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Time to put on your "POCA" Face?

AT the 2014 Gaming Industry Summit of the Betting Gaming and Lotteries Commission, news of the designation of Casino Operators and Gaming Machine Operators as non-financial institutions under the Proceeds of Crime Act (POCA) created quite a buzz amongst participants. The murmurs amongst participants suggested that there was some confusion regarding their obligations as designated non-financial institutions. It is important that all Designated Non-Financial Institutions (DNFIs) understand their obligations and put on their "POCA" face to become compliant with the law.

As of April 1, 2014, real estate dealers, casino operators, gaming machine operators, public accountants and attorneys were designated as non-financial institutions by the Minister of Finance for the purpose of the Proceeds of Crime Act and Regulations (POCA).

Why the designation?

 

The Financial Action Task Force (FATF) has found that certain professions and industries (usually financial institutions and the DNFIs) are susceptible to being used in the layering and integration stages of money laundering, as well and, as a means of disguising the origin of funds before placing them into the financial system. FATF characterises certain professionals as "gatekeepers" because they "protect the gates to the financial system" through which the launderer must pass in order to succeed.

DFNIs' obligations

 

Pursuant to the Proceeds of Crime (Money Laundering Prevention) Regulations, DNFIs may be held liable for money laundering where they:

1. Know or believe or have reasonable grounds for knowing or believing that another person has engaged in a transaction that could constitute or be related to money laundering; and

2. The information or matter on which the knowledge or belief is based or which gives reasonable grounds for such knowledge or belief came to them in the course of business in the regulated sector; and

3. They fail to report such cases of money laundering.

Accordingly, it is necessary to impose anti-money laundering responsibilities on DNFIs when they participate or assist clients/customers in certain transactions. Under POCA DNFIs' obligations include:

1. Appointing a Nominated Officer

2. Mandatory Reporting

3. Mandatory Record Keeping

4. Anti-Money Laundering detection policies/procedures

Appointment of a nominated officer

 

DNFIs shall nominate an officer of the business who performs management functions as the person to be responsible for ensuring the implementation of the programmes, policies, procedures and controls required by the POCA Regulations for preventing and detecting money laundering, including the reporting of transactions. Members of staff report to the Nominated Officer where they have grounds for believing that a client or other person has engaged in a money laundering transaction.

Mandatory Reporting- Suspicious Transactions and Authorised Disclosure reports

 

Under POCA, DNFIs are required to submit two prescribed types of reports: a Suspicious Transaction Report and an Authorised Disclosure report.

DNFIs are required to make and submit Suspicious Transaction Reports (STRs) where they know or believe or have reasonable grounds to believe that another person has engaged (or will engage) in a transaction that could constitute or be related to money laundering and where the information or matter on which the knowledge/belief is based came in the course of a business in the regulated sector.

These reports must be made in the prescribed manner and form to the nominated officer or designated authority within the prescribed time frame. The Designated Authority is the Chief Technical Director of Financial Investigations Division of the Ministry of Finance. STRs can be downloaded from the FID website.

An authorised disclosure is an internal report to an authorised or nominated officer by an employee of information (or other matter) that causes the person making the report to know/believe/have reasonable grounds for knowing/believing that property is criminal property.

Mandatory record keeping

 

DNFIs should ensure that a record of all transactions is preserved and maintained to provide to FID when required. In particular, all complex, unusual or large business transactions and any unusual transaction should be recorded and retained for a period not less than seven years or such other period as may be specified by the Designated Authority.

Anti-money laundering detection policy

 

The 2013 POCA Amendments mandate the need for DNFIs to implement procedures to assess the risk of money laundering through risk profiling and ongoing due diligence verification procedures. Assessing your business's risk profile will help you design the right systems that will spot suspicious activity, and ensure that staff is aware of various money laundering activities that are likely to arise.

The risk profile depends on the nature of the business, branch network, customers, and activities.

Examples of risk-based controls include:

*introducing a customer identification and verification programme that varies depending on the assessed level of risk;

*requiring additional customer identity evidence in higher risk situations; and

*varying the level of monitoring of customer transactions and activities, depending on the assessed level of risk or activities that might be unusual or suspicious.

Other due diligence procedures include implementing a Know Your Client Policy and Procedure. The level of information that should be required from customers may depend on the risk-profile of the business transaction.

There is usually a minimum level of information required from all clients/consumers, such as general proof of identification documents. The regulators of professions, such as the Real Estate Board of Jamaica and the General Legal Council, have published Anti-Money Laundering Guidance Notes which specify minimum customer due diligence requirements.

From all indications, POCA is here to stay as Jamaica seeks to comply with international best practices in business. It is crucial for all persons operating in the DNFI sectors to review their current operating processes, prepare and implement the required Anti-Money Laundering policies and procedures. It may even be important to undertake independent audits from time to time so as to proactively stave off the risk of operating in contravention of POCA.