The Egmont Group is an international partnership that aims to facilitate the exchange of information between all Financial Intelligence Units (FIUs) worldwide. In July this year it published a report which will help institutions that fall within the scope of the (Dutch) Money Laundering and Terrorist Financing (Prevention) Act [Wet ter voorkoming van witwassen en financieren van terrorisme “Wwft”] subject to a reporting obligation – such as banks, accountancy firms, and trust offices – to detect and investigate corruption and laundering of its revenue. A total of 164 FIUs worldwide are currently affiliated with the Egmont Group, including FIU‑The Netherlands.
Over the past year, the Egmont Group has been working on a report that will assist not only FIUs but also institutions subject to a reporting obligation, to identify and report signs of corruption and the laundering of its revenue. In November 2018, the Egmont Group already published a list of established indicators which, when considered in the context of a transaction, can help identify corruption and laundering of the revenue. That list has been supplemented and improved in recent months, partly due to input from the Egmont Group’s affiliated FIUs and international partner organisations. This has now resulted in a checklist of 72 pointers and guidelines forming part of the Egmont Group’s report.
The checklist is divided into three different categories of indicators:
- 24 indicators of corruption in the context of public procurement, such as the repeated awarding of long-term contracts to the same subcontractor or a certain legal entity consistently winning most of the largest publicly tendered contracts;
- 35 indicators relating to unexplained wealth or income, for example transactions in the accounts of government officials involving cash deposits or withdrawals of unusual amounts with unusual frequency, or government officials who have purchased virtual assets for a total amount in excess of their legally declared income; and
- 13 general indicators, such as statements made in the context of certain transactions that contain words or phrasing often utilised as euphemisms for bribery (for example commission, marketing costs, surcharges, etc.), or close relatives/employees of public officials being appointed as senior managers at private companies without meeting the necessary requirements for that position or whose salaries are not in line with the market.
The indicators on the checklist can be applied individually, in combination with one another, or in combination with other indicators or information, and may thus give rise to a suspicion of laundering of the revenue of corruption or other criminal activity. Whereas corruption and the laundering of its revenue varies from case to case and is not always easy to identify, reporting an unusual transaction to the FIU must include a clear and comprehensive description of the case and reasons as to why the transaction is considered unusual. The FIU’s checklist can help with this.
In addition to the checklist, the report explains the FIUs’ most efficient tools and methods for detecting and identifying corruption and the laundering of its revenue. The FIUs utilise a variety of IT tools, such as the i2 platform and goAML, which collect relevant information about years of financial activity. Using such tools allows different types of information to be combined in a single graph for further analysis and perhaps recognition of patterns. In addition to various IT tools, the FIUs also make use of open sources (search engines, social networks, and media messages) such as LEXIS NEXIS and World-Check. The report also describes the challenges FIUs face during their work, such as ensuring confidentiality in the exchange of information between FIUs and foreign colleagues other than FIUs, and how the role of FIUs in the fight against corruption and money laundering can be further reinforced. Given the sensitive information it contains, the full report has not been made public.
The FIU checklist can be used not only by Dutch institutions that are subject to a reporting obligation but also by all such institutions in countries affiliated with the Egmont Group. With the introduction of this improved checklist, the FIU is asking even more explicitly than before for information on transactions that indicate corruption, and the fight against corruption is being stepped up even further worldwide.