The importance of record keeping

Fri, Oct 5, 2012

Submitted by
Financial Intelligence Unit
For Financial Information Month 2012

There are lessons to be learnt from the woman of the house who dutifully saves every receipt, keeps a record of every coupon, and is able to show her husband where the few extra dollars came from, that afforded her the latest luxury in their home. Those receipts and coupons enabled her to know how much extra cash is in the till and is solid proof against any accusations of unnecessary and extravagant spending that may ensue.{{more}}

Like the woman of the house, a prudent businessman should implement a suitable accounting system, recording daily business transactions and preserving pertinent documents such as identity data, receipts, invoices, bank statements, and cheque stubs; to reconstruct transactions and reconcile revenue and expenditure. Record keeping is essential for the daily operation of your business and is a habit that should be cultivated, as it aids in making precise and efficient business decisions through the review and analysis of statistical data; helps in determining the profitability of a business; and is also necessary in filing income tax returns.

All transactions related to your business should be recorded on a daily basis. If you are unable to personally maintain your records, the expertise of an accountant or accounting software should be sought.

While the woman of the house may keep her records for the duration of her marriage, by reason of the “till death do us part” clause, the time frame imposed on you as the prudent businessman is much shorter, as you must do so for seven (7) years after the day on which the transaction recorded takes place, in accordance the Proceeds of Crime and Money Laundering (Prevention) Act, Cap 181 of the Revised Laws of SVG 2009; the Proceeds of Crime (Money Laundering) Regulations 2002; and the Prevention of Money Laundering Guidance Notes 2002.

Should the circumstance arise where the Financial Intelligence Unit (FIU) notifies you in writing that particular records are or may be relevant to an investigation that is being carried out, these records must be retained beyond the seven (7) year period, pending the outcome of the investigation. Even in the absence of such a request, where you know that an investigation is proceeding in respect of a customer, you should not, without the prior approval of the FIU, dispose of any relevant records, even though the prescribed period for retention may have elapsed. This is similar to our woman of the house’s “till death do us part” clause, in your case, until the determination of the matter.

The records must be kept in a format which allows for their recovery within a reasonable period of time, usually seven (7) to ten (10) days. As a prudent businessman, your records provide documentary proof against allegations of wrongdoing and are vital evidence in a situation where there is a money laundering investigation. These records also assist in identifying risk or suspicious activity on the part of a customer, which must be reported to the FIU. Failure to report a suspicious transaction as required is an offence.

Financial institutions and the relevant businesses are mandated by the law to keep proper records to assist in their own management, but more specifically to assist in detecting, deterring and combating money laundering, terrorist financing and all serious crimes. If your business is, or involves money transmission services, entities issuing e.g. credit cards, travellers’ cheques and bankers’ drafts), money broking, investment business, financial intermediaries, trusts and other fiduciary services, company formation and management services, collective investment schemes and mutual funds, car dealerships, jewellers, real estate agents, Casinos, Internet gambling, pool betting, lottery agents, barristers-at-law and solicitors, accountants and charities; then the Proceeds of Crime and Money Laundering (Prevention) Act applies to you.

You are at the forefront of the battle against money laundering, terrorist financing and other financial crimes. Records which you keep are a link in the chain of evidence, which proves innocence or guilt in the prosecution of these crimes, while ensuring you operate your business on principles of good governance, profitability and in accordance with all laws of the land, just as in the case of our woman of the house. A reduction in the incidence of these crimes ensures that your businesses can operate in a safe and secure economic climate. Challenge yourself; be innovative while maintaining a competitive edge and your business will surely reap success.

Challenge yourself: Innovate — Compete —Succeed!