Understanding Suspicion

Two tests

In a case where there are grounds for suspicion, liability for money laundering involvement is determined by two different tests:

1. For the principal money laundering offences, the test is: Do you, personally, have a suspicion?

2. For the failure to disclose offence, the test is: Would a reasonable person have a suspicion based on the facts as known to you or which should reasonably have been known to you?

The risk-based approach

For example, a matter may become suspicious where it does not fit in with the size or nature of the client’s normal business activities. This is where the CDD information we learnt about in Module 3 becomes important.

You are not expected to know the exact nature of the criminal offence or that the particular funds were definitely those arising from the crime. However, the evidence that the organisation obtained at the beginning of the client relationship via CDD measures should ensure that, as an organisation, we know enough about the client and the client’s normal expected activities to recognise anything unusual.