1. JOINT FINANCIAL INTELLIGENCE UNIT Stewart McGlynn Chief Inspector of Police Joint Financial Intelligence Unit AML Seminar to Lawyers - JFIU 3 March 2010

2. JOINT FINANCIAL INTELLIGENCE UNIT  Suggested format & content detailed in JFIU website  Email  Fax  Post  Verbal (urgency - follow-up by hardcopy) STR Filing

3. JOINT FINANCIAL INTELLIGENCE UNIT  Urgency  Confidentiality  Tipping Off  Crime Report Vs STR Concerns

4. JOINT FINANCIAL INTELLIGENCE UNIT  Acknowledgement of Receipt  File Ref.  Contact Person Details  Consent / No Consent Letter  Arrest / Prosecutions / Convictions  STR Quarterly Analysis Report Feedback

5. JOINT FINANCIAL INTELLIGENCE UNIT STR Case Example 1

6. JOINT FINANCIAL INTELLIGENCE UNIT  Walk-in Client  Background Not Known  Purchase of sizeable commercial property investment  Source of finance unknown STR Report Made

7. JOINT FINANCIAL INTELLIGENCE UNIT Learning Points  Poor / Negligible CDD / KYC  Absence of risk based approach  Sub Standard STR  JFIU unable to make assessment  What would you think?

8. JOINT FINANCIAL INTELLIGENCE UNIT Case Example 2 HK$ 170 Million Mr. X Resident in In Country Y Company B Company A Law Firm 12 installments of cash / cashier order

9. JOINT FINANCIAL INTELLIGENCE UNIT  Effective CDD / KYC  Risk based approach  Good quality STR, allowing JFIU to perform its function  Protection for you Learning Points

10. JOINT FINANCIAL INTELLIGENCE UNIT Case Example 3 UK Resident Mr. X Paid US$ 316,750.00 Fake Letter from a local bank PRC Pity worth US 8.35M Mr. Z of law firm Company A Company C Company B

11. JOINT FINANCIAL INTELLIGENCE UNIT Learning Points  Reported knowledge of Crime Proceeds – Fraud  Crime report could have been made but STR acceptable in this case  Urgency? Unsure? Contact JFIU

12. JOINT FINANCIAL INTELLIGENCE UNIT Case Example 4 Mr.X, a HKID holder Law Firm Purchase price HK$ 7,349,000 Paid Down-payment HK$ 734,900 (10%) $ from gambling

13. JOINT FINANCIAL INTELLIGENCE UNIT Learning Points  Common sense, proportionate approach to KYC and CDD  If it looks like a duck……….  No risk of prosecution

14. JOINT FINANCIAL INTELLIGENCE UNIT Country Comparison STR filed by Law Firms Country200520062007 Law Firms in 2008 Singapore 0/2,076 (0%) 2/3,290 (0.06%) 2/7,621 (0.03%) 806 UK 10,525/ 195,702 (5.38%) 7,296/ 213,202 (3.42%) 11,300/ 220,484 (5.13%) N/A HK 5/13,505 (0.04%) 11/14,557 (0.08%) 9/15,457 (0.06%) 135

15. JOINT FINANCIAL INTELLIGENCE UNIT STR filed by Law Firms 20052006200720082009 No. of STR Received 13,50514,55715,45714,83816,062 Filed by Law Firms 51193570 Percentage (%) 0.04%0.08%0.06%0.24%0.44%

16. JOINT FINANCIAL INTELLIGENCE UNIT Some Final Thoughts  JFIU understands the burden that CDD and KYC entails  Law / International Standards  Increase in quality STRs from the sector desirable – intelligence is our business  JFIU is here to help – Contact us

17. JOINT FINANCIAL INTELLIGENCE UNIT Contact JFIU Telephone:2866 3366 Fax :2529 4013 Email:jfiu@police.gov.hkjfiu@police.gov.hk Mail:GPO Box 6555 Hong Kong stewartmcglynn@police.gov.hktewartmcglynn@police.gov.hk Telephone:2860 3547