• AMLG Chapter 5 AMLG Chapter 5 Reporting and tipping-off

    • AMLG Part 5.1 AMLG Part 5.1 Reporting requirements

      Note for Part 5.1

      Principle 4 (see rule 1.2.4) requires a firm to have effective measures in place to ensure there is internal and external reporting whenever money laundering or terrorism financing is known or suspected.

      Derived by QFCRA RM/2019-9 (as from 1st February 2020)

      • AMLG Division 5.1.A AMLG Division 5.1.A Reporting requirements — general

        • AMLG 5.1.1 Unusual and inconsistent transactions

          (1) A transaction that is unusual or inconsistent with a customer's known legitimate business and risk profile does not of itself make it suspicious.

          Note 1 The key to recognising unusual or inconsistent transactions is for a firm to know its customers well enough under Chapter 4 (Know your customer).

          Note 2 A firm's AML/CFT policies, procedures, systems and controls must provide for the identification and scrutiny of certain transactions (see rule 2.1.3 (2) (a)).
          (2) A firm must consider the following matters in deciding whether an unusual or inconsistent transaction is a suspicious transaction:
          (a) whether the transaction has no apparent or visible economic or lawful purpose;
          (b) whether the transaction has no reasonable explanation;
          (c) whether the size or pattern of the transaction is out of line with any earlier pattern or the size or pattern of transactions of similar customers;
          (d) whether the customer has failed to give an adequate explanation for the transaction or to fully provide information about it;
          (e) whether the transaction involves the use of a newly established business relationship or is for a one-off transaction;
          (f) whether the transaction involves the use of offshore accounts, companies or structures that are not supported by the customer's economic needs;
          (g) whether the transaction involves the unnecessary routing of funds through third parties.
          (3) Subrule (2) does not limit the matters that the firm may consider.
          Derived by QFCRA RM/2019-9 (as from 1st February 2020)

      • AMLG Division 5.1.B AMLG Division 5.1.B Internal reporting

        • AMLG 5.1.2 Internal reporting policies

          (1) A firm must have clear and effective policies, procedures, systems and controls for the internal reporting of all known or suspected instances of money laundering or terrorism financing.
          (2) The policies, procedures, systems and controls must enable the firm to comply with the AML/CFT Law and these rules in relation to the prompt making of internal suspicious transaction reports to the firm's MLRO.
          Derived by QFCRA RM/2019-9 (as from 1st February 2020)

        • AMLG 5.1.3 Access to MLRO

          A firm must ensure that all its officers and employees have direct access to the firm's MLRO and that the reporting lines between them and the MLRO are as short as possible.

          Note The MLRO is responsible for receiving, investigating and assessing internal suspicious transaction reports for the firm (see rule 2.3.4 (a)).

          Derived by QFCRA RM/2019-9 (as from 1st February 2020)

        • AMLG 5.1.4 Obligation of officer or employee to report to MLRO

          (1) This rule applies to an officer or employee of a firm if, in the course of his or her office or employment, the officer or employee knows or suspects, or has reasonable grounds to know or suspect, that funds are:
          (a) the proceeds of crime;
          (b) related to terrorism financing; or
          (c) linked or related to, or are to be used for, terrorism, terrorist acts or by terrorist organisations.
          (2) The officer or employee must promptly make a suspicious transaction report to the firm's MLRO.
          (3) The officer or employee must make the report:
          (a) irrespective of the amount of any transaction relating to the funds;
          (b) whether or not any transaction relating to the funds involves tax matters; and
          (c) even though:
          (i) no transaction has been, or will be, conducted by the firm in relation to the funds;
          (ii) for an applicant for business — no business relationship has been, or will be, entered into by the firm with the applicant;
          (iii) for a customer — the firm has terminated any relationship with the customer; and
          (iv) any attempted money laundering or terrorism financing activity in relation to the funds has failed for any other reason.
          (4) If the officer or employee makes a suspicious transaction report to the MLRO (the internal report) in relation to the applicant for business or customer, the officer or employee must promptly give the MLRO details of every subsequent transaction of the applicant or customer (whether or not of the same nature as the transaction that gave rise to the internal report) until the MLRO tells the officer or employee not to do so.

          Note An officer or employee who fails to make a report under this rule:
          (a) may commit an offence against the AML/CFT Law; and
          (b) may also be dealt with under the Financial Services Regulations, Part 9 (Disciplinary and enforcement powers).
          Derived by QFCRA RM/2019-9 (as from 1st February 2020)

        • AMLG 5.1.5 Obligations of MLRO on receipt of internal report

          (1) If the MLRO of a firm receives a suspicious transaction report (whether under this Division or otherwise), the MLRO must promptly:
          (a) if the firm's policies, procedures, systems and controls allow an initial report to be made orally and the initial report is made orally — properly document the report;
          (b) give the individual making the report a written acknowledgment for the report, together with a reminder about the provisions of Part 5.2 (Tipping-off);
          (c) consider the report in light of all other relevant information held by the firm about the applicant for business, customer or transaction to which the report relates;
          (d) decide whether the transaction is suspicious; and
          (e) give written notice of the decision to the individual who made the report.
          (2) A reference in this rule to the MLRO includes a reference to a person acting under rule 5.1.7 (3) (b) (Obligation of firm to report to FIU) in relation to the making of a report on the firm's behalf.

          Note Under rule 2.3.5 the Deputy MLRO acts as the MLRO during absences of the MLRO and whenever there is a vacancy in the MLRO's position.
          Derived by QFCRA RM/2019-9 (as from 1st February 2020)

      • AMLG Division 5.1.C AMLG Division 5.1.C External reporting

        • AMLG 5.1.6 External reporting policies

          (1) A firm must have clear and effective policies, procedures, systems and controls for reporting to the FIU all known or suspected instances of money laundering or terrorism financing.
          (2) The policies, procedures, systems and controls must enable the firm:
          (a) to comply with the AML/CFT Law and these rules in relation to the prompt making of suspicious transaction reports to the FIU; and
          (b) to cooperate effectively with the FIU and law enforcement agencies in relation to suspicious transaction reports made to the FIU.
          Derived by QFCRA RM/2019-9 (as from 1st February 2020)

        • AMLG 5.1.7 Obligation of firm to report to FIU

          (1) This rule applies to a firm if the firm knows or suspects, or has reasonable grounds to know or suspect, that funds are:
          (a) the proceeds of crime;
          (b) related to terrorism financing; or
          (c) linked or related to, or are to be used for, terrorism, terrorist acts or by terrorist organisations.
          (2) The firm must promptly make a suspicious transaction report to the FIU and must ensure that any proposed transaction mentioned in the report does not proceed without consulting with the FIU.
          (3) The report must be made on the firm's behalf by:
          (a) the MLRO; or
          (b) if the report cannot be made by the MLRO (or Deputy MLRO) for any reason — by a person who is employed (as described in rule 2.3.2 (1) (a)) at the management level by the firm, or by a legal person in the same group, and who has sufficient seniority, knowledge, experience and authority to investigate and assess internal suspicious transaction reports.
          Note Under rule 2.3.5 the Deputy MLRO acts as the MLRO during absences of the MLRO and whenever there is a vacancy in the MLRO's position.
          (4) The firm must make the report:
          (a) whether or not an internal suspicious transaction report has been made under Division 5.1.B (Internal reporting) in relation to the funds;
          (b) irrespective of the amount of any transaction relating to the funds;
          (c) whether or not any transaction relating to the funds involves tax matters; and
          (d) even though:
          (i) no transaction has been, or will be, conducted by the firm in relation to the funds;
          (ii) for an applicant for business — no business relationship has been, or will be, entered into by the firm with the applicant;
          (iii) for a customer — the firm has terminated any relationship with the customer; and
          (iv) any attempted money laundering or terrorism financing activity in relation to the funds has failed for any other reason.
          (5) The report must be made in the form (if any) approved by the FIU and in accordance with the unit's instructions. The report must include a statement about:
          (a) the facts or circumstances on which the firm's knowledge or suspicion is based, or the grounds for the firm's knowledge or suspicion; and
          (b) if the firm knows or suspects that the funds belong to a third person — the facts or circumstances on which that knowledge or suspicion is based, or the grounds for the firm's knowledge or suspicion.
          Note A firm that fails to make a report under this rule:
          (a) may commit an offence against the AML/CFT Law; and
          (b) may also be dealt with under the Financial Services Regulations, Part 9 (Disciplinary and enforcement powers).
          (6) If a firm makes a report to the FIU under this rule about a proposed transaction, it must immediately tell the Regulator that it has made a report to the FIU under this rule.
          Derived by QFCRA RM/2019-9 (as from 1st February 2020)

        • AMLG 5.1.8 Obligation not to destroy records relating to customer under investigation

          (1) This rule applies if:
          (a) a firm makes a suspicious transaction report to the FIU in relation to an applicant for business or a customer; or
          (b) the firm knows that an applicant for business or customer is under investigation by a law enforcement agency in relation to money laundering or terrorism financing.
          (2) The firm must not destroy any records relating to the applicant for business or customer without consulting with the FIU.
          Derived by QFCRA RM/2019-9 (as from 1st February 2020)

        • AMLG 5.1.9 Firm may restrict or terminate business relationship

          (1) This Division does not prevent a firm from restricting or terminating, for normal commercial reasons, its business relationship with a customer after the firm makes a suspicious transaction report about the customer to the FIU.
          (2) The firm must ensure that restricting or terminating the business relationship does not inadvertently result in tipping-off the customer.
          (3) If the firm restricts or terminates a business relationship with a customer, it must immediately tell the Regulator about the restriction or termination.
          Derived by QFCRA RM/2019-9 (as from 1st February 2020)

      • AMLG Division 5.1.D AMLG Division 5.1.D Reporting records

        • AMLG 5.1.10 Reporting records to be made by MLRO

          The MLRO of a firm must make and keep records:

          (a) showing the details of each internal suspicious transaction report the MLRO receives;
          (b) necessary to demonstrate how rule 5.1.5 (Obligations of MLRO on receipt of internal report) was complied with in relation to each internal suspicious transaction report; and
          (c) showing the details of each suspicious transaction report made to the FIU by the firm.
          Derived by QFCRA RM/2019-9 (as from 1st February 2020)

    • AMLG Part 5.2 AMLG Part 5.2 Tipping-off

      • AMLG 5.2.1 What is tipping-off?

        Tipping-off, in relation to an applicant for business or a customer of a firm, is the unauthorised act of disclosing information that:

        (a) may result in the applicant or customer, or a third party (other than the FIU or the Regulator), knowing or suspecting that the applicant or customer is or may be the subject of:
        (i) a suspicious transaction report; or
        (ii) an investigation relating to money laundering or terrorism financing; and
        (b) may prejudice the prevention or detection of offences, the apprehension or prosecution of offenders, the recovery of proceeds of crime, or the identification and prevention of money laundering or terrorism financing.
        Derived by QFCRA RM/2019-9 (as from 1st February 2020)

      • AMLG 5.2.2 Firm must ensure no tipping-off occurs

        (1) A firm must ensure that:
        (a) its officers and employees are aware of, and sensitive to:
        (i) the issues surrounding tipping-off; and
        (ii) the consequences of tipping-off; and
        (b) it has policies, procedures, systems and controls to prevent tipping-off within the firm or its group.
        (2) If a firm believes, on reasonable grounds, that an applicant for business or a customer may be tipped off by conducting CDD or ongoing monitoring, the firm may make a suspicious transaction report to the FIU instead of conducting the CDD or monitoring.
        (3) If the firm acts under subrule (2), the MLRO must make and keep records to demonstrate the grounds for the belief that conducting CDD or ongoing monitoring would have tipped off an applicant for business or a customer.
        Derived by QFCRA RM/2019-9 (as from 1st February 2020)

      • AMLG 5.2.3 Information relating to suspicious transaction reports to be safeguarded

        (1) A firm must take all reasonable measures to ensure that information relating to suspicious transaction reports is safeguarded and, in particular, that information relating to a suspicious transaction report is not disclosed to any person (other than a member of the firm's senior management) without the consent of the firm's MLRO.
        (2) The MLRO must not consent to information relating to a suspicious transaction report being disclosed to a person unless the MLRO is satisfied that disclosing the information to the person would not constitute tipping-off.
        (3) If the MLRO gives consent, the MLRO must make and keep records to demonstrate how the MLRO was satisfied that disclosing the information to the person would not constitute tipping-off.
        Derived by QFCRA RM/2019-9 (as from 1st February 2020)

      • AMLG 5.2.4 When advice not considered to be tipping-off

        (1) This rule applies to lawyers, notaries, other independent legal professionals, and accountants acting as independent legal professionals.
        (2) The act of a lawyer, notary, other legal professional or accountant in disclosing relevant information in the course of advising a person against engaging in an illegal act does not constitute tipping-off.
        Derived by QFCRA RM/2019-9 (as from 1st February 2020)