Financial Crime World

Financial Institutions Must Report Suspicious Transactions to Combat Money Laundering and Terrorism Financing

Combating Money Laundering and Terrorism Financing in Timor-Leste

In an effort to combat money laundering and the financing of terrorism, the government of Timor-Leste has introduced new regulations requiring financial institutions to report suspicious transactions. These regulations aim to prevent the misuse of financial systems and protect the country’s financial system from abuse.

Reporting Suspicious Transactions

Under the new rules, financial institutions must immediately submit a report to the Financial Intelligence Unit (FIU) describing any suspicions of money laundering or terrorism financing. This includes:

  • Transactions involving cash or negotiable bearer securities worth $10,000 or more
  • Any attempts to undertake such transactions

Extended Reporting Requirements

The regulations also require:

  • Lawyers and legal advisors not to provide information received from clients or when defending or representing them in cases related to money laundering or terrorism financing
  • Traders in precious metals and precious stones to inform FIU of suspicious transactions worth $10,000 or more
  • Real estate agencies and brokers to report any suspicious operations involved in purchase and sales or purchases for resale on behalf of clients

FIU Powers and Responsibilities

The regulations give FIU the power to:

  • Order a transaction be suspended for up to three working days if there is suspicion of money laundering or terrorism financing
  • Request information from financial institutions about the payer and beneficiary in such cases

Confidentiality and Disclosure Requirements

Financial institutions are prohibited from disclosing confidential information received during investigations into money laundering or terrorism financing.

Supervision and Enforcement

The government has established supervisory authorities responsible for ensuring that financial institutions comply with the regulations. These authorities have the power to:

  • Impose administrative sanctions on institutions that fail to comply, including fines of up to $500,000 and suspension or withdrawal of licenses
  • Order criminal investigations into suspected money laundering or terrorism financing activities

Criminal Penalties

Offenders can face criminal penalties, including:

  • Fines of up to $150,000 for individuals
  • Fines of up to $750,000 for legal persons

Conclusion

The new regulations demonstrate Timor-Leste’s commitment to combating serious crimes and protecting its financial system from abuse. By requiring financial institutions to report suspicious transactions, the government aims to prevent the misuse of financial systems and promote a safer and more transparent financial environment.