1.01 Background

The postal service does not operate under the Financial Institutions Act, 1996-16, nor is it classified as a financial institution under the Money Laundering (Prevention and Control) Act, 1998-38. Nevertheless, the Post Office now provides a number of financial services that could be abused for the purpose of money laundering.

As the Post Office more commercially competitive, there is the likelihood that further financial services and other innovative customer service products would be introduced. If Barbados’ reputation and the integrity of the postal service is to be maintained, efficient and safe operating procedures must be developed and maintained. These guidelines are a step in that direction.

It should be borne in mind that money laundering is an international phenomenon. The money that may be laundered in Barbados may have originated with a crime that was perpetrated in another country. Likewise, much of the money that may be sent through the postal service to foreign lands may have originated with crimes perpetrated in Barbados.

1.02 MONEY LAUNDERING

Money laundering is the process by which illegitimate funds, or the proceeds of crime, are made to look like legitimate or clean funds, so that they may be used for the benefit of the launderer.

Section 3(1) of the Money Laundering (Prevention and Control) Act states that a person engages in money laundering where:

(1) The person engages, directly or indirectly, in a transaction that

involves money or other property, that is proceeds of crime; or

(2) The person receives, possesses, conceals, disposes of, or brings

into or sends out of Barbados, any money or other property that is proceeds of crime.

Subsection (2) states that a person engages in money laundering whether he knows of has reasonable grounds to suspect that the property is derived or realised directly or indirectly from some form of unlawful activity, or where the person fails without reasonable excuse to take reasonable steps to ascertain whether or not the property is derived or realised directly or indirectly, from some form of unlawful activity.

It is not necessary for the original offence from which the proceeds stem to be committed in Barbados, so long as it would have been an offence had it taken place within Barbados (see section 3(4)).

1.03 The Stages of Money-Laundering

There are three stages of money laundering, termed placement, layering and integration.

Placement is the physical disposal of criminal proceeds; in the case of many serious crimes (not only drug trafficking) the proceeds take the form of cash, which the criminal wishes to place in the financial system. Placement may be achieved by a wide variety of means according to the opportunity afforded.

Layering is the separation of criminal proceeds from their source by the creation of layers of transactions designed to disguise the audit trail and provide the appearance of legitimacy.

Integration is the stage in which criminal proceeds are treated as legitimate. If layering has succeeded, integration places the criminal proceeds back into the economy in such a way that they appear to be legitimate funds or assets.

The three basic steps occur as separate and distinct stages but may occur simultaneously or, more commonly, they may overlap. The available laundering mechanism and requirements of the criminal organisation shape how these stages are employed.

SECTION 2          CUSTOMER SERVICE PRODUCTS

2.01 New Services

The postal service has now gone well beyond its original mandate of mail delivery. The service now includes certain financial products that allow for the movement of funds, as well as other products that facilitate the delivery, even if not to one’s home, of many non-traditional items.

2.02 Money Order

A Money Order is an order for the payment of a specified sum of money, usually issued at one post office and payable at another abroad.

There is a relatively small limit (currently US $250.00) that may be sent in this way, but there is at this time no limit on the frequency that such orders may be used. This reality makes the limit subject to breach without too much difficulty.

There is evidence that persons go to one clerk and completes the procedure for sending a money order, then enters another line and proceeds to complete the same procedure with another clerk.

There is also the use of a number of persons to send such orders for a single individual. The fact that there are several post office branches around the country, not linked through a network, at which these services may be acquired, makes this an attractive means of circumventing the set limit.

Until there is an on-line computer network that allows transactions to be recorded at all post office branches in real time, the best means of addressing this problem will not be some attempt at preventative measures, but by ensuring that all the aspects of these transactions are fully recorded and made available for scrutiny. In this way tabs could be kept on how much money is being sent out of the country in this manner, what countries it is being sent to, who is sending it and to whom it is being sent.

To this end a journal must be kept at each post office branch to record the following information with respect to Money Orders:

a. Name of purchaser

b. Address of purchaser

c. National Registration number

d. Amount of order

e. Currency

f. Date of purchase

g. Time of purchase

h. Acting on whose behalf

i. Country to which sent

j. Name of payee

k. Address of payee

2.03 Postal Order

A Postal Order functions similarly to the Money Order, except that it originates outside of Barbados and is subject to less control.

Here too there is evidence of abuse so as to avoid the limit. Without imposing any additional restrictions on this order, in order to harmonize post office internal procedures, a journal similar to that kept for the recording of Money Orders, requiring similar information, shall be kept for the recording of Postal Orders.

2.04 Other Services

In time the post office may provide other financial services. Unless otherwise provided for as an amendment to these guidelines, such services shall be managed in like manner to the Money Order with such adaptations as may be necessary.

SECTION 3 COMPLIANCE PROCEDURES AND SYSTEMS

3.01 Internal Reporting System

The Post Office Department should develop and document a solid anti-money laundering programme to ensure that its offices are not used to facilitate criminal activity. In this pursuit, the Department should

1. develop and apply internal policies, procedures and controls to combat money laundering;

2. develop audit functions to evaluate such policies, procedures and controls; and

3. develop a procedure to audit its overall compliance programme.

The following is a suggested internal reporting system that might address the needs of the Post Office Department:

1. The clerks who come into contact with the public who are buying the services that the Post Office Department is offering must be trained to identify unusual or suspicious activity or patterns. All instances of this nature must be reported to the on-site compliance officer in some permanent form.

2. The on-site compliance officer should be well enough trained to make a determination as to whether the matter should be reported as a suspicious or unusual transaction to the central compliance office. Whatever the determination, a record of the transaction and the concern of the clerk must be recorded and the record stored. If the on-site compliance officer deems the matter worthy of reporting, then it should be forwarded to the central compliance office the same day that the determination was made. All matters that were deemed not reportable should be forwarded to the central compliance office at the end of each month with an explanation on each stating the reason for the decision not to report.

3. The central compliance office shall record all transactions reported to it and shall report those that raise suspicions of impropriety to the appropriate law enforcement department. A written explanation should be given as to why each unreported transaction was thought not to satisfy the reporting requirement. A record of all transactions reported to the central compliance office should be retained for a period of five years.

3.02 Compliance Function

The selection of the person or team that will have responsibility for the monitoring of compliance will be critical and will determine how successful and effective the anti-money laundering programme is. The person in charge of department compliance must of necessity be a person in management since that person should have the authority to monitor all areas of the department’s compliance with all laws, regulations and policies governing its operations.

The following should be among the responsibilities of the compliance person or team:

a. authority to conduct regular ad hoc audits of systems and procedures to ensure that the compliance programme is functioning as it should;

b. authority to implement changes in the post office’s compliance programme as the need arises;

c. assisting in the development and enhancement of employee training;

d. monitoring revenue changes so as to be able to detect policy violations;

e. authority to investigate, or have investigated, identified problems;

f. decide whether to report findings to external authorities.

The compliance function is geared at protecting the institution, and this must drive the initiatives of those who are paid to provide that protection. It will, therefore, not be sufficient to be content with identifying problems after they have been committed, but one should work towards prevention as well.

SECTION 4          IDENTIFICATION

4.01 Identification Procedures

Customer identification is the starting point of any administrative system to combat money laundering. It is now a requirement that proof of customer identity be obtained when a business relation is established or when a single transaction is concluded. Where a customer is acting on behalf of another person, the post office will have to obtain proof of the identity of the person on whose behalf the customer is acting and of the authority of the customer to enter into that transaction. Where the person fails to provide the required information the post office concerned will not give effect to the transaction.

It is good business practice to document the type of identification presented by a customer as part of a business transaction. Identification records should be kept in the same manner as transaction records are kept. In many cases, the simple recording of relevant information on a retained transaction document might be sufficient.

4.02 Minimum Identification

At least the following information should be recorded;

1. Full name

2. Permanent address (temporary addresses, post office boxes and in-care-of addresses are not acceptable)

3. Date and place of birth

4. Nationality

5. Reason for the transaction

Valid photo-bearing identification should be obtained, e.g.

1. National identification card (number should be recorded)

2. Passport (number and place of issue should be recorded)

3. Drivers licence (number should be recorded)

4. Social security or similar number, where applicable (if the applicant is non-resident).

SECTION 5      TRAINING AND AWARENESS

The Post Office Department has a responsibility to equip its staff to function well in the execution of their various tasks. Part of this responsibility is ensuring that they are versed in the laws, regulations and official policies that affect their duties and national responsibility.

In addition to any legal or moral responsibility, such a management strategy makes excellent business sense, for an uncertain worker will not perform nearly as efficiently as one who is well familiar with his duties and responsibilities.

The Post Office Department should develop a training programme that targets persons at all levels of the service. The Anti-Money Laundering Authority is willing, within the availability of resources, to assist wherever possible in the training of staff.

All training should be audience specific, so that persons would benefit most by learning about matters that they may relate to. For example, the training that might be geared to new employees might be very different from that to which middle managers may be exposed.

Training topics should include,

a. laws and guidelines;

b. department policies and procedures

c. the identification of possible suspicious activities in all departments;

d. case studies of traditional schemes and new methods of money laundering;

e. reporting procedures; and

f. personal obligation and liability.

Compliance officers require a higher level of training than other members of staff. They training should focus on,

a. policies and procedures to prevent money laundering;

b. customer identification, record keeping and other procedures;

c. recognition and handling of suspicious transactions; and

d. new trends in criminal activity.

Training must be continuous. A one-off exercise will not suffice. Criminal trends are always changing and so training must reflect this dynamism.


CONCLUSION

Money laundering has reached major proportions worldwide and new avenues are always being sought by those who are in that business to breach whatever preventative systems are erected. The new role of the Post Office Department exposes it to the threat of money laundering and it is, therefore, necessary to take every effort to protect the department’s integrity.

There is much at stake, and each entity in Barbados is expected to play its role in preserving this country’s reputation, not by setting up paper displays, but by developing and maintaining sound procedures and practices.

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