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Credit Union National Supervisors Forum Revenue Commissioners Suspicious Transactions Reports Office 7th November 2010 Gerry Conway Money Laundering Act 2010 Section 6: Definition of “criminal conduct Section 7: The Offence of Money Laundering Section 47: “Disclosure of Information not to be treated as a breach of any restriction imposed by any other law” Section 49: “Designated person should not “tip off” the subject of a report” Section 54: “Obligation to monitor transactions and activities of customers” Section 55: “Keeping of Records – 5 Year Rule” Money Laundering Act 2010 Section 42: “Reporting Suspicious Transactions” - Garda Siochana AND - Revenue Commissioners Report to include: - Information regarding suspicion - Identity of person - Whereabouts of property (share account) - Any other relevant information Revenue Approach to STRs Accept STR only reflects a suspicion of criminality/tax evasion STRs used by Revenue for intelligence purposes Gardai deal with criminality & money laundering Revenue deal with tax/duty/evasion, fraud, smuggling CAB involved in appropriate cases Confidentiality - filing of STR not disclosed Documents retained securely STR Use Identifying cases to be considered for possible prosecution Identifying persons outside the tax net (black economy) Identifying cases for further tax and customs enquiries, audits and investigations Ensuring compliance with Revenue legislation Debt Management Enforcement Sectoral Profiling Revenue Powers Section 906A TCA 1997 Information to be furnished by Financial Institution (Revenue Commissioner approval) Section 908A TCA 1997 As 906A but in prosecution cases (District Court) Attachment Orders Enforcement Orders Risk Analysis of STRs 2009 2010 Risk A+ 37 (9%) Risk A+ 45 (7%) Risk A 49 (12%) Risk A 110 (17%) Risk B 138 (32%) Risk B 196 (30%) Risk C 193 (45%) Risk C 299 (46%) Risk D 10 (2%) Risk D 0 (0%) Risk Assessment Tools Transaction Amount Turnover Amount Employer/Self Employed/Director - control of business funds Cash Local knowledge of member Number of suspicious transactions Most important – Information (Suspicion) Wider Interests Dept. of Social Welfare Criminal Assets Bureau Gardai Financial Regulator New Regulators – Non financial Airport + Port – Intelligence and Profiling Statistics Over 80,000 STRs received since May 2003 30 facilitating criminal prosecutions (Tax) 25 facilitating criminal investigations (Customs) 450 referred to CAB and Special Investigations 2,000 being used in Audit and Compliance enquiries 400 cases settled with €52m tax uplift Settlements ranging from €3.5m to €523 Top Revenue Settlements from STRs Case 1 €3,500,000 Case 2 €2,300,000 Case 3 €2,000,000 Case 4 €2,000,000 Case 5 €2,000,000 Case 6 €1,000,000 Case 7 € 945,355 Case 8 € 900,000 Case 9 € 879,130 Case 10 € 803,520 Number of STRs Received from Credit Unions Year Number 2003 0 2004 267 2005 709 2006 568 2007 454 2008 435 2009 427 2010 650 (to date) Number of Credit Unions Reporting in 2010: 86 Credit Union STRs Always use the standard ML1 form If hand written, writing should be clear and legible Give full details of the individual including ID used to open account If a „child account‟ is being used by an adult give details on the adult as well Give as much detail as possible, including amounts, dates, turnover for a period If the lodgement is a cheque/draft give details Very few Reports received on high investors Confidentiality Restricted Access to STR information Only experienced auditors investigate Source of information never revealed Duty of confidentiality standard practice in Revenue Identified as Corporate Business Risk - Reputational Suspicious Activity Examples 3rd Party cheques (3rd Party Suspicion) Sterling transactions Drafts Lodging business funds to personal accounts Irregular/missing lodgements Early repayment of loans Accounts in family/childrens‟ names Accounts in false or varied names Large cash lodgements €500 notes – more detail of suspicion Social Welfare Payments Suspicious Activity Examples General - Identity Problems - Knowledge of Customer - Statements made at counter - Cash transactions in property deals where known (including withdrawals) - Short period accounts - Unusual requests - Off-shore interests Under Reporting Huge amount of reporting evident Concern that in some instances STRs not submitted Published Cases: LR case Settlement over €9m, 3 months in prison STRs only came in post event Early receipt of STRs would have short circuited enquiries considerably Monitoring: Auditors Reports and Press Reports Notice to Financial Regulator in some instances Supervisors Role ? Section 58 Credit Union Act 1997. “A credit union shall have a Supervisory Committee which shall consist of three or five members and shall have the general duty of overseeing the performance by the directors of their functions”. Role in ensuring that the Credit Union is complying with policies and procedures regarding Money Laundering and Terrorist Financing Be vigilant when looking at member‟s accounts and report any suspicions to the MLRO Note there is an obligation to report to Revenue as well as An Garda Siochána Have you received your AML training? Case Example 1 STR confirmed individual lodging and withdrawing large amounts of cash Individual had not come to the attention of Revenue before Individual organised charitable events in Ireland for American Foundation In Audit did not disclose Credit Union Account but did admit to having a Villa in Spain Revenue advised that they would instigate tax criminal proceedings against individual Case Example 1 contd. Under caution admitted to having a Credit Union Account and Villa in Spain Books and Records and Computer seized Prosecutor established via computer records that individual had 3 properties in Spain and had coerced American Foundation to lie for him Case being prepared for DPP Payment on account received €450,000 Case Example 2 Credit Union Report Child Account opened (10 y.o.) €66,000 lodged over 5 years CU noticed funds withdrawn by a Ms. Smith STR detail linked Ms. Smith with a Mr. Jones, an electrician Focus of attention switched to Mr. Jones During audit, account disclosed Mr Jones used child account to lodge business funds Settlement €141,500 Case Example 3 Person operating Fast Food Outlet Recently sold business Capital Gains Tax due in relation to sale Returning to homeland without paying tax STR received in case Person still had funds in investment products in Ireland Attachment Order issued to protect Tax, Interest and Penalty due to Revenue of €480,000 Case Example 4 STR received for a director of a company Share account held in fictitious name Investigation initiated Initial denial of account followed by declaration Settlement calculated €418,728 6 months later a further STR received from an insurance company stating that director is making claim to funds held in another fictitious account Case reopened and a further €380,000 paid to Revenue 47291 STRO Contact Details Dermot O‟Connor 01 8277636 Gerry Conway 01 8277542 Mary Curtis 01 8277424 Revenue Commissioners, Suspicious Transactions Reports Office, 3rd Floor Block D, Ashtowngate, Navan Road, Dublin 15.
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