AML “anomaly indicators” for Suspicious Activity Reports (SARs) in public administration (October 8th, 2015)

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(Italian translation available here)

On October 7th, 2015 the Ministry of the Interior (Home Office) published  the “Anomaly indicators for Suspicious Activity Reports (SARs) in public administration” (full text available here in word e pdf format).

The alarm by Italian FIU regarding money laundering in Public Administration

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On July 13th, 2015 upon the publication of the “Report 2014”  by UIF  - the Financial Intelligence Unit for Italy, the Italian anti-money laundering authority - the UIF Director, Claudio Clemente, stressed that “Italian public administration is particularly exposed to the incidence of corruption in procurement and public financing” but however, “it still shows little sensitivity to anti-money laundering despite having to respect AML requirements  also regarding SARs obligations. This increases PA vulnerability.”
According to Clemente “ the enactment of specific AML indicators of anomaly for PA will increase its awareness of money laundering and will favor active cooperation of the public administration. PA anomaly indicators will be the fruit of collaboration between the FIU, ministries, ANCI – the Italian association of municipalities - and other authorities.
The PA anomaly indicators will report series of cases related to all sectors of public administration and another specifically aimed at high risk areas.
The procedure of SARs in PA is based on the identification of an explicit delegate.
The PA indicators will represent a major step intended to give a strong signal of the need for public administration to improve awareness of their role in the AML prevention system”(Clemente, “FIU 2014 - Presentation report ", 13 July 2015, p. 8).
Some days before, Claudio Clemente speaking at 11th congress of the Italian Compliance Association (AICOM)  reiterated that cooperation against money laundering by public administration was still inadequate and called for more joint action between the FIU and ANAC - the Italian anti-corruption authority - to provide the PA with applicable rules apply and implement compliance processes in order to mitigate the risks of money laundering and corruption.

What are the indicators of anomaly?

UIF, the Italian FIU writes that “The ‘Anomaly indicators’ and ‘Unusual patterns in customer behavior’ are one of the support tools provided by Legislative Decree no. 231/2007 (the Italian AML Law – editor’s note) for the detection of AML suspicious transactions.
Even though they play an important role in the orientation of the obligated parties in the evaluation of operations, indicators and patterns are not intended to be either exhaustive or binding.
It is not possible to give a general definition of all cases which indicate money-laundering activity or terrorist financing; at the same time, the mere occurrence of one or more deficiencies listed in the indicators is not in itself sufficient reason for suspicious. This must necessarily be based on a full and weighted assessment all the information at the disposal of the obligated parties.

The text of AML anomaly indicators for Suspicious Activity Reports (SARs) in public administration

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The full text is available here in word and pd format  on the basis of what is published in the Official Gazette.

SARs figures regarding PA in 2014

In the "Report 2014" UIF underlines that regarding suspicious transaction reports “the contribution of public administration remains very modest in 2014 with 18 reports declined from 23 reports in 2013 (out of a total of 63.000) to 18 reports in 2014 (out of a total of 65.000).

The other "indicators of anomalies" and "diagrams representative of abnormal behavior"

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(from “Anti-Money Laundering in Italy - 2014 Report”, June 30, 2015  )

Anomaly indicators

The “Anomaly indicators” (art. 41, par. 2) consist of a list of examples of customer behavior to be considered "anomalous" and potentially characterize intent to engage in money laundering or terrorist financing.
The indicators are intended to reduce the margins of uncertainty associated with subjective behavior and also contribute to the containment of costs and the correct and consistent fulfillment of obligations to report suspicious transactions to the parties responsible.
It is the duty of the FIU to develop and propose the “Anomaly indicators”, which are then issued with formal measures by different authorities, competent according to the nature of the party responsible: the Bank of Italy for financial intermediaries and other entities operating in the financial field; the Ministry of Justice, for professionals, in consultation with the professional orders; the Ministry of the Interior (Home Office), for the remaining non-financial and public administrations.

Unusual patterns and diagrams of abnormal behavior

The “Patterns and diagrams representative of abnormal behavior” are complementary and integrate “Red flag indicators” (art. 41, par. 2) as a tool to aid the identification of suspicious transactions to be reported; they are developed and disseminated by the UIF, according to Article. 6, paragraph 7, letter. b) of the Decree.
In order to promote a more effective “active cooperation”, patterns and diagrams provide feedback to addressees the most common cases and they are sent as a return flow to STRs senders (art. 48, par 1).
“Patterns and diagrams” exemplify widespread, recurrent and abnormal behavior found by the UIF regarding certain sectors of activity or specific phenomena related to possible money laundering or terrorist financing.
These diagrams highlight particular logical-temporal sequences of events and behaviors based on previous analyses of criminal phenomena.
They are prepared on the basis of previous financial analyses and with the contribution of the competent investigating authorities and the supervisory bodies.

Following the list of “Anomaly Indicators” and “Patterns and diagrams representative of abnormal behavior” issued by the Italian AML authorities.

Anomaly Indicators

  • Ministry of Interior (Home Office), “AML anomaly indicators for public administration”, October 7th, 2015
  • UIF, Anomaly indicators for credit cards, February 18th, 2014
  • Bank of Italy, “Indicators of anomalies for auditing firms”, February 2013
  • Ministry of Interior, “Indicators for non-financial operators”, April 27th, 2012
  • Ministry of the Interior (Home Office), “Anomaly indicators for non-financial operators to identify suspicious transactions”, 17th February 2011
  • Ministry of Justice, “Anomaly indicators for professionals”, April 16th 2010
  • Bank of Italy,  “Indicators for financial intermediaries”, August 24th 2010
  • Bank of Italy, “Tighter controls against the financing of programs for the proliferation of weapons of mass destruction, May 27, 2009”

“Patterns and diagrams representative of abnormal behavior”

  • Operations with payment cards, 18 February 2014
  • Operations connected with the anomalous use of trusts, December 2, 2013
  • Operations connected with the field of gaming and betting, April 11, 2013
  • Operations connected with tax fraud and international fraud in Billings, April 23, 2012
  • Operations linked to the risk of fraud in factoring, March 16, 2012
  • Operations due to usury, August 9, 2011
  • Operations connected with fraud in the leasing, January 17, 2011
  • Operations connected with the misuse of public funds, July 8, 2010
  • Operations connected with the risk of intra-Community VAT fraud, February 15, 2010
  • Computer fraud, February 5, 2010
  • Counts dedicated, October 13, 2009
  • Companies in crisis and usury, 24 September 2009

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