Editor's note: Former chapter 9 of this title on Major Crimes (§§ 901-951) was repealed in its entirety by PL 11-72 § 1. This new chapter 9 was enacted by PL 11-72 § 84 and is part of the Revised Criminal Code Act.
SUBCHAPTER II
Money Laundering
SECTIONS
§ 912. Department of Justice to have authority over money laundering offenses.
§ 913. Financial institutions and cash dealers to verify customers identity.
§ 914. Financial institutions and cash dealers to establish and maintain customer records.
§ 915. Financial institutions and cash dealers to report suspicious transactions.
§ 916. Financial institutions and cash dealers to establish and maintain internal reporting procedures.
§ 917. Further preventive measures by financial institutions and cash dealers.
§ 918. Money laundering offenses.
§ 919. Related offenses.
§ 920. Seizure and detention of suspicious imports or exports of currency.
§ 921. Power to obtain search warrant.
§ 922. Property tracking and monitoring orders.
§ 923. Orders to enforce compliance with obligations under this subchapter.
§ 924. Secrecy and confidentiality obligations overridden.
§ 925. Immunity where suspicious transaction reported.
§ 926. Immunity where official powers or functions exercised in good faith.
§ 927. Restitution of restrained property.
§ 928. Damages.
The Federated States of Micronesia Department of Justice shall have primary enforcement authority with respect to the provisions of this chapter, and:
(1) shall receive and investigate reports of suspicious transactions issued by financial institutions and cash dealers pursuant to subsection 915(1) of this chapter;
(2) may enter the premises of any financial institution or cash dealer during ordinary business hours to inspect any records kept, pursuant to subsection 914(1) of this chapter, and ask any question relating to such records, make notes and take copies of the whole or any part of the records;
(3) may instruct any financial institution or cash dealer to take such steps as may be appropriate to facilitate any investigation;
(4) may compile statistics and records, disseminate information within the Federated States of Micronesia or elsewhere, make recommendations arising out of any information received, promulgate regulations to be followed by financial institutions and cash dealers, and advise the President;
(5) may provide lists of training facilities for any financial institution in respect of transaction record-keeping and reporting obligations provided for in subsections 914(1) and 915(1) of this chapter;
(6) may consult with any relevant person, institution or organization for the purpose of exercising its powers or duties; and
(7) may enter into joint law agreements with the States of the Federated States of Micronesia with respect to the enforcement and implementation of the provisions of this chapter, as deemed appropriate.
Source: PL 11-72 § 98.
Cross-reference: The statutory provisions on the President and the Executive are found in title 2 of this code. The statutory provisions on the Congress of the Federated States of Micronesia are found in title 3 of this code. The statutory provisions on the FSM Supreme Court and the Judiciary are found in title 4 of this code.
The website of the FSM National Government contains announcements, press releases, news, forms, and other information on the National Government at http://fsmgov.org.
The FSM Supreme Court website contains court decisions, rules, calendar, and other information of the court, the Constitution, the code of the Federated States of Micronesia, and other legal resource information at http://www.fsmsupremecourt.org/.
The official website of the Congress of the Federated States of Micronesia contains the public laws enacted by the Congress, sessions, committee hearings, rules, and other Congressional information at http://www.fsmcongress.fm/.
(1) A financial institution or cash dealer shall take reasonable measures to satisfy itself as to the true identity of any applicant seeking to enter into a business relationship with it, or to carry out a transaction or series of transactions with it, by requiring the applicant to produce an official record reasonably capable of establishing the true identity of the applicant, such as a birth certificate, passport or other official means of identification, and in the case of a corporation, a certificate of incorporation together with its latest tax return filed with the Government of the Federated States of Micronesia.
(2) Where an applicant requests a financial institution or cash dealer to enter into a continuing business relationship, or in the absence of such a relationship, any transaction, then the institution or cash dealer shall take reasonable measures to establish whether the person is acting on behalf of another person.
(3) If it appears to a financial institution or cash dealer that an applicant requesting to enter into any transaction, whether or not in the course of a continuing business relationship, is acting on behalf of another person, then the institution or cash dealer shall take reasonable measures to establish the true identity of any person on whose behalf, or for whose ultimate benefit, the applicant may be acting in the proposed transaction, whether as trustee, nominee, agent or otherwise.
(4) In determining what constitutes reasonable measures, for the purposes of subsections (1) or (3) of this section, regard shall be given to all circumstances of the case, and in particular:
(a) to whether the applicant is based or incorporated in a country in which applicable provisions are in force to prevent the use of the financial system for the purpose of money laundering; and
(b) to custom and practice, as may from time to time be current, in the relevant field of business.
(5) Nothing in this section shall require the production of any evidence of identity where:
(a) the applicant is itself a financial institution or a cash dealer to which this act applies; or
(b) there is a transaction or a series of transactions taking place in the course of a business relationship, in respect of which the applicant has already produced satisfactory evidence of identity.
(1) A financial institution or cash dealer shall establish and maintain:
(a) records of all transactions exceeding $10,000, or its equivalent in foreign currency, carried out by it, in accordance with the requirements of subsection (3) of this section; and
(b) where evidence of a person's identity is obtained in accordance with section 913 of this chapter, a record that indicates the nature of the evidence obtained, and which comprises either a copy of the evidence or such information as would enable a copy of it to be obtained.
(2) Customer accounts of a financial institution or cash dealer shall be kept in the true name of the account holder.
(3) Records required under subsection (1)(a) of this section shall contain particulars sufficient to identify the:
(a) name, address and occupation (or where appropriate, business or principal activity) of each person conducting the transaction, or if known, on whose behalf the transaction is being conducted, as well as the method used by the financial institution or cash dealer to verify the identity of each such person;
(b) nature and date of the transaction;
(c) type and amount of currency involved;
(d) the type and identifying number of any account with the financial institution or cash dealer involved in the transaction;
(e) if the transaction involves a negotiable instrument other than currency, the name of the drawer of the instrument, the name of the institution on which it was drawn, the name of the payee (if any), the amount and date of the instrument, the number (if any) of the instrument and details of any endorsements appearing on the instrument; and
(f) the name and address of the financial institution or cash dealer, and of the officer, employee or agent of the financial institution or cash dealer who prepared the report.
(4) Records required under subsection (1) of this section shall be kept by the financial institution for a period of at least five years from the date the relevant business or transaction was completed.
(1) Whenever a financial institution or cash dealer is a party to a transaction and has reasonable grounds to suspect that the information it has concerning the transaction may be relevant to an investigation or prosecution of a person for a serious offense, it shall as soon as possible, but no later than three working days after forming that suspicion, and wherever possible before the transaction is carried out:
(a) take reasonable measures to ascertain the purpose of the transaction, the origin and ultimate destination of the funds involved, and the identity and address of any ultimate beneficiary;
(b) prepare a report of the transaction in accordance with subsection (2) of this section; and
(c) communicate the information contained therein to the Department of Justice in writing.
(2) A report required by subsection (1) of this section shall:
(a) contain particulars of the matters specified in subsection (1)(a) of this section, and in section 913(1) of this chapter;
(b) contain a statement of the grounds on which the financial institution or cash dealer holds the suspicion; and
(c) be signed or otherwise authenticated by the financial institution or cash dealer.
(3) A financial institution or a cash dealer which has reported a suspicious transaction in accordance with this subchapter shall, if requested to do so by the Department of Justice, give such further information as it has in relation to the transaction.
A financial institution or cash dealer shall establish and maintain internal reporting procedures to:
(1) identify persons to whom an employee is to report any information which comes to the employee's attention in the course of employment, and which gives rise to knowledge or suspicion by the employee that another person is engaged in money laundering, and enables any person so identified to have reasonable access to any information relevant to determine if a sufficient basis exists to report the matter pursuant to subsection 915(1) of this chapter; and
(2) require the identified person to report the matter pursuant to subsection 915(1) of this chapter, in the event that he or she determines that sufficient basis exists.
A financial institution or cash dealer shall establish and maintain internal reporting procedures to:
(1) take appropriate measures for the purpose of making employees aware of domestic laws relating to money laundering, and the procedures and related policies established and maintained by it pursuant to this act;
(2) provide its employees with appropriate training in the recognition and handling of money laundering transactions.
(1) A person commits the offense of money laundering if the person:
(a) acquires, possesses or uses property, knowing, or having reason to believe, that it is derived directly or indirectly from acts or omissions that would constitute a serious offense;<./p>
(b) renders assistance to another person for:
(i) the conversion or transfer of property derived directly or indirectly from the acts or omissions referred to in subsection (1)(a) of this section, with the intention of concealing or disguising the illicit origin of that property, or of aiding any person involved in the commission of the offense to evade the legal consequences thereof; or
(ii) concealing or disguising the true nature, origin, location, disposition, movement or ownership of the property derived directly or indirectly from the acts or omissions referred to in subsection (1)(a) of this section.
(2) The offense of money laundering, established under subsection (1) of this section, is a felony offense, punishable by imprisonment for a maximum term of ten years or a maximum fine of $100,000, or both; PROVIDED, however, in the case of a corporation, company, commercial enterprise, commercial entity or other legal person, the maximum fine shall be increased to $500,000.
(1) A person who knowingly opens or operates an account with a financial institution or a cash dealer under a false name commits a felony offense, punishable by imprisonment for a maximum of five years or a maximum fine of $50,000, or both; PROVIDED, however, in the case of a corporation, company, commercial enterprise, commercial entity or other legal person, the maximum fine shall be increased to $250,000.
(2) A financial institution or cash dealer who fails to comply with any requirement of this subchapter for which no penalty is specified commits a felony offense, punishable by imprisonment for a maximum of five years or a maximum fine of $50,000, or both; PROVIDED, however, in the case of a corporation, company, commercial enterprise, commercial entity or other legal person that is not also a natural person, the maximum fine shall be increased to $250,000.
(3) In determining whether a person, or a financial institution or cash dealer has complied with or failed to comply with any requirement of this subchapter, the Supreme Court shall have regard to all the circumstances of the case, including such custom and practice as may, from time to time, be current in the relevant trade, business profession or employment, and may take into account any relevant regulations adopted and/or approved by a public authority, exercising public interest supervisory functions in relation to the financial institution or cash dealer, or any other body that regulates or is representative of any trade, business, profession or employment carried on by that person.
(4) Any person who knows or suspects that a report under subsection 915(1) of this chapter is being prepared or has been sent to the Department of Justice and discloses to another person information or other matters which are likely to prejudice any investigation of an offense, or possible offense of money laundering under section 918 of this chapter, commits a felony offense; such offense is punishable by imprisonment for a maximum of five years or a maximum fine of $50,000, or both; PROVIDED, however, in the case of a corporation, company, commercial enterprise, commercial entity or other legal person, the maximum fine shall be increased to $250,000.
(5) In proceedings for an offense against subsection (4) of this section, it is an affirmative defense that the person did not know, or have reasonable grounds to suspect, that the disclosure was likely to prejudice any investigation of an offense or possible offense of money laundering under section 918 of this chapter.
(1) An authorized officer may seize and, in accordance with this section, detain any currency which is being imported into or exported from the Federated States of Micronesia if the authorized officer has probable cause to believe that it was derived from a serious offense, or is intended by any person for use in the commission of a serious offense.
(2) Currency detained under subsection (1) of this section shall not be detained for more than 24 hours after seizure, unless a justice of the Supreme Court grants an order of continued detention for a period not exceeding three months from the date of seizure, upon being satisfied that:
(a) there is probable cause to believe that it was derived from a serious offense or is intended by any person for use in the commission of a serious offense; and
(b) its continued detention is justified while:
(i) its origin or derivation is further investigated; or
(ii) consideration is given to the institution in the Federated States of Micronesia or elsewhere of criminal proceedings against any person for an offense with which the currency is connected; PROVIDED, however, upon request by the person from whom the currency was seized and detained, the court shall grant a hearing before entering an order of continued detention.
(3) A justice of the Supreme Court may subsequently order, after hearing, with notice to all parties concerned, the continued detention of the currency if satisfied of the matters mentioned in subsection (2) of this section, but the total period of detention shall not exceed two years from the date of the order.
(4) Subject to subsection (5) of this section, currency detained under this section may be released in whole or in part to the person on whose behalf it was imported or exported:
(a) by order of a justice of the Supreme Court that its continued detention is no longer justified, upon application by or on behalf of that person and after considering any views of the Secretary to the contrary; or
(b) by an authorized officer, if satisfied that its continued detention is no longer justified.
(5) No currency detained under this section shall be released where:
(a) an application is made under subchapter III of this chapter for the purpose of:
(i) the confiscation of the whole or any part of the currency; or
(ii) its restraint pending determination of its liability to confiscation; or
(b) proceedings are instituted in the Federated States of Micronesia or elsewhere against any person for an offense with which the currency is connected, unless and until the proceedings relating to the relevant application or the proceedings for the offense as the case may be have been concluded.
Source: PL 11-72 § 106.
Cross-reference: The statutory provisions on the President and the Executive are found in title 2 of this code. The statutory provisions on the Congress of the Federated States of Micronesia are found in title 3 of this code. The statutory provisions on the FSM Supreme Court and the Judiciary are found in title 4 of this code.
(1) The Department of Justice may apply to the Supreme Court for a warrant, under this section or title 12 of this code, to enter any premises belonging to or in the possession or control of a financial institution, cash dealer, or any officer or employee thereof, and to search the premises and remove any document, material or other thing therein for the purposes of the Department of Justice as ordered by the Supreme Court and specified in the warrant.
(2) The Supreme Court shall grant an application for a search warrant made pursuant to this act if it is satisfied that there is probable cause to believe that:
(a) the financial institution or cash dealer has failed to keep a transaction record, or report a suspicious transaction, as required by this act; or
(b) an officer or employee of a financial institution or cash dealer is committing, has committed or is about to commit an offense of money laundering or other violation of this Act.
Source: PL 11-72 § 107.
Cross-reference: The statutory provisions on the Judiciary and the FSM Supreme Court are found in title 4 (Judicial) of this code. Title 12 of this code is on Criminal Procedure.
For the purpose of determining whether any property belongs to, or is in the possession or under the control of any person, the Department of Justice may, upon application to the Supreme Court, obtain an order:
(1) that any document relevant to:
(a) identifying, locating or quantifying any such property; or
(b) identifying or locating any document necessary for the transfer of any such property, belonging to, or in the possession or control of that person; be delivered forthwith to the Department of Justice; or
(2) that the financial institution or cash dealer forthwith produce to the Department of Justice all information obtained about any transaction conducted by or for that person during such period before or after the order as the Supreme Court directs.
Source: PL 11-72 § 108.
Cross-reference: The statutory provisions on the Judiciary and the FSM Supreme Court are found in title 4 (Judicial) of this code.
(1) The Department of Justice may, upon application to the Supreme Court, after satisfying the Court by a preponderance of the evidence, that a financial institution or cash dealer has failed to comply with any obligation provided for under sections 913, 914, 915, 916, or 917 of this chapter, obtain an order against all or any officers or employees of the institution or dealer in such terms as the Supreme Court deems necessary, in order to enforce compliance with such obligation.
(2) In granting the order pursuant to subsection (1) of this section, the Supreme Court may order that should the financial institution or cash dealer fail, without reasonable excuse, to comply with all or any provisions of the order, such institution, dealer, officer or employee shall pay a financial penalty in the sum and in the manner directed by the Supreme Court.
(3) Nothing in this section shall preclude the Department of Justice from instituting criminal charges and seeking other orders, warrants, remedies or penalties; and notwithstanding any other penalty which may be imposed under this Act, the Department of Justice may apply for an order directing compliance with any requirement of this Act or regulations.
Source: PL 11-72 § 109.
Cross-reference: The statutory provisions on the Judiciary and the FSM Supreme Court are found in title 4 (Judicial) of this code. The statutory provisions the Executive and the President are found in title 2 (Executive) of this code.
The provisions of this Act shall have effect notwithstanding any obligation as to secrecy, confidentiality, or other restriction on the disclosure of information imposed by law and regulations, including the policies, practices and regulations of any financial institution, cash dealer or other commercial entity or person, with respect to secrecy and confidentiality of banking matters, in the Federated States of Micronesia.
No action, suit or other proceedings shall lie against any financial institution or cash dealer, or any officer, employee or other representative of the institution acting in the ordinary course of the person's employment or representation, in relation to any action taken in good faith by that institution or person pursuant to section 915(1) of this chapter.
No suit, prosecution or other legal proceedings shall lie against the Government of the Federated States of Micronesia, or any officer or other person in respect of anything done by or on behalf of that person, with due diligence and in good faith, in the exercise of any power or the performance of any function under this act or any regulation or order made pursuant to this Act.
Where an investigation has begun against a person for a serious offense, or property was restrained under this Act in relation to that offense, and any of the following occurs:
(1) the person is not charged in the Federated States of Micronesia with the serious offense;
(2) the person is charged with a serious offense in the Federated States of Micronesia, but not convicted of that offense; or
(3) a conviction for that serious offense in the Federated States of Micronesia is quashed or reversed and no subsequent complaint is filed within a reasonable time thereafter; the Supreme Court shall order restitution of the restrained property together with the interest, if any, which has actually accrued, if such property is held in a financial institution.
Nothing in this Act affects the right of a person, whose property has been restrained, to seek redress for due process or civil rights violations pursuant to the laws of the Federated States of Micronesia.
Source: PL 11-72 § 114.
Cross-reference: The statutory provisions on Civil Rights are found in chapter 7 of this title.