Reporting Suspicious Activity Measures

ACE

The Financial Action Task Force (FATF) is an intergovernmental organization that aims to combat money laundering, terrorist financing, and other related threats to the integrity of the international financial system. The FATF has developed a set of 40 recommendations that are recognized as the international standard for anti-money laundering and counter-terrorism financing (AML/CTF) measures.

Among these recommendations, reporting suspicious activity is a crucial element of the AML/CTF regime. Financial institutions are required to report suspicious transactions or activities to the relevant authorities, usually the country's financial intelligence unit (FIU), to assist in the detection and prevention of money laundering and terrorist financing.

The measures contained in the FATF 40 Recommendations for reporting suspicious activity include:

A. The activity should be reported promptly to the country's financial intelligence unit.

Financial institutions must report suspicious transactions or activities to the relevant authorities promptly. The term "promptly" may vary from country to country, but the FATF recommends that reports should be made as soon as possible after the institution becomes aware of the suspicious activity.

B. The financial institution has been contracted by law enforcement regarding the activity.

If a financial institution is contacted by law enforcement regarding suspicious activity, it should cooperate fully and promptly with the authorities. This may include providing information, documents, or other assistance as required by the authorities.

C. The financial institution has grounds to believe the activity is related to terrorist financing.

If a financial institution has reason to believe that a transaction or activity is related to terrorist financing, it must report the activity to the relevant authorities promptly. This includes transactions or activities that involve designated individuals or entities, such as those listed on sanctions lists or terrorist financing watchlists.

D. The financial institution has contacted the account holder to determine the activity of the account.

Financial institutions may contact account holders to seek additional information or clarification regarding suspicious activity. However, this measure is not included in the FATF 40 Recommendations for reporting suspicious activity.

E. The financial institution has reasonable grounds to suspect the funds are proceeds of criminal activity.

If a financial institution has reason to suspect that funds are proceeds of criminal activity, it must report the activity to the relevant authorities promptly. This includes transactions or activities that involve money laundering or other criminal offenses.

In conclusion, the three measures contained in the FATF 40 Recommendations for reporting suspicious activity are A. The activity should be reported promptly to the country's financial intelligence unit, B. The financial institution has been contracted by law enforcement regarding the activity, and C. The financial institution has grounds to believe the activity is related to terrorist financing.