial Transactions 6. Elements and Indicators of Suspicious Financial Transactions In order to increase effectiveness in its implementation, PPATK will continuously review and improve these guidelines, the results of which will be periodically issued. In addition to that, it is also possible to provide explanation on significant matters that may arise in the implementation. 2

6 Chapter 2 CHAPTER 2: IDENTIFICATION OF CUSTOMERS 1. Examination on Customer Identity In performing their business activities, PVAs and UJPUs must examine the identity of any customer conducting transaction amounting to Rp.100,000,000 (one hundred million rupiah) or more or in foreign currencies of equal value, in a single transaction within 1 (one) day. In examining customers' identity, PVA and IJPU officials must at least take the following measures: Individual: a. Ask the customer to present his/her identification such as Identity Card (KTP), Diver s License (SIM), or Passport. b. Examine that the customer has been in conformity with the service user's identity, among other things, the conformity of photo and signature. Corporate: a. Ask the customer to present identification such as business license, and or Taxpayer Registration Number (NPWP). b. Examine that the customer has been in conformity with the customer's identity. In the event that the customer cannot present his/her identification or in the event of unconformity of the customer's identity and/or in the 3

7 event that PVA and UJPU officials doubt the originality/accuracy of the customer's identity, transactions may not be conducted with the aforementioned customer. 2. Transaction Recording PVAs and UJPUs are obligated to maintain transaction records of any customer conducting transaction in the amount of Rp.100,000,000 (one hundred million rupiah) or more or in foreign currencies of equal value, in a single transaction within 1 (one) day, which at least covers the following matters: Individual: a. Name and address of the customer b. Place and date of birth c. Occupation d. Nationality e. Identification number f. Transaction value g. Transaction date Corporate: a. Name and address of the customer b. Business sector c. Business license number d. Taxpayer Registration Number (NPWP) e. Transaction value f. Transaction date 4

8 3. Storage of Transaction Documents The data and documents in respect of the transactions as mentioned in item 2 above, must be administered for a minimum period of 5 (five) years as from the date of the transactions. 5

9 Chapter 3 CHAPTER 3: IDENTIFICATION OF SUSPICIOUS FINANCIAL TRANSACTIONS 1. Definition of Suspicious Financial Transaction As already known, the TPPU Law uses the term Suspicious Financial Transaction. The word suspicious has the connotation that such financial transaction is surely related to a criminal act so as to pose impediment to Suspicious Financial Transaction reporting. Basically, referred to as Suspicious Financial Transaction is the transaction that is unusual or improper and is not always related to a certain criminal act. The term suspicious transaction in the anti-money laundering terminology was initially used by the Financial Action Task Force on Money Laundering (FATF) in the Forty Recommendations concerning the eradication of criminal acts of money laundering. In practice, every state may use different terms. The term used is not only suspicious transaction, but also other terms such as unusual transaction. 2. The Importance of Suspicious Financial Transaction Identification In committing money laundering, the perpetrator does not normally spend or use the properties obtained from his/her criminal act directly, but he/she will first try to put such properties into the financial system through placement, layering or integration phases. It is conducted with the purpose of hiding or covering up the origin of such properties so that they appear as if they are legal. Subsequently, the perpetrator of such criminal act can use the outcome of his/her criminal act safely. With respect to the aforementioned matter, the identification of Suspicious Financial Transaction is one of the important activities to be conducted by 6

10 PVAs and UJPUs in producing quality reports on Suspicious Financial Transaction. Such action is required to support the efforts of preventing and eradicating criminal acts of money laundering and terrorism funding as well as securing the financial system so that it will not be used for illegal purposes. 3. Elements and Indicators of Suspicious Financial Transactions Elements of Suspicious Financial Transactions In accordance with Article 1 item 7 of the TPPU Law, a Suspicious Financial Transaction basically has the following elements: a. Transaction deviating from: the profile; the characteristics; or the usual transaction pattern of the relevant customer. b. Transaction reasonably suspected to have been conducted with the purpose of evading the reporting that must be made by the relevant PJK. c. Financial transaction conducted or failed to be conducted using properties alleged to be attributable to criminal acts. If a financial transaction indicates one or more of the aforementioned elements, the relevant PVA and UJPU must identify it as a Suspicious Financial Transaction and report it to the PPATK. Indicators of Suspicious Financial Transaction In identifying whether or not a financial transaction has one or more of the aforementioned elements, the relevant PVA and 7

11 UJPU can use the indicators of Suspicious Financial Transaction, which include, among other things: a. Transaction 1) Foreign currency trading transactions i. Transactions conducted in a different amount from that of usually conducted by the relevant customer (for customer who often conducts transactions with the same PVA). ii. Transactions conducted in a relatively small amount but with high frequency. iii. Transactions conducted by using several different individual names for the interest of a particular person. iv. The sale and purchase of foreign currency in a relatively large amount. v. A customer who sells travelers checks in a relatively large amount. vi. Transactions having no relation to the business of the relevant customer. vii. Customer requesting for the payment of foreign currency sales using checks. viii. Customer requesting for the payment of foreign currency sales to be transferred to the relevant person's or other party's bank account. ix. Customer requesting for the payment of foreign currency sales/purchases to be given to other party. x. Customer requesting for the payment of foreign currency sales/purchases in large denomination. xi. Customer who is willing to be subject to an exchange rate lower than the applicable exchange rate. 8

12 2) Money transfer and receipt transactions i. Money transfers and or receipts to and from high-risk offshore financial centers without any clear business reasons. ii. Money transfers and or receipts performed in a relatively small amount but with high frequency. iii. Money transfers and or receipts performed in several phases in a relatively large amount. iv. Money transfers and or receipts in the same or approximately the same amount and conducted in a relatively short period. v. Money transfers and or receipts from high risk countries. vi. Money transfers and or receipts to and from high risk customers. b. Behaviors of the customer of PVA and UJPU 1) Unreasonable behaviors of the relevant customer when conducting a transaction (nervous, rushed, unconfident, etc.) 2) Customer gives false information with respect to his/her identity. 3) Customer uses identification document that is unreliable or alleged as fake such as different signature or photo. 4) Customer is unwilling or refuses to provide information/documents requested by the officials of the relevant PVA and UJPU without any clear reasons. 5) Customer tries to persuade the officials of the relevant PVA and UJPU in one way or another not to report his/her transaction as a Suspicious Financial Transaction. 9

13 If the relevant PVA and UJPU still feel uncertain even after conducting Suspicious Financial Transaction identification, it will be better that the relevant PVA and UJPU report such transaction to the PPATK as a Suspicious Financial Transaction in order to avoid unexpected risks including the possibility of being penalized as set forth in Article 6 paragraphs (1) and 8 of the TPPU Law. 10

14 Chapter 4 CHAPTER 4: SUSPICIOUS FINANCIAL TRANSACTION REPORTING These guidelines only apply to PVAs and UJPUs, while the guidelines for other PJKs are made separately. The UJPU intended herein is the UJPU conducted by Post Offices and the Western Union. If the elements of Suspicious Financial Transaction are found in the identification process, the relevant PJK must report it to the PPATK in accordance with the provisions in the TPPU and the procedure regulated in the guidelines concerning Suspicious Financial Transaction Reporting Procedures within 3 (three) business days. The obligation to report Suspicious Financial Transactions to the PPATK will be effective as from October 18,

15 Chapter 5 CHAPTER 5: INFORMATION AND INQUIRIES The implementation of the anti-money laundering regime is a relatively new issue for various parties in Indonesia. Therefore, the PPATK has opened a help-line to provide assistance in the form of information and consultation services with respect to the identification and reporting of Suspicious Financial Transactions. However, these services do not constitute legal assistance for PVAs and UJPUs. Such help-line service can be accessed by to: helpline@ppatk.go.id that will be operating on business days from 08:00 to 16:00 hours West Indonesian Time. 12

16 ATTACHMENT: CASE SAMPLES Several case samples of Suspicious Financial Transactions are provided in this ATTACHMENT and they are described in three phases, namely: Cases Exposing the activity and/or method used by a customer of a PJK in an effort to hide the origin of the properties attributable to his/her criminal act. Suspicious Indicators Describing several facts of a case that indicate Suspicious Financial Transaction if combined. Elements of Suspicious Financial Transactions In accordance with the TPPU Law, a transaction is classified as a Suspicious Financial Transaction if it indicates one or more of the following elements: a. The transaction is deviating from: the profile; the characteristics; or usual transaction pattern of the relevant customer. b. Transaction reasonably suspected to have been conducted with the purpose of evading reporting that must be conducted by the relevant PJK. c. Financial transaction the fund of which is alleged to be originating from criminal acts. 13

17 These phases conclude the elements that must be found in a case so that it can be classified as a Suspicious Financial Transaction. Case 1 (PVA) A, the owner of a relatively small boutique named B located around PVA C, conducts foreign currency sale transaction every Friday in the average amount of Sin$8,000-10,000 since early Foreign currency sales conducted twice a week increased to Sin$ in August Foreign currency sales were always conducted by different female employees of B boutique. The identities of such employees indicate various jobs such as college student, student, or employee of a private company and the transactions were conducted for and on behalf of A by stating the transactions as the result of exporting clothes to Singapore. The official of the PVA observes that there is no business entity engaging in export around the location of the PVA. In addition to that, it is known that A was involved in a prostitution business in Suspicious indicators Although the business volume of boutique B is relatively small, the foreign currency sale transactions are always conducted in a relatively enormous amount. There was a relatively high volume change of the foreign currency sale transactions. The business of B boutique is not export-oriented. A has once been involved in a prostitution business. Elements of Suspicious Financial Transactions The aforementioned series of transactions indicate the following elements: Transaction deviates from the characteristic. Transaction deviates from the usual transaction pattern. 14

18 The fund is alleged to be originating from a criminal act. Therefore, it can be concluded that such transactions constitute Suspicious Financial Transactions. Case 2 (UJPU) Mr. X, an ex-banker, transferred Rp.500 million to his child named Y in Australia through a company named Q (UJPU) on September 3, Subsequently, Mr. X transferred Rp.500 million on each date to his second wife, Mrs. Z, in Hong Kong through the same UJPU on September 5, 6 and 8, For information, banks have applied the Know-Your-Customer Principles/KYC since June Based on the information from the mass media, it was found out that Mr. X was alleged to have been involved in a banking criminal act. Suspicious indicators Mr. X (ex-banker) transferred money in a relatively enormous money overseas not through a bank. Based on the information from the mass media, Mr. X was alleged to have been involved in a banking criminal act. Elements of Suspicious Financial Transactions The aforementioned series of transactions indicate the following element: The fund is alleged to be originating from a criminal act. Therefore, it can be concluded that such transactions constitute Suspicious Financial Transactions. 15