MALDIVES MONETARY AUTHORITY

MALDIVES

Circular No: CN-FIU/2016/3
March 6, 2016

To: ALL BANKS

GUIDANCE NOTE ON TRANSACTION MONITORING

As required under Section 16(h) of Law No. 10/2014 (Prevention of Money Laundering and Financing of Terrorism Act), banks shall exercise on-going due diligence with respect to the business relationship and examine transactions that are carried out in order to ensure that they are consistent with their knowledge of their customer, his commercial activities, risk profile and where required, the source of his funds.

It is widely recognized globally, that monitoring customer activities and transactions based on commonly known suspicious activities and activities specific to each individual bank is an important part of the bank’s on-doing monitoring obligation under relevant laws and regulations.

This is also essential exercise to detect suspicious transactions and report suspicious transactions to the Financial Intelligence Unit.

Hence, to assist the banks to detect suspicious transactions, this Unit has prepared a list of examples of the activities and indicators reporting entities have considered potential suspicious activities.

Banks are strongly recommended to refer to the attached non-exhaustive list of examples of suspicious indicators for guidance to enhance their monitoring activities to detect suspicious transactions. Banks are also advised to maintain their own suspicious indicators specific to their customer activities. These examples do not replace the laws, regulations and international standards and shall be treated as a guidance issued by this Unit to assist in their compliance to the applicable laws and regulations.

Yours sincerely,
Abdulla Ashraf
Senior Manager
Financial Intelligence Unit

Attachment: Examples of Suspicious Indicators

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EXAMPLES OF RED FLAGS

NOTE

The following are examples of potentially suspicious indicators, or "red flags" for money laundering and financing of terrorism.

Although these lists are not all-inclusive, they may help the banks to recognize possible money laundering and terrorist financing activities. Banks are advised to have red flags specific to the respective bank incorporated to monitor suspicious transactions and for risk mitigation.

The presence of a red flag may not necessarily be a suspicious transaction. However, it may warrant the bank to collect more information before submitting a suspicious transaction report to the Financial Intelligence Unit.

1. A customer uses unusual or suspicious identification documents that cannot be readily verified.
2. A customer provides an identification number after having previously used another identification number.
3. A customer uses different identification numbers with variations of his or her name.
4. A business is reluctant, when establishing a new account, to provide complete information about the nature and purpose of its business, anticipated account activity, prior banking relationships, the names of its officers and directors, or information on its business location.
5. A customer’s home or business telephone is disconnected.
6. The customer’s background differs from that which would be expected on the basis of his or her business activities.
7. A customer makes frequent or large transactions and has no record of past or present employment experience.
8. A customer conducts transactions structured at or just under MVR 200,000.00, to evade threshold transaction reporting requirements.
9. The customer deposits large amounts (in local or foreign currencies) which are not in line with previous deposits, or are inconsistent with assets and income of the customer, or are outside the normal course of business for the customer.

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10. The customer purchases large number of traveler’s checks or other securities for cash, or exchanges a large number of securities for cash, especially if it is outside normal course of business for the customer.
11. The customer uses large amounts of cash as security for a loan, and then pays off the loan before it is due.
12. Cash is deposited in amounts just below reporting limit, with several transactions during a day or during a few days.
13. Non-active accounts are reactivated, large transactions are performed and then account is inactive again or canceled.
14. There are frequent and large money transfers to and from abroad without clear economic reason.
15. There are frequent purchases of traveler’s checks or exchange of traveler’s checks for cash.
16. A customer refusing to provide information related to a transaction.
17. A customer endorses a crossed cheque to a third party which is issued to the customer by another third party.
18. Complex transactions are conducted with several intermediaries, especially if the participants are from countries known to have weak AML/CFT controls, countries known as narcotics source countries, or countries known for highly secretive banking laws.
19. A request is received for a loan or the opening of a letter of credit or other bank instrument based on securities, or through offshore banks, or banks located in countries known to have weak AML/CFT controls.
20. A customer deposits money in several accounts, then combines the amounts in one account for transfer abroad.
21. Transactions which are characterized as unusual by bank employees, based on their knowledge and experience, and which are not consistent with the profile of the customer.
22. The customer has never been employed, but often performs large transactions or has large amounts of money in his account.
23. A customer has several accounts in different branches of the same bank without clear economic reason.
24. A customer has several accounts and makes cash deposits on all accounts such that the sum of those deposits represents a large amount.

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25. A number of unrelated persons make deposits to one account without rational explanation.
26. A customer makes frequent deposits identified as income from selling property, but there are reasons to doubt the existence of the property.
27. A customer makes large deposits and liquidates the account quickly, without explanation.
28. Accounts are used for receiving and making large payments, but no normal business transactions are performed on the accounts, e.g., salary or invoice payment, etc.
29. A company does not want to submit all information about its business activities. The company’s representatives avoid contact with the branch whenever possible.
30. Deposits and withdrawals from a company’s bank account are performed in cash and not in the form of checks or wire transfers, which is normal in commercial business.
31. A customer makes cash deposits to his business account and the purpose of payment is described as “loan from founder” or “increasing capital assets”.
32. A customer in the retail trade cashes checks, but does not withdraw a lot of cash from the account consistent with the amount of checks deposited.
33. A customer makes a lot of apparently unrelated deposits on several accounts and frequently transfers a large amount of funds to one account at another bank or other financial institution.
34. A customer makes a lot of cash deposits for a company that normally does not deal with cash.
35. A customer constantly withdraws large amounts of cash from an account on which he has just received large and unexpected transfers from abroad.
36. A small company, which performs business activities only in one place, makes deposits in one day in several branches of the same bank, in a manner which is not plausible for that company.
37. There is a significant increase in the number of cash deposits for a company that provides professional consultancy services, especially if the amounts are quickly transferred out of the account.
38. Frequent unusual transactions between a customer’s personal and business accounts.
39. A large number of wire transfers between two accounts, without clear economic or business purpose, especially if wire transfers are performed through countries that are known or suspected to allow money laundering.

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40. Customer sends wire transfers to a country where his company has no business relations or receives wire transfers from legal entities with which he has no business relations.
41. Beneficiaries of wire transfers are resident in or citizens of countries that are believed to be connected with terrorist activities.
42. Customer performs transactions with countries known as narcotic source countries, or countries known for highly secretive banking and corporate law.

Wire Transfers

1. There is wire transfer activity from high risk countries where there is no apparent business reason or when the activity is inconsistent with a customer’s business or profile.
2. There are periodic wire transfers from a personal account to high-risk countries without reasonable explanation.
3. There are large incoming wire transfers on behalf of a foreign customer without reasonable explanation.
4. There are frequent or high value wire transfers to and from high-risk countries (involving shell banks, offshore centers, countries associated with the drugs trade, or countries with strong bank secrecy laws).
5. There are frequent wire transfers in large round amounts.
6. Funds are transferred in and out of an account on the same day or within a relatively short period of time, without reasonable explanation.
7. Wire transfer payments or receipts have no apparent links to legitimate contracts for goods or services.
8. Transfers are routed through multiple foreign or domestic banks.
9. Payment instructions are received to wire transfer funds abroad, and at the same time to expect an incoming wire transfer of funds in an equal amount of dollars or other currency from other sources.
10. There are regular deposits or withdrawals of large amounts of cash using wire transfer to, from, or through countries that either are known sources of narcotics or whose laws are ineffective in controlling the laundering of money.
11. There is a large volume of wire transfers from persons or businesses that do not hold accounts.

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