In December 2012 Samantha asked a New Zealand money transfer service, Overseas Transfer Limited, to transmit $15,600 USD to a Ghanaian bank account in the name of her sister’s brother- in- law, Stephen. The funds were for medical costs her sister had incurred in Africa.
The funds reached Stephen’s bank account, but were not released to Stephen. Overseas Transfer issued a recall instruction to the Ghanaian bank, which was unsuccessful. Samantha communicated with Overseas Transfer and the Ghanaian bank for some time about having the funds returned to her.
In March 2014 the Ghanaian bank sent Samantha a letter saying that the funds had not been released to Stephen because the transaction was reported to the Financial Intelligence Centre (“FIC”) as a suspicious transaction. The letter further said that in order for Samantha to receive the funds back, she needed to apply to the court in Ghana to overturn the order freezing the funds.
Samantha complained that Overseas Transfer should not have allowed her to send the funds to Ghana. Samantha said Overseas Transfer should have warned her that making such a transfer could raise a suspicion of money laundering. Samantha also complained that Overseas Transfer should do more to assist her in retrieving the funds from the Ghanaian bank.
Overseas Transfer was of the view that the transaction was processed in accordance with its normal anti-money laundering procedures. It said its service to Samantha ended once the funds were received into Stephen’s account. Overseas Transfer said that it could not be held responsible for issues arising between Stephen and his bank.
Anti-Money Laundering and Countering Financing of Terrorism
We reviewed the complaint. We suggested Samantha withdraw her complaint and contact the New Zealand Police’s Financial Intelligence Unit (“the Police”).
We noted that New Zealand’s Anti-Money Laundering and Countering Financing of Terrorism regime changed in 2013 with the coming into force of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (“the AMLCFT Act”). The AMLCFT Act sets out stringent responsibilities on financial institutions to report suspicious transactions.
However, Samantha had transferred the funds to Stephen prior to the AMLCFT Act coming into force. This meant that the obligations on financial institutions to report suspicious transactions were those under the Financial Transactions Reporting Act 1996 (“the FTRA”).
Under the FTRA the country to which the funds were being sent was one of the factors financial institutions considered to be an indicator of risk. Based on information prepared by inter-governmental bodies about terrorism and money laundering at the time of Samantha’s transaction (to which New Zealand looks for guidance about whether some countries are high risk for financial transactions), we thought Samantha’s transfer of funds to Ghana may have raised a red flag to financial institutions.
However, we did not have the jurisdiction to determine whether the transaction should have raised a flag to Overseas Transfer as being a suspicious transaction, as this is the Police’s role. .
Ongoing obligation to assist?
We also agreed with Overseas Transfer that it had carried out what Samantha asked it to do, that is, transfer the funds to Stephen’s bank account. In our view, Overseas Transfer’s contractual relationship with Samantha ended at that point, and it was under no obligation to assist her further with retrieving the funds. We suggested Samantha speak to the Police.
Lastly, we outlined to Samantha that it was unusual for the Ghanaian bank to have disclosed to her that it had reported the transaction as a suspicious transaction to the FIC. As this could amount to the offence of “tipping off” – that is, ‘tipping off’ an alleged money launderer of the action being taken to report suspicious transactions. We suggested that Samantha contact the Ghanaian bank and the FIC directly to ask whether the letter was genuine.