Financial Intelligence Unit

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A Financial Intelligence Unit (FIU) is a national body which collect information on suspicious or unusual financial activity from the financial industry and other entities or professions required to report suspicious transactions, suspected of being money laundering or terrorism financing.

Contents

Overview

FIUs are normally not law enforcement agencies, but their mission is to process and analyze the information received. If sufficient evidence of unlawful activity is found, the matter is passed to public prosecutors. [1] They complement the apparatus of administrative anti-money laundering supervision, which ensures that obliged entities transmit relevant information to the FIU.

The Egmont Group of Financial Intelligence Units is the global coordination venue for FIUs.

Examples

National FIUs include:

European Financial Intelligence Unit Network

The Financial Intelligence Unit Network (FIU.NET) is a decentralized computer network that provides an information exchange between the financial intelligence units of the European Union. [3] FIU.NET is a decentralized system with no central database where the information is collected. All the connected FIUs have their FIU.NET equipment within their own premises and manage their own information. Through FIU.NET the connected FIUs create bilateral or multilateral cases. Ma3tch (autonomous, anonymous, analysis) is a matching tool within FIU.NET. Ma3tch makes it possible for FIUs to match names in order to find relevant data that is possessed by other connected FIUs. As the data is anonymized, there is no breaching of privacy and data protection rules.

Connected FIUs

FIU.NET is funded by the European Commission and participating FIUs. [4] Currently, the connected EU Member State FIUs are: [5] Austria, Belgium, Bulgaria, Cyprus, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxemburg, Malta, Netherlands, Poland, Portugal, Romania, Sweden, Slovenia, Slovakia, Spain, and the United Kingdom.

Governing body

FIU.NET is governed by a Board of Partners (BoP) formed by connected FIUs that have volunteered for a seat. The Board of Partners is chaired by an independent Director. [6]

Project management

Daily operation of the system is managed by the FIU.NET Bureau, a project bureau of the Dutch Ministry of Justice and Security, which is housed in the Europol International headquarters in The Hague.

FIU reporting in the United States

The United States has several laws requiring the reporting to the Financial Crimes Enforcement Network (FinCEN). These include the Right to Financial Privacy Act (RFPA) of 1978, [7] the Bank Secrecy Act of 1970 (and other names of revisions), and the Gramm–Leach–Bliley Act of 1999 (GLBA). Some reports also need to go to the Securities and Exchange Commission.

Representative Reports required from US financial institutions
Report and definitionAuthorityReceiving Agency
Currency Transaction Report (CTR). Cash transactions in excess of $10,000 during the same business day. The amount over $10,000 can be either from one transaction or a combination of cash transactions.Bank Secrecy ActInternal Revenue Service
Negotiable Instrument Log (NIL). Cash purchases of negotiable instruments (e.g., money orders, cashiers checks, travelers cheques) having a face value of $3,000, or more.Bank Secrecy ActInternal Revenue Service
Suspicious Activity Report (SAR). Any cash transaction where the customer seems to be trying to avoid BSA reporting requirements (e.g., CTR, NIL). A SAR must also be filed if the customer's actions indicate that s/he is laundering money or otherwise violating federal criminal law. The customer must not know that a SAR is being filed.Bank Secrecy ActFinancial Crimes Enforcement Network

Actions that can trigger an SAR being filed include:

  1. Any kind of insider abuse of a financial institution, involving any amount;
  2. Federal crimes against, or involving transactions conducted through, a financial institution that the financial institution detects and that involve at least $5,000 if a suspect can be identified, or at least $25,000 regardless of whether a suspect can be identified;
  3. Transactions of at least $5,000 that the institution knows, suspects, or has reason to suspect involve funds from illegal activities or are structured to attempt to hide those funds;
  4. Transactions of at least $5,000 that the institution knows, suspects or has reason to suspect are designed to evade any regulations promulgated under the Bankruptcy Secrecy Act; or
  5. Transactions of at least $5,000 that the institution knows, suspects, or has reason to suspect have no business or apparent lawful purpose or are not the sort in which the particular customer would normally be expected to engage and for which the institution knows of no reasonable explanation after due investigation. The language of the RFPA indicates that a SAR filed under this rule comes from an individual transaction, not a profile of activities that make the transaction stand out.

See also

Notes

  1. ↑ "What is an FIU?". Archived from the original on 3 June 2012. Retrieved 7 July 2013.
  2. ↑ "FIUindia.gov.in". Archived from the original on 2011-03-16. Retrieved 2011-01-31.
  3. ↑ Georgios A. Antonopoulos; Marc Groenhuijsen; Jackie Harvey; Tijs Kooijmans; Almir Maljevic; Klaus Von Lampe (2011). Usual and Unusual Organising Criminals in Europe and Beyond: Profitable Crimes, from Underworld to Upper World: Liber Amicorum Petrus Van Duyne. Netherlands: Maklu. p. 100. ISBN   978-90-466-0429-8.
  4. ↑ "Fundings". European Commission. European Commission - DG Home Affairs (HOME). Retrieved 7 July 2013.
  5. ↑ "Parties involved" . Retrieved 7 July 2013.
  6. ↑ Money laundering and the financing of terrorism: 19th report of session 2008-09, Vol. 2: Evidence. United Kingdom: UK- Parliament; House of Lords - The Stationery Office. 2009. pp. 254–255. ISBN   9780108444692.
  7. ↑ "Right to Financial Privacy Act." FDIC.
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