Rulebook on Indicators
In accordance with the article 46 of the on the Prevention of Money Laundering and Terrorist Financing ("Official Gazette of the Republic of Montenegro ", No. 14/07), The Ministry of Finance adopted
Rulebook on Indicators for recognizing suspicious customers and transactions
Article 1
The list of indicators for recognizing suspicious customers and transactions is closely defined by this Rulebook.
Article 2
The list of indicators for recognizing suspicious customers and transactions is printed together with this rulebook and it makes the integral part of it, as follows:
- List of Indicators for banks,
- List of Indicators for capital market,
- List of Indicators for the Customs Administration,
- List of Indicators for the Department of Public Revenues,
- List of Indicators for leasing companies,
- List of Indicators for auditors,
- List of Indicators for accountants,
- List of Indicators for lawyers and
- General indicators.
Article 3
This Rule book shall come into force on the 8th day after it is published in the “Official Gazette of the Republic of Montenegro” “.
No : 02-
Podgorica, 7th October 2009
Minister of Finance
dr Igor Lukšić
LISTOF INDICATORS FOR BANKS
CASH TRANSACTIONS
1. Depositing or converting into another currency large amounts of small denomination bills into large denomination bills especially if it is outside of the normal course of business of the customer.
2. Frequent payments or numerous bank notes that are battered or damaged.
3. Single payment of a large sum of money on an account of an natural person that is automatically withdrawn from the account.
4. Multiple deposits of small amounts on an account of an individual which are transferred to one account
5. Paying taxes with large amounts of cash.
6. Repeated (consecutive) conversions of large amounts of money into foreign currency.
7. Purchasing financial instruments (securities, insurance policies) in large amounts for cash.
8. Customer conducts cash transactions which are slightly below the legally determined maximum in order to avoid the reporting requirement.
9. Customer conducts transactions which are unusual for him.
10. Transaction involves non-profit or humanitarian organizations without an obvious economic purpose, or where there is no logical relation between the purpose of the organization and other entities involved in the transaction.
UNUSUAL CHANGES ON THE ACCOUNTS
11. Opening accounts for which the signature authority is given to persons that have signature authority in several companies, especially if the companies are related
12. Opening accounts with the signature authority given to the persons that are neither family nor business related.
13. Opening accounts of legal entities on which deposits are made that are not in accordance with the scope of business of the customer
14. Transactions that are not economically justified.
15. Transactions related to payment operations in the country and abroad which are outside normal activities of the customer with regard to the goods, amounts, business partners, scope of turnover, etc.
16. Frequent advance payments
17. Providing illogical information on the transaction to bank officials.
18. Frequent ordering of traveler's checks, frequent issuing of letters of credit for large sums of money.
19. Short term inflows of a large sum of money on an account of the customer that has been inactive for a long time or payment on an account in an off-shore region
20. Multiply transactions carried out by several different persons to one account and without the clear purpose.
21. Flow of large sums of money from one account to another within a closed group of people
22. Attempt to open an account under a false name.
23. Accounts on which several small sums of money are deposited and there is one time withdrawal of a large sum..
24. Transactions involving several accounts, some of which become inactive for a long time.
25. Depositing a higher amount of cash as deposit for the purpose of obtaining credit, and afterwards an unexpected request form a customer to pay of the credit before the deadline
26. Customer deposits considerable amounts on an account and gives an order to a bank for the amounts to be transferred on the accounts of a great number of persons, especially in cases when there is no rational explanation or economic justification for such transactions
27. Frequent transfers to huge and rounded amounts.
28. Frequent transactions on the basis of advance payments or advance returns that are substantiated by a customer with the non- execution of commercial contracts.
29. Transfers of huge amounts in foreign countries from the account of a customer when the account balance originates from numerous cash deposits on different accounts of customers at one or more banks.
30. Small enterprise operating on only one location performs transactions of depositing or withdrawing funds in more branches of the same bank, which could be evaluated as impractical for that enterprise.
31. Considerable increase of the amount, or frequency of cash deposits or withdrawals from the account of an enterprise whose activity is providing professional and consulting services, especially when the deposited funds are immediately transferred on other accounts.
32. Transactions between private and business account of an enterprise, which do not indicate to a clear economic justification.
33. Transactions including withdrawal of funds soon after the funds have been deposited at reporting entity (only through an account), when this rapid withdrawal of funds is not justified in the business activity of a customer.
34. Unexpected/ sudden paying off a debt without a convincing explanation.
35. Loans granted by off-shore companies.
36. Unexplained electronic transfers of funds by a customer.
37. Accounts are used for receiving or paying of huge amounts, but they do not show so called normal activities related to the operating, such as, for example, payment of salaries, paying bills etc.
38. Transactions with a country that is considered as non-cooperative by Financial Action Task Force (FATF) or business relationships with customers whose permanent residence is in such countries.
39. Issuing payable guarantees by a third party unknown to the financial institution, which do not have a clear relationship with a customer or a good reason for offering such guarantees.
40. Transfers of huge amounts of money with instructions to pay of the funds to the beneficiary in cash.
41. A great number of different individuals paying in deposits on the same account number.
42. Depositing or payment of the higher amounts of the effective money (in Euro currency or other foreign currency) which significantly differ from the customer’s usual transactions because they are not in accordance with incomes or customer’s status, particularly if the transactions are not typical for the business activities of a customer.
43. Considerable increase of the amount, or frequency of cash deposits or withdrawals from the account of an enterprise whose activity is providing professional and consulting services, especially when the deposited funds are immediately transferred on other accounts
44. Trade or conversion of numerous traveller check’s or securities for cash, especially if those transactions are not typical for a customer.
45. Frequent transactions based on the return of advance which customer explains with non completed contracts.
46. Customer carries out transactions that include several intermediaries or accounts, especially if the customers who are carrying out those transactions are citizens of countries that do not apply regulations from the prevention of money laundering area or where very rigid laws on bank and business data secrecy are in force.
47. Transactions that are recognized as suspicious by employees with the bank, in accordance with their experience and knowledge.
48. Safe deposit box is only used by a person defined as an authorized person in the leasing contract and this person requires cancelling of the safe deposit box leasing contract.
49. Frequent remittance, domestic and foreign, in smaller amounts and ongoing- connected transactions, with the purpose of concealing the real amount of assets in transaction.
50. There are no evidence on transactions (data on sender), or provided evidence for transaction does not correspond to the swift message and other data for payment (contract, invoice, preliminary calculation, , annexes to a contract etc..
51. Politically exposed persons are carrying out transactions with countries which are is recognized as non cooperative by Financial Action Task Force (FATF), or establishing business relationships with clients whose place of residence is in these countries.
BEHAVIOR OF CUSTOMERS AND EMPLOYEES
52. Customers open accounts or conduct transactions in the branch offices which are not economically or geographically justified
53. Customers conduct transactions through several accounts in several branch offices without the real economic or other reason.
54. Customers are nervous. They avoid answering questions related to the transactions. They assume a defensive posture. They are reluctant to provide identification. They provide false documents or data.
55. Transactions with large amounts of money conducted by public officials, clerks or employees or political exposed persons that are not in accordance with their income or position.
56. Customer asks for assistance to complete the documents while opening an account or he can not provide the necessary information.
57. Customer does not know or is unable or unwilling to provide information concerning the nature of the business or about the owners of the firm.
58. Documents do not show clearly the identity of owners and/or authorized persons to represent the firm.
59. Representatives of a business that is registered in territories of so called high risk countries or off-shore regions want to open an account.
60. Founders of the company are identified as suspicious by law enforcement or other sources.
61. There are valid reasons to believe that the submitted documents to open an account are forged or their authenticity can not be verified.
62. Customer insists that a transaction is conducted promptly.
63. Customer offers statements that the money is clean and that it is not laundered without being questioned in this regard.
64. Customer refuses to show personal documents
65. Customer asks questions about certain facts, which point to his desire to avoid the reporting requirement.
66. Customer shows only copies of his personal documents.
67. Customer attempts to prove his identity using some other documents that are not usual personal documents..
68. The customer’s documentation does not contain usual data such as phone number and address etc
69. The customer’s personal documents are new and recently issued.
70. Customer has never been employed, and owns considerable funds on the accounts.
71. Customer holds open accounts in few branches of the same bank, deposits cash on each of them, and the sum of payments is a considerable one.
72. Customer often deposits funds for which he/she states that they originate from asset sale, while the existence of the asset is questioned.
73. Authorized persons for disposing of the funds on the account of an enterprise refuse to provide complete data on business of the enterprise.
74. Customer makes cash deposits on the account of his/her enterprise with the purpose of paying for “founder’s loan” or “increase of founder’s deposit”.
75. Customer withdraws high sums of money from the account on which significant funds have been transferred on the basis of a credit granted from a country that does not implement the regulations from the prevention of money laundering area.
76. Customer transfers funds on the account in a country his/her enterprise has not had business relationship or receives remittances from business entities he/she had no connections and previous transfers
77. Orderer or the user/beneficiary of the remittance is the citizen of the country that does not apply regulations from the prevention of money laundering area, or which is on the consolidated list of the Sanctions Committee on the basis of UN Security Council Resolution 1267.
78. Customer carries out transactions with persons or companies registered in the countries known as narco-countries and through whose territory narcotics are distributed, or where very rigid laws on bank and business data secrecy are in force.
79. Customer – a legal person, submits a loan application, despite the fact that the economic and financial standing indicators do not imply the customer’s need for a loan. The funds from the loan are afterwards transferred on the accounts in an off-shore bank, or in the favor of a third party, or are used without clear purpose.
80. When carrying out a transaction, a customer is supervised by a third person.
81. Customer frequently deposits or withdraws funds in the amounts that are somewhat lower than the threshold required for identifying and reporting.
82. Customer requires the business relationship to be terminated and to establish a new relationship with a bank in his own name, or in the name of a family member, with no documented traces left.
83. Customer frequently (in a short period of time) via cash dispensers withdraws cash in the amounts that are under the threshold required for identifying and reporting.
84. Customer carries out transactions in high amounts and through an account that has been inactive for a long period of time and possibly gives order for closing an account.
85. Customer frequently deposing assets, claiming that it derives from property sale while the existence of this property is disputable..
86. Customer has unusually good knowledge of legal provisions related to the prevention of money laundering and terrorist financing and reporting suspicious transactions, very “gabby” in relation with topics referring to money laundering and activates of terrorist financing, rapidly confirms that the assets at his/her disposal are “clean” and not laundered.
87. Politically exposed persons frequently depositing cash (in high amounts), and the origin of money is not known or can not be established.
88. Natural person issues order to a bank to transfer assets to a third person without evidences on the purpose and intention of this transfer.
89. Customer opens account as natural person or he/she is an authorized person of a legal person but provides personal documentation issued in countries where dual documentation is still valid (states which do not exist but documents they have issued are still valid) and now he appears as non resident.
ELECTRONIC FUNDS TRANSFER
1. Customer transfers large amounts of money abroad with cash payment order to the foreign entity.
2. Customer receives large amounts of money, from foreign locations, that contains cash payment orders.
3. The amount of electronically transferred assets is out of usual business transactions of that customer.
4. Customer carries out fund transfer towards counties known for drugs production and export.
5. Customer carries out transactions within countries known for high level of bank and business secrecy, except when there is about countries that have accepted international standards on prevention of money laundering.
6. Customer carries out electronic fund transfer in/from free or off shore zone, even if this activity is not usual for customer’s business activities.
7. Customer carries out fund transfers (in/from) and as a purpose for transaction states different derivative financial instruments (options, futures…)
LIST OF INDICATORS FOR CAPITAL MARKET
INDICATORS OF SUSPICIOUS TRANSACTIONS AT THE STOCK EXCHANGE BUSINESS
WHILE OPENING AN ACCOUNT
1. When a customer expresses unusual request for the privacy protection, especially with regard to the data related to his identity, type of industry, assets or business.
2. When a customer refuses or avoids showing the origin of funds for each transaction with the value exceeding 15.000 Euros or when there are grounds for suspicion that the funds were gained from illegal sources.
3. When an employee estimates that a customer broke a transaction into several separate transactions in order to avoid identification.
4. When a customer pulls from giving a payment order in order to avoid identification after he has been told in accordance with the law provisions that his identity should be checked.
5. When a customer is not interested in the commission, other expenses and the risks to the transaction.
6. When a customer conducts a transaction as an authorized person and he does not want to identify the entity in the name of which he conducts the transaction, especially if the entity resides and has the main office out of the Republic of Montenegro territory.
7. When a customer cannot explain the nature of his business industry.
8. When a customer has several accounts under the same name, or several sub accounts under different names for no particular reason.
9. When a customer is from or has an account in the country, which has been identified as a risk country, because it does not apply the standards in the area of the detection and the prevention of money laundering.
10. When a customer has been convicted for the criminal offenses involving the payment operations, the economic activities and discharging official duties.
WITH REGARD TO CONDUCTING THE TRANSACTION
11. The transaction a customer wants to conduct is not in accordance with his financial status or the course of business.
12. Customer shows interest in purchasing securities for large amounts without special analysis or broker's or investment manager's advice, and such a transaction does not have a clear financial purpose.
13. The transaction a customer wants to conduct is not of a kind that he would be expected to conduct, because the transaction has unclear purpose and is conducted under unusual circumstances.
14. Customer purchases securities from numerous accounts in the banks
where he previously deposited cash, especially if the funds were deposited in amounts which are slightly under the reporting threshold.
15. Customer conducts transfers of monetary funds or securities from one account to other account, none of which is connected to the customer.
16. Customer's account shows sudden inflow of monetary funds, especially if the customer's account has previously been inactive, or deposits are not in accordance with his financial status.
17. Customer's account shows inflow of monetary funds from the accounts in the countries which are risky because they do not apply standards in the area of the detection and the prevention of money laundering.
18. Customer's account shows major inflow of monetary funds while the securities account does not undergo any changes.
19. Customer attempts to create an image of real trade in securities, but instead he conducts fictitious or simulated trade in securities.
20. The proposed transaction is financed by the international wire transfer of money, especially from the countries without an efficient anti-money laundering system.
21. Announced block trade in shares at price slower than the market ones, when buyers are unknown or newly formed companies, and particularly the companies registered on offshore territories.
22. Customer invests in prime and very promising shares, without expressing an interest in the results, or suddenly and without purpose sells the shares.
23. Customer often changes brokerage houses in an effort to conceal the scope of his/her business and the financial standing.
24. Trades and transactions carried on through a brokerage-dealer house that has previously been punished by the Securities Commission for irregular or undue carrying on business.
25. Trade in securities with a planned loss, when a customer frequently purchases securities and soon after sells them below cost.
26. Trade in shares that have been the subject of collateral on the basis of granted loans to the share owners.
27. Customer has poor reputation; he/she is known for illegal activities from the past or connections with persons related to illegal activities.
INDICATORS OF SUSPICIOUS TRANSACTIONS FOR CUSTOMS ADMINISTRATION
IMPORTER/EXPORTER/GOODS
1. The business has previously committed Customs violation.
2. The business was founded recently and conducted substantial import/export operations over a short period of time.
3. The business uses services of a suspicious shipping or transport company.
4. The business is known to have financial problems.
5. The business is not specialized for trade but only occasionally conducts trading.
6. The business that is specialized in importing or exporting products from certain countries changes the source of procurement or destination of his products.
7. The business chooses to change location of the Customs examination.
8. Goods are imported from a country known as the source or transit country for narcotics.
9. The business is not registered in the Customs register.
10. Goods are imported or exported in an usual or indirect manner.
11. The value of goods is similar to or lower that the transport costs?
12. The number of the seal does not agree with the number written in the customs documentation.
13. The seals are either impossible to identify or they are perfectly clear.
TRAVELLER / VEHICLE
1. There is a failure to properly declare currency or goods to Customs authorities in accordance with the law.
2. The appearance of the traveler is not in accordance with the purpose of the stated travel.
3. If traveling by public conveyance there is a one way ticket.
4. Traveler is using a leased vehicle.
5. Driver is extremely cooperative or offers information without being asked.
6. The traveler's passport has recently been issued.
7. The traveler always uses the same flight or schedule.
8. The traveler gives a vague or incomplete explanation of the purpose of the travel and the date of return?
9. The travel destination is known for being a source location for narcotics or other illegal activities.
10. There any indication of modification remodeling or changes to the vehicle that may signal secret compartments.
INDICATORS OF SUSPICIOUS TRANSACTIONS FOR THE TAX ADMINISTRATION
CASH CONTRARY TO REALIZATION
1. It is used in accounting for large enterprises while selling goods (services). Transaction is usually conducted; turnover is reported even if no payment was made at all. The same pattern is used for business expenditures. Activities with legal appearance through which cash could be sent to the business account are for example: food market business, restaurants and hotels, bars, night clubs, etc. For example, it also happens that individual payments of daily earnings are conducted even when the industry is not performed.
KEEPING RECORDS ON SUPPLIES
2. Accounting on cash is usually combined with supplies. Keeping records on supplies belongs to the system based on realization. Each abnormal increase or drop of figures related to the supplies should be examined.
BALANCE SHEET (ASSETS, FUNDS, LIABILITIES AND CAPITAL)
3. Balance sheet represents the reflection of the value of the capital that is engaged in certain business, loans, as well as data as to who the creditors are, retained profit that represents business pre-history of the company, assets engaged in that business, etc. It should be determined who participates in the ownership and loans. There is always suspicion in case the balance sheet is not in accordance with the tax returns.
METHODS OF LIVING COSTS AND THE METHOD ON NET VALUE AND DEPOSITS IN THE BANKS
4. How much money does the taxpayer spend, where did he earn the money and what does he do for living? If he cannot prove that the assets were paid from the business revenues, then there are other sources of funds. If the total bank deposits exceed the reported turnover and the taxpayer cannot prove where the money came from, the reason to conduct examination appears immediately. In general, whenever the source of funds cannot be proved the examination should be conducted.
CASH
5.Turnover gained in cash has tendency to be used for the new investments, or for personal needs, and the next step would be to send the money back to a firm from which it can be used without raising suspicion, i.e. that the source of money can be explained easily.
RECEIVABLES
6. Balance due, especially a large one, should be examined. This refers particularly to the buyers that are not related to certain business. This usually reveals some private activities that have been conducted through that business.
LIABILITIES TO CREDITORS AND SUPPLIERS
7. Loan given by a shareholder to a firm is shown as payable loan. It is always suspicious when capitalized firms, which have inappropriate status of basic funds according to the balance sheet, convert loans into share capital.
EXAMINING TURNOVER ON THE ACCOUNT
8. Was cash recorded in the turnover and was cash deposited in the banks together with the checks? If not, check the account in the banks due to potential unusual transactions; check the goods that were taken for personal use and whether those amounts were included in the total turnover.
BAD DEBT
9. Examine major and unusual items in the accounts (write-off) and check whether they were previously reported as revenues. In case of writing off from the account of a shareholder, taxpayer or foreigner that is subject to examination, examination should be obligatory.
TRAVEL EXPENSES AND ENTERTAINMENT EXPENSES
10. Are they business oriented or in favor of a shareholder or an
employee? Are expenses for purchasing luxurious commodities related to business needs or in favor of the owner?
TRANSACTIONS WITH CONNECTED PERSONS
11. Compulsory examination, especially with large firms that have their own accessory companies located in foreign countries. Also, if the funds are obliged to be transferred to other persons, it is particularly important to examine firms whose the owners of which are both directors or clerks, because there are transactions between two parties (owner and firm) and it should be examined whether they are treated in accordance with «arms length transactions« i.e., under the reasonable conditions as if the parties involved in the transaction are not connected at all.
INDUSTRY MARGINS
12. Use of substantially lower or substantially higher margin than normal for the industry.
HIGH RISK LEGAL ACTIVITIES (RELATED TO THE BANKS – CONTRACTS ON FORFEITING, FACTORING, ETC.) AND THE FINANCIAL DERIVATIVES (FUTURES, OPTIONS AND SIMILAR CONTRACTS)
13. High Risk activities are included in the list because the bank with claims enters into the risky situation while collecting debt from the third person (person liable to perform the obligation assigned) – forfeiting, or the firm in case of factoring. Payment of claims does not depend on the bank or the firm, but on an uncertain event that was not known when the contract was signed. They are used mostly while delivering equipment (export) or constructing a building, so called “turn key” operations.
INDICATORS LIST FOR LEASING COMPANIES
1. Customer submits request for approving financial leasing and given data are incomplete or incorrect with obvious intent to conceal the basic information related to identity of customer or its business activity
2. Transactions for which directors or owners of legal persons , or persons on whose behalf the transaction was carried out, never appears in person not even to sign the contract on financial leasing but instead of them this is done by other persons possessing a special (ad hoc) authorization. All this is activities are performed with excuse that can not be checked (illness, unspecific obligations etc.) or give authorization to the third persons in order to avoid direct contact with employees with the leasing companies.
3. A request for financial leasing which seems unjustifiable due to the purpose of equipment or in relation to the business activity of a customer (for example: obvious disproportion between the size of investment and type of business of leasing receiver or in case when the equipment that is purchased by the contract on leasing is not appropriate to customer’s business activity or to business activity which the customer plans to perform).
4. Distributor of the leased equipment performs partial delivery
In order to avoid the amount of transaction that is subject to report that must be delivered to APMLTF. In case when distributor, in cooperation with the receiver of leased equipment, delivers equipment through few leasing companies, in the aim of removing the risk it is important to establish the following: that the delivered equipment is completed or that delivered goods is supplement of the previously imported equipment which the receiver already uses (for example: spare parts for current maintenance).
5. Equipment leasing Business when the equipment is offered for price that significantly differs from the real market price.
6. Distributor of the leased equipment neither is the manufacturer nor it is known as seller of goods or equipment that is the subject of leasing.
7. Leasing business of second hand equipment that is not connected with the regular business activity of leasing equipment distributor and distributor is not involved in selling this type of equipment (neither new nor second hand equipment)
8. Leasing business for which the third party provides guarantees (assurance, mortgage, deposit etc. sl.) and when the connection between leasing user and the person offering guarantees is not clear as well as the reasons why the guarantee is offered to the leasing user.
9. Leasing business in which there is a provision on repurchasing leased equipment by distributor and it is offered by distributor spontaneously and under non-market conditions, and especially when distributor of leased equipment is not familiar to the leasing company.
10. Receiver or distributor of leased equipment unwillingly provides information on itself, its business activities or business relations with other leasing companies, especially when concealment of these information disables access to better conditions for concluding leasing business.
11. Customer with no justifiable reason communicates with leasing companies or its subsidiaries that are away from the company’s register office.
12. Customer, with no real reason, performs payment form another subsidiary /the account different than the account defined in the original contract.
13. Customer submits request for approving leasing on the basis of guarantees issued or for which asset cover is provided by bank of suspicious solvency, bank from off shore country. Bank from a country through which drug trafficking is carried out or bank from a country where regulations on the prevention of money laundering and terrorist financing are not applied.
14. Customer offers, with no justifiable reasons, offers participation in leasing business and it is significantly higher than the amount that is usual at the leasing market.
15. Customers that are carrying out leasing business with cash payments or checks rather than transactions through the bank account
16. Customer pays its debt by a leasing contract with assets transferred form abroad and from accounts opened in banks situated in countries where the standards on the PML/TF are not implemented or from countries where the strict regulations on bank and business data secrecy and confidentiality are in force.
17. Customer deposits high amounts of cash as participation for getting leasing and afterwards unexpectedly pays off the rest of its debt before the payment deadline.
18. Customer signs the contract on financial leasing accompanied by a person that obviously supervises customer’s behavior or insists that the business should be done quickly.
19. Customer provides only copies of documents that are necessary for customer’s personal identification or documents issued abroad and its authenticity can not be easily confirmed due to justifiable reasons.
20. Customer possess unusually good knowledge on regulations related to PML/TF and reporting suspicious transactions, customer is very talkative in relations to the topics on money laundering and financing terrorist activities and confirms quickly that his/her assets are “clean” and that they are not “laundered” .
INDICATORS LIST FOR AUDITORS
1. Customer is not familiar with its business and it can be concluded that the customer does not performs its business at all or performs it in very limited range.
2. An Auditor is not allowed to check business premises or production facilities of a customer and it can be concluded that the company is fictitious
3. Complicated organizational structure of the corporation which, in relation to its business activity, is not efficient and due to that it is not economically justifiable
4. A legal person is established with no particular or justifiable business reason.
5. An orderer pays in advance for the business that has not been contracted yet, and it is less likely that it will be realized.
6. High, unclear oscillations in incomes or unusually higher incomes than business expenditures.
7. Customer, contrary to its business practice, requires from an auditor to perform, on his/her name and account, a transaction for a customer
8. Unusual transactions, most often with connected persons or persons that are different than usual customers (for example: payments to natural persons).
9. There are no evidences on transactions (information, clarifications), or those evidences are not satisfactory.
10. Booking transactions on the basis of unauthentic and incomplete documentation
11. Transactions with legal persons in which identity of beneficiary owner is difficult to establish.
12. Cash based business mainly appears at the legal person that conducts business activity for which cash payment is unusual type of realization of business transaction
13. Payment for undefined actions or payments that differ from usual payments.
14. Enormous delay when opening account of legal person (account of legal person is opened much later that the time when legal person was established)
15. A legal person is founded without economic reason
16. Often trips abroad that are, with the view to business activities of the legal person, unnecessary or to be more precise unusual
17. Legal person possess several recorded individual transactions that are, with the view on other transactions, unusually high.
18. Executing cash transactions below the threshold for which an identification is prescribed. .
19. Cash business is mostly performed below the threshold for which an obligation to be reported to the Administration is prescribed.
20. Concluding contracts on life insurance, with one shot premium, and early termination of contract without justifiable reason
21. Opening numerous accounts without clear economic- legal justifiability and business activities are done through these accounts, contrary to the regulations, they are not presented in balances.
22. Conducting business activities with entities from countries through whose territory narcotics are distributed, or that do not apply regulations from the prevention of money laundering and terrorist financing area.
LIST OF INDICATORS FOR ACCOUNTANTS
LIST OF INDICATORS FOR RECOGNIZING SUSPICIOUS TRANSACTIONS FOR LEGAL AND NATURAL PERSONS THAT PROVIDES AUDITING SERVICES
1. Customer performs recapitalization of the legal entity without economically justifiable reason.
2. Customer, without established reason, does not open business account not even after one year from the date of registration into the Central Register of Commercial Court and it is known that this legal entity performs business activities.
3. Customer, without economical or legal justification, opens or has numerous accounts, or performs business activities through those accounts that are not, contrary to regulations, presented at the balance.
4. Customer does not possess records of regularly employed persons or contracted employees what is unusual for business activity which that legal person performs.
5. Customer is not sure where its business documentation is stored.
6. Customer often and with no basic reason, changes person(s) that for him/her conduct auditing.
7. Customer, contrary to business practice, requires from accountant to perform, on his/her name and account, a transaction for a customer.
8. Termination of the contract on cooperation due to requirements for additional explanation of realization (or announcement of realization) of certain transactions, without any established reasons.
9. High, unclear oscillations in incomes or unusually higher incomes than business expenditures
10. Insufficiently explained short term income that is in the amount 10 times higher than average monthly realization in the previous year, for the same business activity, and it is done without increase in the scope of business activities.
11. Debt and obligation write offs that amount 10% of customer’s assets.
12. Customer’s Business activities with entities from countries through whose territory narcotics are distributed, or that do not apply regulations from the prevention of money laundering and terrorist financing area.
13. Customer’s Business activities with entities from countries that are known as “tax paradises” (for example: payment for consulting services or payments for examining entities that do not conduct trade or production activities in the state where they are registered)
14. Inflows from foreign accounts or outflows to foreign accounts where customer does not have any business partners.
15. Frequent, illogic payments to daughter company or different connected companies or payments to natural persons.
16. Executing cash transactions below the threshold for which an identification is prescribed.
17. Cash based business is mostly performed below the threshold for which an obligation to be reported to the Administration is prescribed
18. Early cash repayments of credits or loans .
19. providing loans for shareholders or employees and that is contrary to regulations
20. Payments for undefined services.
21. Concluding contracts on life insurance, with one shot premium, and early termination of contract without justifiable reason
22. There are no clear evidences on transactions or transactions are executed without a clear purpose.
23. Increase of share capital for companies without additional registration at Central Register of the Commercial Court.
24. Customer, user of auditing services, conducts business activities that include significant number of cash transactions or cash amounts.
25. Customer, user of auditing services, uses complex structure without obvious business or any other reason, especially when the beneficiary owner of the company can not be established.
26. Customer, user of auditing services, has its registered offices or performs high risk business activities or business activities in high risk countries.
LIST OF INDICATORS FOR LAWYERS
General data on customer, its documents and intentions
1. Customer avoids the meeting and identification in person breach the business relationship with a lawyer when he/she becomes informed on identification obligation
2. Customer breaches business relationship by authorization (since he/she is authorized representative) because of the request for additional explanations or additional documentation, without obvious reasons
3. Customer’s phone is turned off or it is established that customer’s number does not exist at all.
4. Customer uses fictitious name or address
5. Customer possesses unusually good knowledge on regulations related to reporting suspicious transactions, and confirms quickly that his/her assets are “clean”
6. Customer unwillingly provides information on itself, its business activities or business relations with other persons (legal or natural), especially when concealment of these information disables access to better conditions for concluding specific contracts.
7. Customer provides only copies of documents that are necessary for customer’s personal identification or documents issued abroad and its authenticity can not be easily confirmed due to justifiable reasons.
8. Customer offers much more money for the service that is provided to him/her than it is usual for that kind of business.
9. Customer requires advice on conducting specific legal business that is connected with criminal act. Criminal
10. Customer is a citizen of country through whose territory narcotics are distributed, or its registered office, or address, is in a country that does not apply regulations from the prevention of money laundering and terrorist financing area.
REAL ESTATE TRADE
11. Customer sold a real estate within a relatively short period even if in the process of sale it is obvious that this sale will be a business loss for customer.
12. Customer, in a short period, conducts numerous purchases without any economically or legally justifiable reasons.
13. Customer requires conducting trade contracts in high amounts (where the customer appears as buyer) and after realization of the first part of contracted business transaction, aborts trade, specifically requires breach of the contract even if it is known that the customer possess enough financial assets for realization of the trade contract. Customer consciously losses certain financial assets, without any economically or legally justifiable reasons, by this act.
14. The pre-contract requires from lawyer stating disproportionately higher prices than market prices
Disposing customer’s money – securities or other property. Disposing customer’s bank account, savings or share trading account
15. In the process of planning transaction, customer plans to make deposits at numerous accounts, (with the same bank but different subsidiaries or different banks), and than the total amount of payments , that is a significant sum, to transfer in countries that do not apply regulations from the prevention of money laundering and terrorist financing area .
16. Transactions with country that is designated by Financial Action Task Force (FATF) as non-cooperative or business relationships are established with entities whose place of residence is in the mentioned countries.
17. Frequent unusual transactions, often with persons that differ from regular customers.
18. Customer’s Business activities are performed with entities from countries that are known as “tax paradises” (for example: payment for consulting services or payments for examining entities that do not conduct trade or production activities in the state where they are registered)
19. Customer, contrary to business practice, requires from lawyer to perform, on his/her name and account, a transaction for a customer
20. There are no clear evidences on transactions or transactions are executed without a clear purpose.
GENERAL INDICATORS
1. Customer brings high amount of cash and intend to execute a transaction.
2. Customer’s business transactions are not in accordance with customer’s known income or position.
3. Customer provides unclear explanation on its source of incomes or cash which he/she uses in business transactions.
4. Customer claims or states that the origin of incomes or cash is illegal
5. There are data that customer is allegedly involved in for illegal activities.
6. Customer requires paying in installments in order to avoid cash payment in the amounts which are slightly under the reporting threshold.
7. Customer requires that the report on cash transaction should not be composed or rejects to execute transaction after receiving information that there is reporting obligation. .
8. Transaction that customer executes is not in accordance with his/hers usual business practice.
9. Customer intends to buy property or conduct business on behalf of another person for example: acquaintance or cousin (besides it’s suppose).
10. Customer does not want that his/her name is recorded in any document that could connect him/her in relation with the certain business transaction.
11. Customer provides inadequate explanation why does he/she, in the last moment, changes names of persons that are used in relation with the transaction.
12. Customer negotiates on performing business by market price or price higher than required but demands that lower price should be provided in the documents, and he/she is paying price difference underhand
13. Customer pays advance in a high amount of cash, while the rest of it is financed from an unusual source or offshore bank.
14. Customer buys property, especially real estates, blindly (without seeing or checking it).
15. Customer buys property or invests in real-estate business in a short term period and acts as very interested in location, status or projected expenses for repairing the property.
16. Customer performs real-estate business (buying, selling, replacing) in cash and for the benefit of himself/herself, members of its family and third persons, in the amounts exceeding 150.000 €.
17. Customer would like to know more about unusual ways of.
18. Customer does not want to identify itself in case of real-estate trade in cash or identifies itself with counterfeited data or documents.
19. Customer that is known from the public life, buys real estates in high amounts and the value of the bought property differ from his/her income status.
20. Customer that purchases real estates is a young person and it is obvious that this customer disposes luxurious status symbols (expensive automobiles, motorcycles, vehicles, watches etc.).
21. Customers that are residents or non residents purchase real-estates for domestic legal person even if it is obvious that the purpose of real-estate trade is purchasing real-estate for non resident natural person.
22. Customer natural or legal person asks or executes transactions on real-estate for natural or legal persons , residents or non residents, that are from off shore destinations or for off shore companies and also from countries known for narcotics distribution and production narcotics or countries that do not apply regulations from the prevention of money laundering and terrorist financing area .
23. Payments of high amount insurance premiums.
24. The insurance user requires cash payment for money form insurance or returns of insurance premium in case that there is a high amount of money.
25. High insurance amounts for number of insurance policies, that are concluded in short time period, are paid in cash.
26. It is suspected that insurance policies are concluded on fictitious names, names of other persons or fictitious addresses.
27. One person owns numerous insurance policies issued at different insurance companies, especially if insurance contracts were concluded in a short time period.
28. Insurance policy owner makes changes at insurance contract and requires insurance policy with higher premium or to change monthly policy payments to annual policy payments or insurance at fixed premium, and it is not in accordance with its income status.
29. Cancelling insurance policy soon after concluding insurance policy contract soon after concluding insurance policy contract, especially when there is large amount premium.
30. Customer demands compensation from insurance, money that is demanded on the basis of compensation in case of cancellation of policy or overpaid amount of insurance premium to be paid off to a third party or transferred to the account of natural or legal person on the territory of the state where are applied high standards in the area of money laundering and in which are prescribed strict regulations on confidentiality and secrecy of bank and business data.
31. Customer accepts unfavorable terms of insurance contract, with regard to his health condition and age.
32. Companies that are owners of insurance policies pay on behalf of their employees unusually large insurance premiums or cancel policies in very short time period from the date of concluding insurance contract
33. Companies purchase insurance policies for their employees, and number of employees is lower than number of purchased policies: polices are issued even for persons that are not employed in company.
34. Insurance contract is concluded by person who carried out illegal activities in past or insurance contract is concluded by person that in some manner can be connected with these activities.
35. Contractor insurance or the insured insists on transaction secrecy, i.e. not to report the amount of the insurance premium or the amount of the insurance to the APML despite the fact that it is a statutory obligation of the insurer. A customer attempts, by plead or bribe, to convince the employees in the insurance company to represent his/her interests which is against the law.
