We have an obligation to report, we have looked at the offences and certain examples. In order to fulfil this obligation we must understand ‘what constitutes suspicion and reasonable grounds to suspect?’
We must recognise the difference between suspicion and mere speculation. Although in criminal law suspicion has been held to be ‘a mere inkling’. We should have something that corroborates our suspicions.
We could speculate, for example, that some of our clients may be committing some form of tax evasion offence, we cannot report them all on this basis, we require something more tangible to give us reasonable grounds to suspect on an individual case.
There is no simplistic answer, what is suspicious to one person may not be suspicious to others. The following does demonstrate the process.
- A suspicion may start as a “gut feeling” something that does not smell right. The “smell test”
- You may enquire of the client, But ask the RIGHT question
- Be prepared to be professionally skeptical about answers received – you do not have to accept the answer given
- Then use your professional judgment
- Ask someone if you need support, even your MLRO
When forming your firm suspicion regard should be had for the following definitions;
Suspicion is an opinion held that is based on information or circumstances but without certainty or proof. Unusual transactions are not necessarily suspicious, however, MLR 2007 Regulation 20(2) requires that unusual transactions and any other activity that is regarded as particularly likely by its nature to be related to money laundering or terrorist must be identified and scrutinised, which could result in suspicion requiring disclosure.
Reasonable grounds for knowledge or suspicion arise where the facts or circumstances, if viewed objectively, would lead to an expectation that a reasonable person working in the relevant business would know or suspect that someone was engaged in money laundering or terrorist financing.
You may know something instantly, but very often suspicion is formed over time, sometimes taking years.
If you find yourself asking the question “should I make a report”, then in 99% of cases you probably should. However you should not file a report ‘just to cover yourself’; you must have a high level of confidence in your suspicions.