Beneficial Owners: UBO : The True Owners : Anti Money Laundering Compliance

”The natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement.”1
A lack of clarity over who is the ultimate beneficial owner of a company or asset clouds the ability of banks and financial institutions to carry out these checks effectively, leaving them exposed to facilitating corruption or bribery, or unwittingly funding illegal or terrorist activities. The regulatory cost of such activities can include large fines and personal prosecution for directors of financial institutions.2

Beneficial ownership identification and verification is now an essential component of the client KYC on boarding process.3
The beneficial owner is the natural person who controls an account or who exercises ultimate control over legal arrangement or who benefits from the transaction.
Although title to property or money is in another name, the beneficial owner will ultimately benefit from the transaction at the end of the day.

Why would an individual choose to be the beneficial owner?
i)Privacy-In Trinidad and Tobago, the Companies Registry and Deeds Registry are public records and the names and addresses of directors can be easily searched, once the relevant fees are paid. High net worth persons and famous persons may not want their home address available on public record.

ii)Asset Protection-Wealthy individuals who are exposed to lawsuits, divorces or those involved in Money laundering (ML) or Terrorist Financing (TF) may not want to be associated with bank accounts or assets. Funds in the bank accounts of persons suspected of Ml/TF may be seized in Trinidad.
Scandals involving Ultimate Beneficial Ownership

The Panama Papers were published in 2016. They were essentially archives of a Panamanian law firm. These archives revealed the beneficial ownership of several thousands of offshore corporations. It seems that some beneficial ownership was hidden for nefarious or illegal motives. 4
Unaoil, a Monaco-based firm registered in the British Virgin Islands and its subcontractors allegedly bribed foreign officials to help major multinational corporations (MNCs) win contracts. This type of corruption leads to political instability, undermines trust in governments and help terrorists. 5 There is a view that if companies dealing with Unaoil sought insight into beneficial ownership, legal name, tradestyle(s), organizational structure, parent companies, names of all principals/officers and industry.

The author is an attorney at law in Trinidad and Tobago and she specializes in Anti Money Laundering and the Financing of Terrorism . See the website http://asydneygroup.com and Instgram @asydneygrouptt WhatsApp 868 484-7778

References:
1https://www.lexisnexis.de/whitepaper/beneficial-ownership.pdf
2 https://www.lexisnexis.de/whitepaper/beneficial-ownership.pdf

3 http://www.dnb.com/content/dam/english/dnb-solutions/supply-management/UBO-guide-170515_US.pdf

4 https://www.investopedia.com/terms/b/beneficialowner.asp
5https://www.huffingtonpost.com/entry/unaoil-scandal-explained_us_56fbd2f0e4b0daf53aee0cff

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Life is but the shipwreck of our plans

Planning to make a plans. What a life!I agree that goals are important , and yes I believe in the law of attraction . But do our plans turn out the way that we expected? Life can be messy . Relationships end,children leave the nest and sometimes our love is not reciprocated.

Enjoy the mess. Dance when your world is falling apart. Keep your head up. Stand in the rain . Don’t you give up on your dreams.

When you lose control of the ship,the anchor holds. You will be grounded and you will be on land soon.

The author is an attorney at law in Trinidad. She specialises in AML CFT Compliance .

Website : http://asydneygroup.com

What’s app 868 484-7778

Employee Engagement: How to Maximize Productivity and make your Employees Want to Work?

What is employee engagement?
Employee engagement is based on trust, integrity, two way commitment and communication between an organisation and its staff. It is an approach that increases the chances of business success, contributing to organisational and individual performance, productivity and well-being1.
Employee Engagement from the perspective of the employees2

Imagine if an employee can wake up and be excited about going to work. Imagine if he looks forward to sharing great ideas, to working together with colleagues and accomplishing a common goal. That employee would feel as though they are a part of the organisation making a vital contribution to achieving the company’s mission.
Employee engagement is about being included fully as a member of the team, focusing on clear goals, trusted and empowered, receiving regular and constructive feedback, supported in developing new skills, thanked and recognised for achievement.
A work environment that is fair, based on mutual respect is an engaged organisation.

Employee engagement from the perspective of the Employer 3
Employee engagement is about positive attitudes and behaviours leading to improved business outcomes, in a way that they trigger and reinforce one another. Imagine an organisation that runs on employees’ knowledge and ideas to improve products and services and to promote innovation. Imagine a place where your employees can recommend the organisation to prospective employees and boast that the actions of the employer are in line with the values of the company.

Methods of Employee Engagement
Have a tea lady who walks around offering beverages, she can then return to the refrigerator and bring it;
Give employees flexi-time-whereby they can work from home on two or more days per week, for accountability they will log in and log out;
Have a snack or fruit bar full of fruits and snacks for employees to indulge in;
Ask employees about their goals and aspirations and advise them generally on how to move forward;
Show concern for employees who are experiencing difficulties when their spouse or sibling is sick i.e. compassion;
Give employees every other Friday off for personal business, the compromise is that staff will work an additional hour everyday or come in one hour early every morning.
Try to get all employees involved in activities this limits the feeling of alienation.
Employee engagement is about eliciting a deeper commitment from our employees thereby receiving fewer sick leave ,reduction in absenteeism, decreasing accident and incidents rates , limited conflicts and grievances ,and ultimately an increase in productivity 4.
References: 1-4 http://engageforsuccess.org/what-is-employee-engagement

 

The author is an attorney at law in Trinidad , she specialises in Anti Money Laundering and the Countering of the Financing of Terrorism. See the website http://asydneygroup.com Instagram @asydneygrouptt Whatsapp 1 868 484-7778

Do not let the water get inside the boat : if it does,keep your nose above the water

I listened as she explained her situation. I was sympathetic,but I told her that we were in the same boat. She was underemployed and she opined that the work felt degrading.

She knew that she could do better. Years of sacrifice and effort resulted in debt for tuition and living expenses. I told her to keep her head up. There was no shame in serving. While we are young,we ought to work to learn not earn.

We are not entitled to a dream job after graduation, we have to earn our stripes. I commended her on her successful interviews,and the subsequent employment with the company.

I advised her to do extra things with her time ,that could make extra money. Although her salary is equivalent to an entry level position ,she has to work her way up. The experience that she gains will serve her well in the future.

For those students who are graduating this year, welcome to the rat race. You will be disappointed by what the world of work has to offer to you. Be humble. You have to work to earn your dream job .

The author is a lawyer in Trinidad. She specialises in Anti Money Laundering Compliance.

Website :http://asydneygroup.com

What’s app 868 484-7778

There are no dead end jobs,just dead end people:It is an adventure to be alive

Today is a present. Are you alive or just living ? Bills ,bills ,bills. I wish the person who invented bills will choke on his saliva. Bills are a huge inconvenience to me. But working towards generating funds to pay these bills is fun. In the absence of he responsibility to pay bills,some people may never enter into the workforce. Nevertheless,it is a blessing to be on your way to work. Some people are not economically active. Look at it as a quest. You are on a journey to make money. Do not look at it as going to your dead end job. A wise man told me that there are “…No dead end jobs,just dead end people “. Do not resent your employer,after all  the company is paying your bills,sending your kids to school. For the entrepreneurs out there,think of your job as your investor. I encourage you to view your day as an adventure,just like something I heard in the movie Peter Pan ,the version with Robin Williams.

The author is an attorney at law in Trinidad. She specialises in Anti Money Laundering and Countering the Financing of Terrorism. See the website http://asydneygroup.com .

What’s app 1 868 484-7778

Instagram :@asydneygrouptt

Should you quit your job and focus on your own business: Advice to Entrepreneurs

Nine things to do before quitting your job,to run your business:

1. Ensure that your business generates enough money to pay all your recurrent expenses. Before making the great leap,determine how much money you need to cover all living expenses for each month. Then look at the income already generated from your business ,and see if enough money comes in to take care of your basic needs.

2. Consider finding another job that will equip you with the tools needed to bring more value to your own business.

3.Talk to your spouse to let them know your concerns and your desire to leave your job. This will give them notice,lest they are taken by surprise when you are home all the time. It is also a good time for your spouse to admit if they are similarly thinking about leaving their job.

4.Try to prepay some of your expenses,such as internet,electricity before you quit. This will give you a little comfort knowing that bills are paid.

5. Try to buy wholesale food items and store them. When the hard times come ,you will not go hungry.

6. Clear off major debt ,please be reminded that you can lose your house or car if you fail to make your monthly installments. 

7. Be prepared for uncertainties, business is  in and of itself uncertain. Some months will be feast,and some months will be famine. 

8. Before quitting your job,view your employer as your investor ,your financier,who is paying you a salary which you will then use to finance your dreams. 

9. Follow the proper procedure in resigning,so that you leave on good terms. If the services or products that you offer are in line with those of your former employer,you may conduct business with them.

The author is a Trinidadian attorney at law. She specialises in Anti Money Laundering and Countering the Financing of Terrorism. Please see the website http://asydneygroup.com ,whats app 868 484-7778 ,Instagram @asydneygrouptt

What does the way you walk say about you?

I have always been teased about the way I walk. I walk quickly, I pass people by on the sidewalks as though a dog I chasing me. I am oftentimes told that I would get a speeding ticket. I simply laugh at these jokes. In response, I say that I am “on a mission”. I could be on my way to class, on my way to the office or about to meet a friend, I walk with purpose.
Increasing your walking pace by 25% was one of the confidence building exercises in the Magic of Thinking Big . The author told of the games his mother played that consisted of watching passersby and observing their walking habits. His mother advised him that there was much to learn from observing the walking habits of people. The author said that psychologists link poor posture and sluggish walking to low self confidence. Psychologists also say that our attitudes can be changed by improving our posture and by increasing our speed of movement.
The author described 3 different groups of people based on their walking patterns. The first group are the “beaten people”, they “shuffle and stumble along through their life”. The second group of people are average and so is their walk, average. The last group of people exude “superconfidence” in the words of the author. These people walk faster than average, there is a sprint in the way they walk. Their walk tells the world “ I’ve got someplace important to go, something important to do”. Moreover, it tells the onlooker that the walker will succeed at anything he is about to do. The author advised that we should “throw our shoulders back, lift up our head and walk a little faster and feel confidence grow.

The author is an Attorney at Law in Trinidad and Tobago. She is an internationally Certified Specialist in Anti Money Laundering, Countering the Financing of Terrorism and FIU Compliance. See the website http://asydneygroup.com for her portfolio of companies. Instagram @asydneygrouptt Whats app 868 484-7778 .

How to deal with angry customers who insult you? A message to all those employed in the service industry and hospitality industry

I am well on my way to reading one book every week  pursuant to my new year’s resolution. This week, I am exploring “The magic of Thinking Big by David Schwartz. In one chapter he narrates a  story of an irate guest at a hotel who sent a telegram to reserve a room for a single occupant but who came to the hotel clerk requesting  hotel room with double occupancy. The customer insulted the clerk threatening to have him fired and questioned his intelligence. The young clerk apologized but declared that he was merely following instructions.

The author was next in line to deal with the clerk but was pleasantly surprised when the clerk greeted him warmly. The author told the clerk that he admired the way that he dealt with the previous customer. The clerk stated that he refused to be infuriated by a customer like that, he empathised with the man and supposed that he was having marital problems and that the man used him as a scapegoat to feel superior. The clerk added that “…underneath he is  probably a nice guy, most folks are…”

The author then suggested that we remember this statement the next time someone “declares war on us. He said the best way to deal with situations like this is to let the other person say their piece, then forget about it”.

We have nothing to lose by following this approach. Instead of responding to their insults , especially for those of us who work in the service industry, it is wise to hold our tongue. There is nothing to gain by charging with bitter words. The other person may in fact be experiencing some trying times and may simply want attention. Although you may find that your minimum wage does not pay you enough to take insults, I am sure by the following week that you will forget the exchange of words.

 

 

 

 

Money Laundering, Terrorist Financing and Non Profit Organization (NPOs)

What are non profit organisations?

Non Profit Organisations are organisations that provide a public benefit such as furthering cultural, educational, religious, and professional or public service objectives.

There are three (3) main elements of a Non-Profit Organization;

  1. A mission that focuses on activities that benefit society and whose primary goal is not profit. It is to be noted that these organizations are usually profitable, once revenue exceeds expenses. But instead of re distributing profit to owners/staff/investors, the Non-Profit pursues public benefit purposes recognized and approved by the Ministry of Finance in Trinidad bad Tobago.
  2. No particular person owns shares of the company or interests in the company. The organization is not controlled by one person it is owned by the public.
  3. The income must never be distributed to any directors but is recycled back into the Non Profit’s mission. Non-profits typically depend primarily on grants and mission-related earned income to fund its socially oriented activities.

DISTINCTIVE FEATURES OF NON-PROFITS

Staff in a NPO consists of volunteers and paid staff, the former usually out numbers the latter. Accounting for a Non Profit;

Non-Profits are focused on ensuring revenue is greater than costs;

Non-profits do not use balance sheets; they will compile a “statement of financial position”, which focuses only on assets and liabilities. Non Profits do not use income statements but prepare a statement of activities each quarter. This document lists the organization’s revenues minus expenses, plus net assets Exemption from taxes;

Non-profit organizations may be exempt from taxation once they are designated as charitable organizations by the Ministry of finance.

Filing of Annual Returns: Non-profits must file annual returns with MLA Opening a bank account- By-laws are extremely important to create here.

What is available on public record ?

The  Articles of Incorporation discloses certain information such as the Name of the Non Profit, number of directors and intended employees, general nature of activities, the address of the principal office, name occupations and addresses of the first directors of the company.

The Mutual Evaluation Report 2016 and NPOs

Although NPOs are required to register with the Registrar General’s Department, there is no proper AML/CFT policy in relation to the management, supervision and monitoring of these entities. There is no targeted risk assessment for these entities nor are there adequate laws to address this which results in insufficient regulation of the sector.

The Assessors in the Mutual Evaluation Report 2016 considered NPOs to be Non Compliant for the following reasons:

  • There are no laws requiring NPOs Sector to be subject to an AML/CFT regime;
  • There is a lack of proportionate and dissuasive sanctions for violations of the standards of NPOs;
  • No evidence of outreach to the NPO Sector concerning Terrorist Financing issues;
  • There have been no adequate policies articulated concerning NPOs;

 

The non regulation of Non-Profit Organizations is cause for concern since these organizations could be used to facilitate ML/TF activity. Since the last mutual evaluation, the Assessors found that there were no AML/CFT measures in place to deal with NPOs. To date, there are still no measures in place to address AML/CFT.

 

NPOs traditionally enjoy an elevated level of trust by society at large. In light of this, NPOs must take precautions to avoid potential money laundering and terrorist financing abuse of the charitable donation process.2 

Money Laundering , Terrorist Financing and  Non Profits Organizations

Non profits can be used to launder corporate money.  “The lack of transparency around NPOs provides the donors with unfettered funding opportunities while letting them hide their identities …”3

Why are Non Profit Organisations susceptible to being used by Money Launderers?

Non-profit organisations (NPOs) are defined by their purpose, their reliance on contributions from supporters and the trust placed in them by the wider community. They often process large amounts of cash and regularly transmit funds between jurisdictions. NPOs have also traditionally operated under less formal regulatory control and generally, a less rigorous form of administrative and financial management. It is argued that the combination of these factors exposes the sector to an elevated risk of criminal and terrorist abuse (Charity Commission 2009a; FATF 2004a, 2004b).4

 

Misuse of NPO funding to launder money

The misuse of NPO-generated funds may take any one of the following forms;

Funds may be collected in the name of a legitimate NPO but disbursed for terrorist rather than altruistic means;

NPOs may be used to launder money or provide legitimate means for the transmission of funds between multiple locations.5

NPOs may provide financial support to an organisation that provides humanitarian aid, for example, but that organisation may also provide succour to terrorist activities.

Alternatively, NPOs may raise funds for a particular cause but have those funds dispensed or support provided through a terrorist group.

Misuse of the notion of charitable status Criminal or terrorist entities may elect to establish a sham NPO (in this case, a charity) but one which is registered and engages in requisite regulatory requirements. The purpose of the NPO is ostensibly to collect and distribute charitable giving but it is in reality a front for the laundering of money, appropriation of terrorism funds or for the rallying support for terrorist activities.

Gurulé (2008) has suggested a general modus operandi for non-profit exploitation, based on sham NPOs in the United States. Such sham agencies were found to:

  • incorporate under state law;
  • apply for tax-exempt status as a charity or other type of NPO;
  • undertake fundraising activities;
  • open domestic bank accounts into which proceeds and donations are deposited; and
  • transfer funds to overseas financial institutions, diverting all or some of the funds to terrorist activity.7

 

 

FATF recommends the following best practices for non profits to prevent  abuse relating to terrorist financing and money laundering 8:

Ensure good governance practices and strong financial management , including robust internal controls and risk management procedures;

Carry out proper due diligence on individuals and organizations that give  money to, receive money from or work closely with your organization;

Enter into written agreements to outline expectations and responsibilities of grantors and grantees;

Undertake internal risk analysis to help better understand the risk you face in your operations and design appropriate risk mitigation and due diligence measures;

Establish strong financial controls and procedures and keep adequate and complete financial records of income expenses, and financial transactions;

Clearly state program goals when collecting funds and ensure funds are  applied as intended;

Ensure information about the activities carried out by grantors and grantees is publicly available;

Ensure you are informed as to the sources of your income and establish criteria to determine whether donations should be accepted or refused.

Non Profit Organisations must be closely monitored in Trinidad and Tobago and elsewhere because of the abuse of same by money launderers and terrorist financiers.

The author is a certified Anti Money Laundering Specialist and an attorney at law in Trinidad. Website http//:asydneygroup.com

References:

http://www.businessdictionary.com/definition/non-profit-organization-NPO.html

2 https://www.baalegal.com/best-practices-for-preventing-money-laundering-and-terrorist-financing-abuse/

3 https://www.huffingtonpost.com/lucy-bernholz/money-laundering-in-nonpr_b_773771.html

http://www.aic.gov.au/media_library/publications/tandi_pdf/tandi424.pdf

http://www.aic.gov.au/media_library/publications/tandi_pdf/tandi424.pdf

http://www.aic.gov.au/media_library/publications/tandi_pdf/tandi424.pdf

http://www.aic.gov.au/media_library/publications/tandi_pdf/tandi424.pdf

8 https://www.baalegal.com/best-practices-for-preventing-money-laundering-and-terrorist-financing-abuse

 

Are Lawyers required to comply with the Financial Intelligence Unit (FIU) in Trinidad and Tobago?

According to the CFATF Mutual Evaluation Report June 2016 “there is no evidence that the legal profession complies with AML/CFT measures in Trinidad and Tobago. This is a serious deficiency having regard for the significant role played by these professional as financial intermediaries (gatekeepers) in introducing and facilitating such a large percentage of financial transactions”.

Gatekeepers are professionals who can facilitate the entry of illicit money into the financial system . These professionals include: Accountants, Auditors, Lawyers, Notaries, Company Formation Agents.

In AML CFT terminology, lawyers fall under the umbrella term DNFB-Designated Non Financial Businesses and Professions.

The First Schedule of the Proceeds of Crime Act (POCA) captures lawyers as listed businesses but states that the lawyer is only accountable when performing the following functions on behalf of a client:

a)Buying and selling real estate;

b)Managing of client money, securities and other assets;

c)Management of banking, savings or securities and other assets;

d)Organization of contributions for the creation, operation or management of companies;

e)Creation, operation or management of legal persons or arrangements, and buying and selling of business entities.

Lawyers are susceptible to being used as a conduit to money launderers to facilitate their nefarious purposes.1

It is therefore imperative that local attorneys understand their AML/CFT obligations and comply with the FIU to safeguard their practice and to retain their reputation.

Which lawyers are at risk?

Sole practitioners, small firms and large firms are all plagued by the risk of being used by money launderers and perpetrators of other financial crimes. A risk assessment ought to be conducted to ensure that measures are put in place that are commensurate with the risks posed by the customer.

What are attorneys required to do?

  • Register with the FIU;
  • Create a Compliance Program;
  • Appoint a Compliance Officer;
  • Submit a Fit and Proper Form for the Compliance Officer to be approved by the FIU;
  • Train staff on the Compliance Program;
  • Receive internal suspicious activity and transaction memos from staff;
  • Report Suspicious Activity in the SAR/STR to the FIU;
  • Undergo Continuous training;
  • Conduct an annual internal review of the Compliance Program;
  • Conduct annual external review of the Compliance Program.

How do money launderers use the legal and professional services  law firms and sole practitioners to launder their funds?

  • Creating corporate vehicles and complex legal entities such as trusts. These obscure the links between the proceeds of crime and the perpetrator.2
  • Buying and selling property can be used in the layering stage, or in the integration stage where the asset is purchased and retained.3
  • Performing financial transactions on behalf of a client (making deposits, issuing cheques, making and receiving wires, buying and selling stock).4
  • Providing financial and tax advice. Criminals may pose as wealthy individuals who need help sheltering wealth from tax.5

The issue of lawyers  providing advice to their client is controversial, as they have a confidential relationship with their clients.6

According to the CFATF Mutual Evaluation Report June 2016 at paragraph 260 “Financial Institutions (FIs) have indicated that they have particular concerns with doing business with real estate entities and lawyers that buy and sell real estate due to concerns that there is inadequate AML/CFT understanding and application of the requirements such as CDD”.

The Evaluators at paragraph 282 of the MER requested that there be collaboration between the FIU and the Law Association to make the legal fraternity aware the AML/CFT legislative requirements as well as their obligations to implement these requirements.

The Evaluators noted at paragraph 317 of the MER that there appears to be a gap in the registration of lawyers. The majority of lawyers opined that they did not qualify for inclusion as a listed business since their services did not fall withAre Lawyers required to comply with Financial Intelligence Unit (FIU) in Trinidad and Tobago? clearly identify who should be registered.

Penalties

For the offence of Money Laundering, the penalty :

  • On summary conviction,  is  a fine of $10M & to imprisonment for 10 years
  • On Indictment, to a fine of $25M & to imprisonment for 15 years under POCA, S 53 (1)

For the offence of the Financing of Terrorism the penalty,

  • On conviction on indictment for  Individuals $5M & 25 years imprisonment;
  • On summary conviction Legal entities $5M & 5 years imprisonment  under Anti Terrorism Act s 22 A (3) (4) .

When must legal practitioners conduct Customer Due Diligence(CDD)?

When the services provided to the client falls under those services described in the First Schedule of the POCA. This CDD must be applied on a risk sensitive basis when lawyers  establish a “business relationship” with a client, when attorneys carry out an occasional transaction, when they suspect money laundering, when they suspect terrorist financing or when they doubt the veracity of identification documents.7

When must legal practitioners conduct Enhanced Due Diligence (EDD)?

For ongoing matters that present a higher risk of money laundering or terrorist financing, where the client has not been physically present for identification purposes or where the client is a Politically Exposed Person (PEP).8

Kevin Shepherd back in 2002 stated that “Some believe that the special relationship between lawyers and their clients gives lawyers an early inside view into crimes that could make their insights invaluable in the war on domestic and international criminal activity.”9

Lawyers as gatekeepers must start the Know Your Customer (KYC) process. “There is just no other current way of ensuring that the information an Financial Institution (FI) receives is not just a big cobweb of complexities created by a lawyer, helping the customer protect personal identification and corporate ownership information”.10

The time is coming when lawyers will be closely observed by the regulators as powerful and effective gatekeepers. Please get your affairs in order.

 

The author is an internationally certified Anti Money Laundering specialist and  attorney at law in Trinidad .
Please see the website : http://asydneygroup.com and the associated social media pages

References

1 – http://www.telegraph.co.uk/money/criminal-activities/anti-money-laundering-solicitors-front-line-defence

2- 6 http://aml-expert.com/study-notes/Gatekeepers:_Accountants_Auditors_Lawyers_Notaries_Company_Formation_Agents

7-8 https://www.niceactimize.com/blog/Regulation-of-UK-lawyers-as-gatekeepers-for-AML-538

9-10 http://www.cypressresources.com/blog/aml-gatekeepers-engage