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Why is there need for a Financial Intelligence Unit?

Why is there need for a Financial Intelligence Unit?

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Terrorist activity financing may involve funds raised from legitimate sources, such as personal donations and profits from businesses and charitable organizations, as well as from criminal sources, such as the drug trade, the smuggling of weapons and other goods, fraud, kidnapping and extortion.{{more}}

Terrorists use techniques like those of money launderers to evade authorities’ attention and to protect the identity of their sponsors and of the ultimate beneficiaries of the funds. However, financial transactions associated with terrorist financing tend to be in smaller amounts than is the case with money laundering, and when terrorists raise funds from legitimate sources, the detection and tracking of these funds becomes more difficult.

To move their funds, terrorists use the formal banking system, informal value-transfer systems, Hawalas and Hundis and, the oldest method of asset-transfer, the physical transportation of cash, gold and other valuables through smuggling routes.

Money laundering is the process by which large amounts of illegally obtained money (from drug trafficking, terrorist activity or other serious crimes) is given the appearance of having originated from a legitimate source. If done successfully, it allows the criminals to maintain control over their proceeds and ultimately to provide a legitimate cover for their source of income.

Money laundering plays a fundamental role in facilitating the ambitions of the drug trafficker, the terrorist, the organised criminal, the insider dealer, the tax evader as well as the many others who need to avoid the kind of attention from the authorities that sudden wealth brings from illegal activities.

The techniques used to launder money are essentially the same as those used to conceal the sources of, and uses for, terrorist financing. Funds used to support terrorism may originate from legitimate sources, criminal activities, or both. Nonetheless, disguising the source of terrorist financing, regardless of whether the source is of legitimate or illicit origin, is important. If the source can be concealed, it remains available for future terrorist financing activities. Similarly, it is important for terrorists to conceal the use of the funds so that the financing activity goes undetected.

By their very nature, money laundering and terrorist financing are geared towards secrecy and do not lend themselves to statistical analysis. Launderers do not document the extent of their operations or publicize the amount of their profits, nor do those who finance terrorism.

As a result of these serious International issues, Saint Vincent and the Grenadines has joined with other countries around the world to attack money laundering and terrorist financing and those who seek to benefit from these criminal acts.

A Financial Intelligence Unit (FIU) has been established in Saint Vincent and the Grenadines to receive, analyze suspicious transaction reports and investigate money laundering and other serious financial crimes. This institution has a key role to play in the fight against money laundering and in ensuring that the country’s financial system is seen as sound and healthy system, which is conducive to investment. It is our duty to assist the financial and other relevant business sectors to fulfill their anti-money laundering and by extension counter-finance terrorism obligations. It is our intention to take the profit out of crime by draining the resources of these criminals.

The Financial Intelligence Unit functions as mandated by the FIU Act 2001 include:

  •  Receipt and analysis of suspicious transaction reports that are required to be made under the Proceeds of Crime and Money Laundering (Prevention) Act, No.39 of 2001;
  •  Collection of information from financial institutions and other relevant bodies for the purpose of investigating relevant offences;
  •  Investigating of relevant offences;
  •  Dissemination of information;
  •  International cooperation in the exchange of financial information; and
  •  Awareness raising and education of financial and business institutions on their obligations to detect prevent and deter money laundering and associated offences.

The FIU is committed to active cooperation with foreign FIUs and law enforcement agencies to properly investigate suspected money laundering offences and other financial crimes.

The Proceeds of Crime and Money Laundering (Prevention) Act criminalizes the act of money laundering; gives the FIU the authority to trace, seize and ultimately confiscate criminally derived assets; and builds the necessary framework for permitting the exchange information with counterparts in other countries.

It also brought law enforcement and financial regulatory authorities together with the private sector to enable financial institutions to play a role in dealing with the problem. This means, among other things, involving the relevant authorities in establishing financial transaction reporting systems, customer identification, record keeping standards and a means for verifying compliance.

Terrorist financing and money laundering have negative effects on financial institutions and non-financial businesses and professions. When funds are manipulated and diverted for these criminal activities, it weakens these organizations, exposing them to significant risk to their reputation and operations. This in turn not only harms the country’s reputation but it also creates a loss in public confidence. Therefore, money laundering and terrorist financing activities have potential to distort economic data and to cause economic growth to suffer.

It is imperative that all stakeholders cooperate in order to combat these nefarious crimes.