Terrorist Financing links to Money Service Business

Suspicious Activity:

• The appointment of a non-familial beneficiary based in a JFSC D2 listed country.
• Engagement with a country on the GoJ Red List of high-risk jurisdiction associated with Terrorist Financing.
• Operation of a network of currency exchange businesses in D2/Red list jurisdictions.
• The use of both a formal banking system and the potential to be linked to the informal value system (potentially money services businesses/Hawala type arrangements) to facilitate the funds to individuals not named as beneficiaries of the Trust.
• Indirect sanction links, Client Y maintains close familial and business links with individuals and businesses who are subject of sanction measures.
• An audit trail in respect of the final destination of the distributions made to Client Y under the guise as a “beneficiary” could not be established.

 FIU Actions:

• The FIU reviews all submissions and grades and prioritises them as appropriate.
• TF related cases will always be graded as the highest priority with the greatest urgency of assessment and analysis, known as a Code 1.
• The Code 1 is prioritised and allocated to an FIU officer with specific higher level TF training.
• Whilst all members of the FIU have training in TF matters, the FIU has several officers who are highly trained in TF matters and maintain additional global connections and higher vetting levels to support a deeper understanding of potential TF typologies.
• A wide range of sources will be reviewed and checked to ascertain the facts of the submission and seek to expand our understanding.
• The FIU engages with domestic competent authorities as well as internationally with global FIUs and specialist counter-terrorism units to share intelligence and seek further information.
• The FIU maintains additional awareness of a range of jurisdictions and activities aligned to product, jurisdiction, sector and client risks, in particular as it may relate to TF matters.
  

Outcomes:

• Client Y was highlighted as of significant potential risk.
• A review of the Trusts risk appetite and compliance approach identified that they were not suitable as a client.
• Client Y was removed as a beneficiary from the Trust.
• International intelligence organisations could understand wider network links associated with potential TF matters.
• The businesses and associations were further reviewed by international partners in a number of jurisdictions.
• The indirect risk to Jersey was negated.

FIU Comment:

• In TF cases, identifying the value chain and distribution of funding is necessary to fully understand the activity, as the complex links moving between formal and informal value systems is often undertaken to obscure illicit activity.
• It is not always clear how value may be being used or abused. International partnerships and collaborative work is critical to better understand typology and threat development as well as support local investigations and disruption operations.
• The sense and transparency of activity was worrying as it appeared overly complex and seeking to obscure activity.
• The D2 and Red lists are dynamic, necessary and useful aids that can support risk understanding and reporting thresholds.