Reporting a suspicious matter
Lawyers and incorporated law firms currently must report any suspicious transaction in certain circumstances as set out in sections 3 and 15 of the Financial Transactions Reporting Act 1996 (FTRA). This requirement is expected to extend to suspicious activity under Phase 2 of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act).
Regardless of the AML/CFT Act, lawyers are obliged to abide by the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008. Rule 2.4 says a lawyer “must not … assist any person in an activity that the lawyer knows is fraudulent or criminal”.
Registering and lodging a report with the Police Financial Intelligence Unit
Certain technical requirements must be followed to file a Suspicious Transaction Report (STR) with the police. Previously, lawyers would send hard copies of suspicious transaction reports to the police. Police now need lawyers and law firms to register as an “entity” and file reports electronically through a reporting tool called goAML. A number of law firms have already done this.
Not only does this make investigations of suspicious transactions more efficient, it also has the advantage that lawyers and law firms will have already completed one of the many things they will need to do when they become “reporting entities”.
Law firms do not have to register with goAML until they need to make a report but the police’s Financial Intelligence Unit (FIU) is urging them to register now so that they receive any intelligence it disseminates to reporting entities through that medium. The FIU also says it will give firms a chance to familiarise themselves with the system ahead of time before a first report is filed.
Why STRs are important
STRs alert the FIU to activity that may warrant investigation. The FIU frequently receives more than one STR about a particular activity, and each STR will provide one set of information, with others providing different information. It may be that the STR you provide will be the one that brings together enough of the pieces of the jigsaw puzzle to give the Unit the picture that leads to appropriate action.
Registering as an entity
Registering as an entity is simply a matter of filling out the form on the FIU website.
The form is part of the goAML reporting tool that allows rapid and secure exchange of information between the FIU, reporting entities and law enforcement and intelligence authorities.
The FIU says confidentiality of the data collected is assured (see s 44 of the AML/CFT Act).
goAML is the prescribed method by which reporting entities submit STRs and, from 1 November 2017, Prescribed Transactions Reports to the FIU.
Filling out the registration form
Lawyers in sole practice, as well as law firms (partnerships and incorporated firms) need to fill out all three sections.
Until lawyers become “reporting entities” under the AML/CFT Act, there are two fields that the lawyer or firm will either enter “N/A” or leave blank. In the second section, Registering Organisation, fill out the details in all but two fields. Enter “N/A” in the Swift/Bic field, and ignore the field Reporting Obligation.
Lawyers in sole practice will enter “First name, Last name, lawyer” in the name field (eg, “John Citizen Lawyer”) and can then repeat that in the acronym field.
Fill out the third section, Registering Person. Under email use the address you want to use for communication with the Financial Intelligence Unit.
Ensure you use strong passwords, and do not disclose them to anyone else. Passwords must be between 5 and 10 characters. (Tip: Choose a password with a combination of upper and lower case letters and numbers. goAML does not allow spaces or symbols to be used.)
Finally, type in the Captcha (sequence of digits that appears on the screen) and submit the form.
Once this has been submitted you will receive an automated email notification from goAML with a reference number. When your request has been approved you will receive another email from the FIU.
Registering as a new user
You can register as a new user (person) for an existing entity. Do not select Individual User. Enter your goAML entity number in the field Organisation ID.
Filing a Suspicious Transaction Report (STR)
You can access the STR form by logging on to the goAML website.
When filling out the form it is important to keep in mind that the FIU cannot make any amendments to it after it is submited. It is therefore important to fill out the form correctly in the first place.
The FIU has provided a range of advice that can be accessed at police.govt.nz, click on advice at the top, and on the left go into For businesses and organisations section. Within the FIU page is a section on goAML and within that are Suspicious Transaction Reports (STRs).
One of the documents available on the link above is the goAML Web Reporting Quick Reference Guide. This provides screenshots and instructions on how to complete an STR.
Before the screenshots, it also provides advice as a set of 10 points about filling in an STR. Another document lists the “top 10 errors with STRs”. It is worthwhile reviewing these documents before filling out the STR.
The grounds for your suspicion need to be spelled out in the STR.
The reason you are suspicious should cover at least the following three elements:
- What happened: A clear description of the transactions, or the circumstances, or both.
- What is your suspicion: A clear description of what has made you suspicious. Examples of this may be suspicious behaviour such as potential structuring (executing financial transactions in a specific pattern calculated to avoid the creation of certain records and reports required by law), or unusually large cash deposits, or evidence of a specific crime such as money laundering, drugs, tax evasion.
- Why you hold the suspicion: A clear explanation/rationale as to why the suspicion is held (for example, that this transaction differs from the customer’s usual account or transaction activity; that their demeanour/behaviour raised suspicion and a description of that demeanour/behaviour; or a description of what made the transaction different/unusual/unexplainable).
In the section Indicators, lawyers need to select all the indicators that apply to the STR, but do not need to fill in the field relating to their “Sector supervisor”, until Phase 2 is implemented, as the supervisor for lawyers has not yet been finally determined.
Training is available
The FIU runs free 2½ hour hands-on How to Enter an STR training sessions. These are usually held in Auckland once a month at Harlech House in Otahuhu. Sessions are occasionally held in Wellington from the computer training suite at the Police College in Porirua.
Training outside Auckland and Wellington can be arranged but the FIU needs somebody to host this. They require a boardroom or similar and access to wi-fi so participants can bring their own devices to access the test site.
If you require training, once registered send the FIU a message through the goAML message board.
What about when it’s urgent?
If you think your suspicion may need urgent attention (for example, when you think the person involved in the suspicious transaction may be about to leave the country) you can alert the FIU via a message using the goAML message board, as well as filing the STR.
You can save and print the preview of your STR for your records.
Mary Ollivier is the New Zealand Law Society’s General Manager, Regulatory.
Last updated on the 5th May 2017