Financial Intelligence Data⚓︎
To support the two business areas within the model Financial Intelligence Agency, governments collect the following two key data assets. While the data collected is somewhat different across the two data assets logically they all of the data collected relates to one or more parties being associated with some kind of activity.
Regulated Entity Registration/Information - initially provided at the time of registration and updated when significant business characteristics change. Regulated Entity information includes:
- Identifying Business Characteristics - e.g. name, address, telephone, email, business registration details.
- Key Personal Details - identifying characteristics of the directors, key managers (such as risk officers) and other contacts.
- Business Details - industry, sector, services provided, scale of business (turnover, number of staff, locations, etc…).
- Details of the entity’s risk mitigation processes and procedures - that seek to combat criminal abuse of the financial services provided.
Additionally governments often survey their regulated entities, for exampe once a year, to help them direct their supervisory efforts and understand changes occuring across the Regulated Entity population.
Transaction Reports - these are reports on financial transactions, which are submitted by regulated entities to support the government's financial intelligence analysis. The financial transaction reports collected by governments differs between jurisdictions. Listed below, in order of their prevalence, are the types of reports captured:
- Suspicious Activity Reports - which is provided by a Regulated Entity when they form a criminal suspicion in relation to one of their customer's (or potential customer's) activities. For example an institution may form a suspicion that an individual is deliberately structuring transactions to avoid a single large transaction that would be reportable to the FIU.
- Threshold Transaction Reports - which describe transactions in to or out of a financial institution involving cash over a specified value (e.g. > $10k in cash). While the use of physical cash is decreasing transactions involving large amounts of cash are still very common for example the deposit of a weekend's charity collection.
- Physical Cross Border Movement Reports - which relates to the physical carrying of cash (or equivalents) into or out of the country. Where individuals fail to declare they are physically carrying cash a fine maybe applied by border and customs officials.
- Suspected Unregistered Entity Reports - (commonly referred to as dob-ins) which allows members of the public to identify entities that appear to be provided financial services that would require them to be be registered, however they appear not to be registered.
- International Fund Transfer Reports - recording the electronic transfer of funds into or out a country between the customers of financial institutions. International Fund Transfers related to: settlement of financial transactions between institutions are generally not reportable.
International Fund Transfer Reports Complexity
From the customer’s perspective International Fund Transfers are intentionally simple - they provide some institution and beneficiary details and within a day or two the funds arrive in the foreign institution account.
Below this simplicity is a complex web of connectivity between financial institutions that faciliate these transfers. The below diagram illustrates an example whereby the fund transfer is passed through mulitple intermediaries and through a third country before it can be routed to the beneficiary customer's account.
The key takeaway from the above diagram is that the Ordering Institution has no visibility into the details of the beneficiary account (i.e. the beneficiary customer is not a customer of the Ordering Institution). Similarly the Beneficiary Institution has no visibility into the details of the ordering customer.
In practice what this means is that when Financial Intelligence Agencies collect International Fund transfer Instructions from the institution on the edge of their juristiction they are only getting high quality data on one of the parties involved in the transaction.
For inbound transactions the beneficiary details provided to the Ordering Institution could not be verified, when the instruction was received. However the beneficiary details of the account that received the funds are known by the domestic Beneficiary Institution. Some Financial Intelligence Agencies are reaching out to the domestic Beneficiary institutions to obtain this information to supplement the instruction provided by the Ordering Institution.