Preventing Money Laundering and Terrorist Financing
is formally responsible for enforcing the AML legislation) and OSFI have an MOU under which OSFI shares with FINTRAC all information gained from its AML assessment program. FINTRAC shares with OSFI information on STR and large cash/electronic funds transfer filings and sector statistics on filing trends and effectiveness. Regular meetings are held between the two agencies to discuss trends and emerging issues, as well as the specific results of assessments of individual entities. Conversely, there may also be a need for a flow of information the other way round, from the supervisor to the FIU. On-site inspections conducted by the supervisor may bring to light unreported suspicious activity. To remedy this, countries may provide the supervisor with the right to ensure that the FIU is informed, either by making a report directly or by having the reporting institution file a belated STR. Again, depending on the role of the supervisor in a given jurisdiction, it may be possible to make a simple agreement between the two institutions. On the other hand, where general confidentiality provisions prohibit sharing of information gathered in the execution of supervisory responsibilities, a specific legislative exemption may be required. Finally, in countries in which the FIU is the supervisory body responsible for AML/CFT, it is necessary to ensure coordination between the prudential supervisor and the FIU, which would clearly consider information encountered on deficient internal controls in the course of a prudential inspection to be important. Similarly, such information gathered by the FIU would be important to the prudential supervisor.
3.1.2 Cooperation with Law Enforcement Authorities
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The supervisor might, of course, uncover much more serious evidence during an on-site visit—not simply evidence of an overlooked transaction, but of the bank’s involvement in criminal behavior, whether that behavior was the result of active involvement or of gross negligence. In that case, the supervisor may wish to inform law enforcement authorities to consider further action.4 The supervisor may, in fact, have no choice, and be obliged to report any evidence of wrongdoing. Because such a situation deals with criminal conduct, any information the supervisor gathers should not be covered by any supervisory confidentiality provisions. To put matters beyond doubt, however, legislators may choose to include an explicit provision to this effect in the law. There is, in any event, a need for dialogue and structural cooperation between supervisory and law enforcement authorities. In the above example, it could be the case that a law enforcement agency was already investigating the bank in question. If the supervisor decided to take independent action without any dialogue or coordination, the entire criminal investigation could be disrupted. If the supervisory action included the imposition of administrative sanctions, these sanctions could preclude criminal sanctions from being applied (see box 7.2). Similarly, a prosecutor who took law enforcement action without consulting the supervisor might cause a run on the