As a general rule, the designated authority is not in a position to advise regulated entities about the precise language that should be used to inform customers when their transactions are either pending consent or denied consent. Any such communication would be dependent on the circumstances of the particular case.
We can advise that in corresponding with the customer, the financial institution must be conscious of the tipping-off provisions under the Act. This means that where the financial institution has made a disclosure under the Act, or is aware of an investigation related to that customer, any information about the investigation, or which is likely to prejudice an investigation should not be disclosed.
Section 97 (1) of POCA makes it an offence to make an unauthorized disclosure. A person commits an offence of tipping off if:
- knowing or having reasonable grounds to believe that an authorized disclosure has been made, he makes a disclosure which is likely to prejudice any investigation that might be conducted following the first mentioned disclosure.
- knowing or having reasonable grounds to believe that the enforcing authority is acting or proposing to act in connection with a money laundering investigation which is being, or is about to be, concluded, he discloses information or any other matter relating to the investigation to any other person.
This obviously means that the financial institution cannot tell the customer:
- during the notice period, that the transaction is being delayed because it is awaiting consent from the designated authority
- during the 10-day moratorium period, that consent to the transaction was refused by the designated authority
- at a later date, that the transaction was delayed because the consent of the designated authority was being sought or
- that law enforcement is conducting an investigation.
During the seven-day notice period, and subsequent ten-day moratorium period, regulated entity may simply choose to say nothing and give no reason for the delay.
Regulated entities are however free to advise customers that it is carrying out its required due diligence checks and procedures to comply with all applicable laws and its own internal procedures. It may be useful for regulated entities to make customers aware in the contracts that transactions may sometimes be delayed or refused because of the Financial Institutions obligations under the governing statutes. This would provide an explanation for the delay in processing a transaction without violating the tipping-off provisions.