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Suspect Transaction Reporting - AUSTRAC Guideline No

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					                           AUSTRAC Guideline No. 5

                 (Formerly CTRA Guideline No. 5)

            Financial Transaction Reports Act 1988

Suspect Transaction
Reporting - Casinos
Preamble

The Financial Transaction Reports Act 1988 is an initiative to assist in the detection of
major tax evasion and other serious criminal activity including money laundering from
drug trafficking and organised crime. The Financial Transaction Reports Act 1988 places
certain obligations on cash dealers including the requirement to report suspect
transactions.


The Australian Transaction Reports and Analysis Centre (AUSTRAC) published AUSTRAC
Guideline Number 1- Suspect Transaction Reporting which was designed essentially to
assist staff of financial institutions and other cash dealers to identify suspect activity.


AUSTRAC Guideline No. 5 has been issued specifically to assist staff of casinos to identify
and report suspect transactions that may occur in the casino industry. This guideline
should be read in conjunction with AUSTRAC Guideline No. 1 - Suspect Transaction
Reporting which was issued in June 1992.


When must a Suspect Transaction
Report be given?

1. A report must be completed by the cash dealer where the cash dealer is a party to a
transaction and the cash dealer has reasonable grounds to suspect that information that
the cash dealer has concerning the transaction may be:


        • relevant to investigation of an evasion, or attempted evasion, of a taxation law;
        • relevant to investigation of, or prosecution of a person for, an offence against a
            law of the Commonwealth or of a State or Territory;

        • of assistance in the enforcement of the Proceeds of Crime Act 1987 or the
            regulations made under that Act; or

        • relevant to investigation of, or prosecution of a person for, an offence against
            the Corporations Act 1989.


What is a transaction?
2. "Transaction" has not been extensively defined in the Financial Transaction Reports
Act 1988. It therefore has its ordinary legal and commercial meaning. A transaction can
be classified as any business dealing between a cash dealer and a customer. The
Financial Transaction Reports Act 1988 does make it clear however that it would include
preliminary and bilateral negotiations, or proposals to conduct a transaction in the same
way that it applies to a completed transaction. It would also include a transaction that is
terminated prior to completion, in other words, it includes negotiations that might not
ordinarily amount to a transaction. However, a transaction would not include mere
enquiries.


3. The transaction must be something which can be reported in terms of the reportable
details required by the Financial Transaction Reports Act 1988 and as set out in the
Suspect Transaction Report form. However, it is not essential that all such details be
available to the cash dealer before there is a reporting obligation. The cash dealer should
complete as many sections as possible of the Suspect Transaction Report from the
information ordinarily available to the cash dealer.


What is a suspect transaction?

4. Suspect transactions are likely to involve a number of factors which together raise a
suspicion in the mind of the cash dealer that the transaction may be connected with
certain illegal activities (explained at point 1). As a general principle, a suspect
transaction may be any transaction which causes a cash dealer to have a feeling of
apprehension or mistrust about the transaction considering:


          • the nature of, or unusual circumstances, surrounding the transaction;
          • the known business background of the person conducting the transaction;
          • the production of seemingly false identification in connection with any
              transaction, the use of aliases and a variety of similar but different
              addresses;

          • the behaviour of the person or persons conducting the transaction (e.g.
              unusual nervousness); and

          • the person or group of persons with whom they are dealing.

5. If in bringing together all relevant factors the cash dealer has reasonable grounds to
suspect that the transaction may be connected with certain illegal activities (explained at
point 1), then the transaction is required to be reported.


Not only cash transactions are affected

6. It is important to note that a suspect transaction must be reported even if it does not
involve any dealing in cash. The presence of cash in a transaction may in some
circumstances be so unusual of itself as to trigger suspicion. In some cases, however,
there may be no cash element and suspicion will be formed from other factors
surrounding the transaction.


Casino activities which may be suspect
transactions

7. The following activities may be indicative of attempts at money laundering through a
casino:
            • The structuring of cash transactions to avoid the filing of a Significant Cash
                 Transaction Report (a report of a transaction of $10,000 or more).

            • Cheques being requested which are not a result of gaming winnings.
            • Associates betting against each other in even money games.
            • Patrons being known by multiple names.
            • Account opening identification requirements not met.
            • The refusal to provide identification when conducting a significant cash
                 transaction.

            • Exchange of smaller denomination bank notes to either larger denomination
                 bank notes, chip purchase vouchers or cheques.

            • A winnings cheque being requested in a third party’s name.
            • Exchange of paper notes to polymer notes.

     8. These types of activities are not intended to be exhaustive and should be used as a
     general guide only. Casinos should make a report of a Suspect Transaction at all times
     when the cash dealer has the required reasonable grounds for suspicion during the
     negotiation or the completion of a transaction.


     Some examples of suspect transactions

     9. AUSTRAC has received Suspect Transaction Reports from all of the casinos currently
     operating in Australia. The following are examples of the grounds of suspicion contained
     in some of the reports:


Case example 1

             Associates betting against each other in even money games, and a
             winnings cheque being requested in a third party’s name.


             "Customer 1 ‘bought in’ for $10,000 cash. He subsequently went and ‘bought in’
             for $40,000. This was followed by Customer 2 ‘buying in’ for $50,000. Total of
             $100,000 ‘bought in’ from both patrons. They then went and bet $50,000 on
             Player and $50,000 on Banker. Player won therefore still holding $100,000 in
             chips. They then requested a gaming cheque for the full amount to be made in
             the name of a third party. Upon departing the casino attendant was asked how
             long it would take to clear the cheque and receive their funds from the bank."


Case example 2

             Exchange of paper notes to polymer notes.


             "Two persons handed over $4,000 in the old style $10 and $20 paper notes.
             They firstly went onto a gambling table and exchanged $200 worth of old $10
             paper notes for $100 gaming chips. They next went to the casino main cage and
             exchanged $800 in old $10 notes for $100 notes. They then went for a walk
             before going back to the same gaming table as the first transaction and
             exchanged $3,000 in old $10 and $20 notes for chips and then cashed in the
             chips."
Case example 3

             Cheques being requested which are not a result of gaming winnings.


             "Patron requested a winnings cheque for the amount of $6,200. When trying to
             verify the amount of winnings, the patron changed his story regarding the
             amount he ‘bought in’ at the gaming tables. The Casino Manager denied the
             request for a winnings cheque. The patron took cash."


Case example 4

             The refusal to provide identification when conducting a significant cash
             transaction.


             "Patron was asked for identification. He claimed to have no identification with
             him. When he was asked to write down his name and address he stated his
             name as ‘John Citizen’. When pressed for an address he said he had ‘no fixed
             address’. A surveillance photo was taken and the patron was subsequently
             identified as a regular patron."


Case example 5

             The structuring of cash transactions to avoid the filing of a Significant
             Cash Transaction Report.


             "When asked for details to complete a $10,000 significant cash transaction form
             the person refused then took $2,000 out of his original $11,000 leaving $9,000,
             therefore not required to complete transaction form."


     Confidentiality of reporting

     10. The report is to be completed as soon as possible after the transaction and not in the
     presence of the subject of the report. The subject of the report must not be advised of
     the reporting by the cash dealer.


     It is an offence to disclose to anyone that a suspicion has been formed or that
     information has been communicated to AUSTRAC or to infer that these have occurred.
     The punishment upon conviction is imprisonment of up to two years or an appropriate
     fine.


     How to report

     11. A Suspect Transaction Report should be made on a Suspect Transaction Report Form


     16. Supplies are available from AUSTRAC by telephoning (02) 9950 0827. A copy of the
     report is to be forwarded to AUSTRAC by:


             • facsimile to (02) 9413 3705; or
             • post to The Director (AUSTRAC) PO Box 5516 West Chatswood NSW 1515
12. Where urgent reporting of a suspect transaction is appropriate, call AUSTRAC’s
Hotline on 1300 021 037. This is a free call from anywhere in Australia. Further
information or assistance


13. AUSTRAC officers are able to provide assistance in relation to suspect transaction
reporting. The AUSTRAC Help Desk can be contacted on (02) 9950 0827.


September 1997


Australian Transaction Reports and Analysis Centre (AUSTRAC)
PO Box 5516
West Chatswood NSW 1515


Telephone (02) 9950 0827 Facsimile (02) 9950 0071 DX AUSTRAC 29668