Revised Laws of Saint Lucia (2021)

Anti-Terrorism (Guidance Notes) Regulations – Section 41

(Statutory Instrument 56/2010)

Statutory Instrument 56/2010 .. in force 26 May 2010

ARRANGEMENT OF REGULATIONS

ANTI-TERRORISM (GUIDANCE NOTES) REGULATIONS – SECTION 41

Commencement [26 May 2010]

1.   Citation

These Regulations may be cited as the Anti-Terrorism (Guidance Notes) Regulations.

2.   Guidance notes

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   (1)   The Guidance Notes set out in the Schedule regulates financial institutions.

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   (2)   A breach of the Guidance Notes by a financial institution constitutes an offence and the financial institution is liable to a fine not exceeding $1million.

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   (3)   A financial institution is deemed to have notice of the provisions of the Guidance Notes for the registration of a ship shall be in the form set out in Form 1 of the Schedule.

Schedule

(Regulation 2)

ANTI-TERRORISM FINANCING

GUIDANCE NOTES FOR FINANCIAL INSTITUTIONS

PART I

These Guidelines have been issued by the Financial Intelligence Authority (FIA) in recognition of the risks the financial sector in Saint Lucia is exposed to with regard to the financing of terrorism.

The Guidelines reflect best practice internationally and implement the recommendations of the Financial Action Task Force (FATF) and the Caribbean Financial Action Task Force (CFATF).

The Guidelines are directed to all financial institutions and are designed to assist with the enforcement of the Anti-Terrorism Act (ATA), as they

represent good industry practice. It is recommended that financial institutions should adopt internal procedures which are of equivalent standard.

Institutions should be aware that business dealings with terrorists or terrorist organizations could result in the institution facing significant legal, operational and reputation risks. These risks increase significantly if there is a lack of effective monitoring which may enable persons to carry out acts of terrorism.

All financial institutions are therefore required to establish and implement programmes, policies, procedures and controls in order to prevent and deter the financing of terrorism as specified in the ATA.

These Guidelines should be read in conjunction with the FIA's Revised Anti-Money Laundering Guidelines, particularly with regard to “Verification” or “Know Your Customer” procedures.

The FIA recognizes that institutions may have systems and procedures in place which, whilst not identical to these outlined in the Guidelines, nevertheless impose controls and procedures, that are at least equal if not higher to those contained in the Guidelines.

The Authority actively encourages all institutions to develop and maintain links with it to ensure that the internal systems and procedures are effective and up to date, so enabling them to implement their duty of vigilance.

WHAT IS TERRORISM?

Under the Anti-Terrorism Act a terrorist act is defined as—

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   (a)     an act or omission in or outside Saint Lucia which constitutes an offence within the scope of a counter terrorism convention;

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   (b)     an act or threat of action in or outside Saint Lucia which—

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      (i)     involves serious bodily harm to a person,

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      (ii)     involves serious damage to property,

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      (iii)     endangers a person's life,

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      (iv)     creates a serious risk to the health or safety of the public or a section of the public,

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      (v)     involves the use of firearms or explosives,

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      (vi)     involves releasing into the environment or any part thereof or distributing or exposing the public or any part thereof to—

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         (aa)     intimidate the public or a section of the public; or

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         (ab)     compel a government or an international organization to do, or refrain from doing, any act; and

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         (ac)     is made for the purpose of advancing a political, ideological, or religious cause;

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   (c)     an act which—

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      (i)     disrupts any services, and

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      (ii)     is committed in pursuance to a protest, demonstration or stoppage of work,

shall be deemed not to be a terrorist act within the meaning of this definition, so long as the act is not intended to result in any harm referred to in sub-paragraphs (i),(ii), (iii) or (iv) of paragraph (b).

WHAT IS FINANCING OF TERRORISM?

Financing of terrorism is the term used to describe the accommodating or facilitating of financial transactions that may be directly related to terrorist groups or organizations and their activities.

Financing of terrorism may involve funds raised from criminal activity e.g. fraud (credit cards and cheques), prostitution, smuggling, intellectual property theft (e.g. CD piracy), kidnapping and extortion.

Some terrorists operations, however, do not depend on outside sources of money and may be self funding either through legitimate sources such as employment, personal donations and profits from charitable organizations.

Money laundering and terrorist financing often share similar transactional features mostly in relation to the concealment and disguise of funds. It should be noted, however, that terrorist financing tends to be in smaller amounts than in the case with money laundering, and when terrorist raise funds from legitimate sources, the detection and tracking of these funds becomes more difficult.

RELEVANT OFFENCES UNDER THE ATA

Provision of Services for Commission of Terrorist Acts

Any person who, directly or indirectly, provides or makes available financial or other related services—

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   (a)     intending that they be used, in whole or in part, for the purpose of committing or facilitating the commission of a terrorist act or for the purpose of benefiting any person who is committing or facilitating the commission of a terrorist act; or

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   (b)     knowing that in whole or part, they will be used by or will benefit, a terrorist group, commits an offence and is on conviction on indictment, liable to imprisonment for a term of twenty-five (25) years.

Dealing with Terrorist Property

Any person who knowingly—

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   (a)     deals, directly or indirectly, in any terrorist property;

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   (b)     acquires or possesses terrorist property;

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   (c)     enters into, or facilitates, directly or indirectly any transaction in respect of terrorist property;

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   (d)     converts, conceals or disguises terrorist property;

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   (e)     provides financial or other services in respect of terrorist property at the direction of a terrorist group;

commits an offence and is on conviction on indictment, liable to imprisonment for a term of twenty-five (25) years.

Financial Institutions

A financial institution which engages in the financing of terrorist acts commits an offence and is liable on conviction on indictment to a fine of one million dollars ($1,000,000.00).

A director, general manager, secretary or other like officer or an employee of the financial institution engages, in the financing of a terrorist act commits an offence and is liable to conviction on indictment to a fine of five hundred thousand dollars ($500,000.00) or to imprisonment for a term of years or both.

PART II

SCOPE OF THE GUIDELINES

The guidelines apply to all financial institutions defined as commercial banks or any other institution which makes loans, advances or investments or accepts deposits of money from the public.

PART III

As indicated previously money laundering and terrorist financing share similar transactional features, the systems and procedures used to deter and prevent money laundering apply equally to terrorist financing.

For the purpose of implementing Anti Terrorism Financing systems and measures, financial institutions should refer to and apply Part IV particularly as it relates to—

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   (a)     Vigilance;

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   (b)     Verification;

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   (c)     Reporting;

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   (d)     Record Keeping; and

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   (e)     Training.

PART IV

TERRORISM FINANCING RED FLAGS

Potentially Suspicious Activity that may Indicate Terrorist Financing

The following examples of potentially suspicious activity that may indicate terrorist financing are primarily based on “Guidance for Financial Institutions in Detecting Terrorist Financing” provided by the Financial Action Task Force (FATF). The FATF is an intergovernmental body whose purpose is the development and promotion of policies, both at national and international levels, to combat money laundering and terrorist financing.

Activity Inconsistent with the Customer's Business

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   (a)     Funds are generated by a business owned by persons of the same origin or by a business that involves persons of the same origin from high-risk countries (e.g., countries designated by national authorities and FATF as non-cooperative countries and territories);

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   (b)     The stated occupation of the customer is not commensurate with the type or level of activity;

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   (c)     Persons involved in currency transactions share an address or phone number, particularly when the address is also a business location or does not seem to correspond to the stated occupation (e.g. a student, an unemployed, or self-employed);

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   (d)     Regarding nonprofit or charitable organizations, financial transactions occur for which there appears to be no logical economic purpose or in which there appears to be no link between the stated activity of the organization and the other parties in the transaction;

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   (e)     A safe deposit box opened on behalf of a commercial entity when the business activity of the customer is unknown or such activity does not appear to justify the use of a safe deposit box.

Funds Transfers

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   (i)     A large number of incoming or outgoing funds transfers take place through a business account, and there appears to be no logical business or other economic purpose for the transfers, particularly when this activity involves high-risk locations,

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   (ii)     Funds transfers are ordered in small amounts in an apparent effort to avoid triggering identification or reporting requirements,

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   (iii)     Funds transfers do not include information on the originator, or the person on whose behalf the transaction is conducted, when the inclusion of such information would be expected,

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   (iv)     Multiple personal and business accounts or the accounts of nonprofit organizations or charities are used to collect and funnel funds to a small number of foreign beneficiaries,

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   (v)     Foreign exchange transactions are performed on behalf of a customer by a third party, following by funds transfers to locations having no apparent business connection with the customer or to high-risk countries.

Other Transactions that Appear Unusual or Suspicious

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   (1)   Transactions involving foreign currency exchanges are followed within a short time by funds transfers to high-risk locations;

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   (2)   Multiple accounts are used to collect and funnel funds to a small number of foreign beneficiaries, both persons and businesses, particularly in high- risk locations;

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   (3)   A customer obtains a credit instrument or engages in commercial financial transactions involving the movement of funds to or from high-risk locations when there appear to be no logical business reasons for dealing with those locations;

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   (4)   Banks from high-risk locations open accounts;

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   (5)   Funds are sent or received via international transfers from or to high-risk location;

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   (6)   Insurance policy loans or policy surrender values that are subject to a substantial surrender charge.

Red Flags – Non Government Organization (NGO) Terrorist Financing

The red flags most often associated with NGO terrorist financing are—

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   (a)     Foreign bank accounts, where the NGO's stated aims and activities have no connection with that area;

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   (b)     The NGO has a high volume of wire transfers;

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   (c)     Transfers are made to regions where there is a high risk of terrorist activity;

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   (d)     The NGO has multiple accounts without a satisfactory explanation for their use;

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   (e)     The NGO receives third party cheques for deposit into its account;

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   (ƒ)     Multiple cheques are received from the same individual;

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   (g)     Donations are diverted from their intended purpose or application;

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   (h)     Cash deposits are followed by immediate ATM withdrawals;

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   (i)     Donation cheques are cashed rather than deposited in the NGO account;

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   (j)     Transfers are received from intermediary organizations;

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   (k)     There are multiple transfers to the same recipient;

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   (l)     The NGO has a hoard of cash available that is not deposited into its account;

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   (m)     There is evidence of laying of funds;

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   (n)     The account history is inconsistent with typical NGO activity.

Many NGO officers who are involved in terrorist financing have had prior experience with other NGO's that were also fronts. All NGO staff, as well as officers and directors, should be vetted when the organization is periodically checked.