Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698834374934.pdf (Micronesia, Federated States of)
FIFTEENTH CONGRESS OF THE FEDERATED STATES OF MICRONESIA FOURTH REGULAR SESSION, 2008 C.B.

NO.

15-134 A BILL FOR AN ACT To enact a new chapter 18 of title 12 of the Code of the Federated States of Micronesia to establish a Financial Transactions Reporting Law for the Federated States of Micronesia.

BE IT ENACTED BY THE CONGRESS OF THE FEDERATED STATES OF MICRONESIA: 1 Section 1.
Title 12 of the Code of the Federated States of 2 Micronesia, as amended, is hereby further amended by enacting a 3 new chapter 18 entitled “Financial Transactions Reporting”.

4 Section 2.

Title 12 of the Code of the Federated States of 5 Micronesia, as amended, is hereby amended by adding a new 6 subchapter I of chapter 18 entitled “General Provisions”.

7 Section 3.
7 Section 3.

Title 12 of the Code of the Federated States of 8 Micronesia, as amended, is hereby amended by adding a new section 9 1801 of chapter 18 to read as follows: 10 11 12 13 "Section 1801.

Title.

This act shall be known and cited as the ‘Financial Transactions Reporting Act of 2008’" Section 4.

Title 12 of the Code of the Federated States of 14 Micronesia, as amended, is hereby amended by adding a new section 15 1802 of chapter 18 to read as follows: "Section 1802.

Purpose.
Purpose.

The purpose of this chapter is to facilitate the prevention, detection, investigation and prosecution of money laundering, the financing of terrorism and other serious offenses; enable the establishment of a Financial Intelligence Unit that will CBL 15-20 C.B.

NO.
NO.

15-134 collect, analyze, investigate and disseminate suspicious transactions reports and other financial information; and to require financial institutions to undertake due diligence measures and other measures to combat money laundering and the financing of terrorism."

Section 5.
Section 5.

Title 12 of the Code of the Federated States of 7 Micronesia, as amended, is hereby amended by adding a new section 8 1803 of chapter 18 to read as follows: 26 "Section 1803.

Definitions.
For purposes of this chapter, the following terms shall have the following meanings: (1) 'Account' means any facility or arrangement by which a financial institution does any of the following: (a) accepts deposits of currency; (b) allows withdrawals of currency; or (c) pays checks or payment orders drawn on the financial institution, or collects checks or payment orders on behalf of a person other than the financial institution; and includes any facility or arrangement for a safety deposit box or for any other form of safe deposit; (2) 'Auditing Authority' means an office of the public auditor established pursuant to National or State laws, or a private auditor that is either paid in whole or in part with National or State funds, or funds received from a foreign government or international organization, 2 of 86 26 C.B.
NO.

15-134 or is required by law to be contracted by a financial institution to perform periodic audits; (3) 'Banking Commissioner' means the person appointed pursuant to section 206 of title 29 of the Code of the Federated States of Micronesia; (4) “Beneficial Owner” means the natural person who ultimatehy owns or controls a customer or an account, the person on whose behalf a transaction is being conducted, or the person who ultimately exercises effective control over a legal person or arrangement.
(5) 'Cash' means any coin or paper money that is designated as legal tender in the country of issue and includes bearer bonds, travelers’ checks, postal notes and money orders; (6) 'Currency' means the cash, including coin and paper money of the Federated States of Micronesia or of a foreign country, that is designated as legal tender and which is customarily used and accepted as a medium of exchange in the country of issue; (7) 'Customer' in relation to a transaction or an account includes: (a) the person who is arranging, opening or undertaking a transaction or account; (b) the person in whose name, or on whose behalf, a transaction or account is arranged, opened or undertaken; 3 of 86 26 C.B.
NO.
15-134 (c) a signatory to a transaction or account; (d) any person to whom a transaction has been assigned or transferred; (e) any person who is authorized to conduct a transaction; (f) an applicant for a transaction or a business relationship; and (g) such other person as may be prescribed by the Secretary through regulations promulgated pursuant to this chapter; (8) 'Data' means representations, in any form, of information or concepts; (9) 'Document' means any material on which data is recorded or marked and which is capable of being read or understood by a person, computer system or other device or any record of information, and includes: (a) anything on which there is writing or printing; (b) anything on which there are marks, figures, symbols, or perforations having meaning for persons qualified to interpret them; (c) anything from which sounds, images or writings can be produced, with or without the aid of anything else; (d) a map, plan, drawing, photograph or similar thing; and 4 of 86 26 C.B.
NO.

15-134 (e) an electronic document.
(10) 'Financial Intelligence Unit' means the unit established pursuant to section 1818 of this chapter; (11) ‘Financial Institution’ means any person who carries on any of the following businesses or activities: (a) banking as defined by section 102 of title 29 of the Code of the Federated States of Micronesia; (b) acceptance of deposits and other repayable funds from the public; (c) lending, including consumer credit, mortgage credit, factoring (with or without recourse) and financing of commercial transactions; (d) financial leasing; (e) money transmission services; (f) issuing and managing means of payment (such as credit cards, travelers’ checks and bankers’ drafts); (g) issuing financial guarantees and commitments; (h) trading for his or her own account or for account of customers in money market instruments (such as checks, bills, certificates of deposit), foreign exchange, financial futures and options, exchange and interest rate and index instruments, commodity futures trading and securities; (i) underwriting and participating in shares and securities issues and the provision of financial 5 of 86 26 C.B.
NO.
15-134 services related to such issues; (j) money-broking; (k) individual and collective portfolio management and advice; (l) investing, administering or managing funds or money on behalf of other persons; (m) safekeeping and administration of cash or liquid securities on behalf of other persons; (n) safe custody services; (o) credit reference services; (p) advice to undertakings on capital structure, industrial strategy and related questions, and advice and services relating to mergers and the purchase of undertakings; (q) insurance, including insurance intermediaries, agents and brokers; (r) dealing in bullion; (s) issuing, selling or redeeming travelers’ checks, money orders or similar instruments; (t) collecting, holding and delivering cash as part of a business providing payroll services; (u) operating a gambling house, casino or lottery including carrying on such a business through the internet; (v) trustee or manager of a unit trust; (w) trustee, administrator or investment manager 6 of 86 26 C.B.
NO.
15-134 of a superannuation scheme but excluding closed-ended schemes; (x) real estate agent, broker or other person involved in transactions for clients relating to the buying and selling of real estate; (y) dealer in precious metals, precious stones artwork or antiquities; (z) attorney, notary, other independent legal professional and an accountant, other than internal or in-house legal practitioners and accountants, when preparing for or carrying out transactions for clients relating to the following activities: (i) buying and selling of real estate; (ii) managing of client money, securities or other assets; (iii) management of bank, savings or securities accounts; (iv) organization of contributions for the creation, operation or management of companies; and (v) creation, operation or management of legal persons or arrangements, and buying and selling of business entities; (aa) trust or company service provider not otherwise covered by this definition, which as a business, provides any of the following services to third parties: 7 of 86 26 C.B.
NO.
15-134 (i) formation or management of legal persons; (ii) acting as (or arranging for another person to act as) a director or secretary of a company, a partner of a partnership, or a similar position in relation to other legal persons; (iii) providing a registered office, business address or accommodation, correspondence or administrative address for a company, a partnership or any other legal person or arrangement; (iv) acting as (or arranging for another person to act as) a trustee of an express trust; (v) acting as (or arranging for another person to act as) a nominee shareholder for another person; or (bb) a pawnbroker, in relation to transactions carried on by its customer above the threshold prescribed by the Secretary through regulations; (cc) a bookmaker, in relation to transactions carried on by its customer above a threshold as may be prescribed by the Secretary through regualtions promulgated pursuant to this chapter; (dd) a travel agent, in relation to transactions carried on by its customer above a threshold as may be prescribed by the Secretary through 8 of 86 26 C.B.
NO.
15-134 regulations promulgated pursuant to this chapter; (ee) A motor vehicle, aircraft or other vessels agents or dealers, in relation to transactions carried on by its customer above a threshold as may be prescribed by the Secretary through regulations promulgated pursuant to this chapter; (ff) A superannuation fund or any social security scheme; or (gg) such other business as may be prescribed by the Secretary through regulations promulgated pursuant to this chapter; (12) ‘Money Laundering Offense’ means an offense under section 912 of title 11 of the Code of Federated States of Micronesia; (13) ‘Money Transmission Services’ means a person (other than a bank) carrying on a business of: (a) exchanging cash or the value of money; (b) money changing; (c) collecting, holding, exchanging or remitting funds or the value of money, or otherwise negotiating transfers of funds or the value of money, on behalf of other persons; (d) delivering funds; or (e) issuing, selling or redeeming traveler’s checks, money orders or similar instruments.
(14) 'Negotiable Instrument' means a document 9 of 86 26 C.B.

NO.
15-134 representing ownership of debts or obligations, including but not limited to, bank checks, bills of exchange, promissory notes or certificates of deposit, whether made payable to the bearer or not; (15) 'Offense of the Financing of Terrorism' means an offense under subchapter II of chapter 13 of title 11 of the Code of the Federated States of Micronesia; (16) 'Person' means any natural or legal person including a group, association or body of persons, whether it has legal personality or not; (17) 'Politically Exposed Person' includes any person who is or has been entrusted with any prominent public function in a foreign country such as a Head of State or of Government, a senior government, judicial or military official, a senior executive of a state-owned and nationally-owned corporation, an important political party official, an ambassador or head of a consular post, and any family members or close associates of such a person; (18) 'Property' means currency and all other real or personal property of any kind, whether corporeal or incorporeal, moveable or immovable, tangible or intangible, and legal documents or instruments in any form including electronic or digital, evidencing title to, or interest in, such property, including but not limited to bank credits, traveler’s checks, bank checks, 10 of 86 26 C.B.
NO.
15-134 money orders, shares, securities, bonds, drafts, letters of credit, whether situated in the Federated States of Micronesia or elsewhere and includes any legal or equitable interest in any such property; (19) 'Record' means any material on which data is recorded or marked and which is capable of being read or understood by a person, computer system or other device; (20) 'State' means one of the four states of the Federated States of Micronesia; (21) 'Secretary' means the Secretary of the Department of Justice for the Federated States of Micronesia.
(22) ‘Serious Offense’ shall have the meaning given to it by section 903 of title 11 of the Code of Federated States of Micronesia; (23) ‘Shell Bank’means a bank incorporated in a jurisdiction in which it has no physical presence or is unaffiliated with a regulated financial group; (24) ‘Specified Entity’ means (a) an entity that has knowingly committed, attempted to commit, participated in committing, or facilitated the commission of a terrorist act; or (b) an entity knowingly acting on behalf of, or at the direction of, or in association with, an entity referred to in paragraph (a) and which has been prescribed under a written law relating to terrorism; (25) 'Supervisory Authority' means any department, 11 of 86 26 C.B.
NO.
15-134 office, agency, board of directors, or public official established pursuant to the National or State laws of the Federated States of Micronesia that has regulatory or supervisory authority over a financial institution or group of financial institutions; (26) 'Supreme Court' means the Supreme Court of the Federated States of Micronesia, and all its divisions, wherever or whenever constituted; (27) 'Suspicious Transaction Report' means a report required to be made under section 1811 of this chapter and also includes a suspicious activity report.
(28) 'Terrorist' shall have the meaning given to it by section 1303 of title 11 of the Code of the Federated States of Micronesia.
(29) 'Terrorist Act' shall have the meaning given to it by section 1303 of title 11 of the Code of the Federated States of Micronesia; (30) 'Terrorist Organization' means a group composed of two or more persons, whether organized or not, that engages in terrorism; (31) 'Terrorist Property' means: (a) proceeds from the commission of a terrorist act; (b) property which has been, is being, or is likely to be used to commit a terrorist act; (c) property which has been, is being, or is 12 of 86 C.B.

NO.
15-134 likely to be used by a terrorist or terrorist organization; (d) property fully or jointly owned or controlled by or on behalf of a terrorist or terrorist organization; or (e) property which has been collected for the purpose of providing support to a terrorist or terrorist organization, or funding a terrorist act; and (32) 'Transaction' includes: (a) opening of an account; (b) any deposit, withdrawal, exchange, remittance or transfer of funds in any currency whether in cash or negotiable instrument, and whether by electronic or other non-physical means; (c) use of a safety deposit box or any other form of safe deposit; (d) entering into any fiduciary relationship; (e) any payment made in satisfaction, in whole or in part, of any contractual or other legal obligation; and (f) such other transactions as may be prescribed by the Secretary through regulations promulgated pursuant to this chapter."
Section 6.

Title 12 of the Code of the Federated States of 25 Micronesia, as amended, is hereby amended by adding a new 26 subchapter II of chapter 18 entitled "Record Keeping and Identity 13 of 86 C.B.

NO.

15-134 1 Verification".

2 Section 7.

Title 12 of the Code of the Federated States of 3 Micronesia, as amended, is hereby amended by adding a new section 4 1804 of chapter 18 to read as follows: 26 "Section 1804.
Financial institution to verify customer identity.
(1) A financial institution shall obtain the identity of a customer on the basis of any official or other identifying document, and shall verify the identity of the customer on the basis of reliable and independent source documents, data or information or other evidence as is reasonably capable of verifying the identity of the customer when – (a) entering into a continuing business relationship, or in the absence of such a relationship, conducts any transaction; (b) carrying out an electronic funds transfer other than an electronic funds transfer referred to in subsections 1809(2) or 1809(3) of this chapter; (c) there is a suspicion of a money laundering or the financing of terrorism offense; or (d) there is doubt about the veracity or adequacy of the customer identification and verification documentation or information previously obtained from the customer.
(2) Without limiting the general requirements of subsection (1) of this section, a financial institution 14 of 86 26 C.B.

NO.
15-134 shall – (a) when establishing a business relationship, obtain information on the purpose and intended nature of the business relationship; and (b) if the customer is a natural person, adequately verify his or her true identity by: (i) obtaining the customer’s name, address, occupation; and (ii) requiring the customer to produce a birth certificate, national identity card, passport or other official identifying document prescribed by law or the Secretary through regulations promulgated pursuant to this chapter; (c) if the customer is a legal person who is not a natural person, adequately verify its legal existence and structure, including obtaining information relating to: (i) the customer’s name, address and legal form and its control structure,including obtaining a certificate of incorporation for corporate entities, articles of association, if applicable, together with the customer’s latest tax return filed with the National government of the Federated States of Micronesia (ii) the principal owners, directors and beneficiaries; (iii) provisions regulating the power to bind 15 of 86 26 C.B.
NO.
15-134 the entity; and (iv) whether the person purporting to act on behalf of the customer is so authorized, and to identify the person, or (d) if the customer or beneficial owner is a politically exposed person, (i) adequately identify and verify his or her identity as set out in this section; (ii) have appropriate risk management systems to determine whether the customer or beneficial owner is a politically exposed person; (iii) obtain the approval of senior management of the financial institution before establishing a business relationship with the customer; (iv) conduct regular and ongoing enhanced monitoring of the business relationship (e) For all customers, including Politically Exposed Persons, take reasonable measures to establish the source of wealth and the source of funds; and (3) Where a customer requests a financial institution to enter into a continuing business relationship, or in the absence of such a relationship, any transaction, then the institution shall take reasonable measures to establish whether the person is acting on behalf of another person in addition to complying with subsections 2(a),(b) and (c)of this section, whether as a trustee, 16 of 86 26 C.B.
NO.

15-134 nominee, agent, power of attorney or otherwise.

If it appears to a financial institution that a customer is acting on behalf of another person, then the financial institution shall obtain and verify the identity of any person on whose behalf, or for whose ultimate benefit, the customer may be acting in the transaction or business relationship.
(4) A financial institution shall, in relation to its cross-border correspondent banking and other similar business relationships – (a) adequately identify and verify the correspondent financial insitution, or other similar business, with whom it conducts such a business relationship; (b) gather sufficient information about the nature of the business of the correspondent financial institution, or other similar business; (c) determine from publicly available information the reputation of the correspondent financial institution or other similar business, and the quality of supervision to which the correspondent financial institution, or other similar business, is subject; (d) assess the correspondent financial institution’s, or other similar business’, anti-money laundering and anti-terrorist financing controls; (e) obtain approval from senior management of the 17 of 86 26 C.B.
NO.

15-134 financial institution before establishing a new correspondent banking relationship, or relationship with other similar businesses; and (f) document the responsibilities of the financial institution and the correspondent financial institution, or other similar business.
(g) shall not approve the establishment or accept the continued operation of shell banks; and should refuse to enter into, or continue, a correspondent banking relationship with shell banks; and should also guard against establishing relations with respondent foreign financial institutions that permit their accounts to be used by shell banks.
(5) A financial institution shall, in relation to its payable-through account and other similar business relationships, ensure that the correspondent financial institution with whom it has established the business relationship – (a) has verified the identity of and performed ongoing due diligence on that correspondent financial institution’s customers that have direct access to accounts of the financial institution; and (b) is able to provide the relevant customer identification data upon request to the financial institution.
(6) Where a financial institution relies on an 18 of 86 26 C.B.

NO.
15-134 intermediary or third party to undertake its obligations under subsections (1), (2) or (3) of this section, or to introduce business to it, it shall – (a) immediately obtain the necessary information required by subsections (1), (2) and (3) of this section; (b) ensure that copies of identification data and other relevant documentation relating to the requirements of subsections (1), (2) and (3) of this section will be made available to it from the intermediary or the third party upon request without delay; and (c) satisfy itself that the intermediary or third party is regulated and supervised for, and has measures in place to comply with, the requirements set out in sections 1804, 1805 and 1806 of this chapter.
(7) The Secretary may prescribe through regulations – (a) the official or identifying documents, or the reliable and independent source documents, data or information or other evidence that is required for identification and verification of any particular customer or class of customers; (b) the timing of the identification and verification requirements under this section of any particular customer or class of customers; and (c) the threshold for, or the circumstances in 19 of 86 26 C.B.
NO.

15-134 which, the provisions of this section shall apply in relation to any particular customer or class of customers.
(8) Nothing in this section shall require the production of any evidence of identity where: (a) the transaction or series of transactions is part of an existing and regular business relationship with a person who has already produced satisfactory evidence of identity unless the financial institution has reason to suspect that the transaction is suspicious or unusual; (b) the transaction is an occasional transaction not exceeding $1,000, other than an electronic funds or wire transfer, unless the financial institution has reason to suspect that the transaction is suspicious or unusual; or (c) in such other circumstances as may be prescribed by the Secretary through regulations promulgated pursuant to this chapter.
(9) For purposes of this section, ‘occasional transaction’ means any transaction involving cash that is conducted by a person other than through an account in respect of which the person is the customer.” (10) Subsection (1) or (2) does not apply: (a) if the transaction is part of an existing and regular business relationship with a person who has 20 of 86 C.B.

NO.
15-134 already produced satisfactory evidence of identity unless the financial institution has reason to suspect that the transaction is suspicious or unusual; (b) if the electronic funds transfer is between financial institutions where the originator and beneficiary of the funds transfer are acting on their own behalf; (c) if the electronic funds transfer is other than a money transfer effected from the use of a credit or debit card as a means of payment, that results from a transaction.
(11) Penalty.

A financial institution which contravenes subsection (1), (2),or (3), commits an offense and is liable on conviction: (a) for an individual: to a fine not exceeding $50,000 or to a term of imprisonment not exceeding 10 years or both; or (b) for a legal person who is not a natural person, by a fine not exceeding $250,000.

Section 8.
Section 8.

Title 12 of the Code of the Federated States of 21 Micronesia, as amended, is hereby amended by adding a new section 22 1805 of chapter 18 to read as follows: 23 24 25 26 “Section 1805.

Necessity of identification to conduct business.

If adequate evidence of identity is not submitted to or obtained by a financial institution under section 1804 of this chapter, the financial 21 of 86 C.B.

NO.
NO.

15-134 institution shall not proceed any further with the transaction unless – (1) it reports the attempted transaction to the Financial Intelligence Unit as a suspicious transaction under section 1811 of this chapter; and (2) the Financial Intelligence Unit authorizes the financial institution to proceed with the transaction.” Section 9.
Title 12 of the Code of the Federated States of 9 Micronesia, as amended, is hereby amended by adding a new section 10 1806 of chapter 18 to read as follows: 26 "Section 1806.

Financial institutions to establish and maintain customer records.
(1) A financial institution shall establish and maintain files of: (a) records of all transactions carried out by it, in accordance with the requirements of subsection (2) of this section; (b) records of a person’s identity obtained in accordance with section 1804 of this chapter; (c) records of all reports made to the Financial Intelligence Unit; and (d) all enquiries relating to money laundering and the financing of terrorism made to it by the Financial Intelligence Unit and other law enforcement agencies.
(2) Records required under subsection (1)(a) of this 22 of 86 26 C.B.

NO.
15-134 section shall be those records as are reasonably necessary to enable the transaction to be readily reconstructed at any time by the Financial Intelligence Unit or other law enforcement agency, including, but not limited to, information sufficient to identify the: (a) name, address and occupation (or where appropriate, business or principal activity) of each customer conducting the transaction, and if applicable, on whose behalf the transaction is being conducted, as well as the documents used by the financial institution to obtain and verify the identity of each such customer; (b) nature and date of the transaction; (c) type and amount of currency involved; (d) type and identifying number of any account with the financial institution 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, and of the officer, employee or agent of the financial institution who gathered and reported the 23 of 86 26 C.B.
NO.

15-134 information specified in this subsection.

(3) The records listed in subsection (1) of this section shall be kept for a minimum period of 5 years from the later of the following dates: (a) the date that evidence of a customer’s identity was obtained; (b) the date of any transaction or correspondence; or (c) the date the account is closed or the business relationship ceased.
(4) Where any record is required to be kept under this chapter – (a) it shall be maintained in a manner and form that will enable the financial institution to comply immediately with requests for information from the Financial Intelligence Unit, the Banking Commissioner or other law enforcement agency or supervisory authority; and (b) a copy of it shall be kept: (i) in a machine-readable form, if a paper copy can be readily produced from it; or (ii) in an electronic form, if a paper copy can be readily produced from it and an electronic signature of the person who keeps the record is retained.
(5) The records maintained under subsection (1) of 24 of 86 C.B.

NO.

15-134 this section shall be made available upon request to the Banking Commissioner and Financial Intelligence Unit and for purposes of ensuring compliance with, and disseminating for investigations into money laundering, investigations into terrorist financing offenses and activites, and investigations pursuant to this chapter.
(6) Any financial institution, or any director, officer, employee or agent of a financial institution, that knowingly fails to comply with subsection (1) or (2) of this section shall be guilty of a felony offense punishable on conviction: (a) in the case of a natural person, by imprisonment for a maximum of five (5) years, or a maximum fine of $50,000, or both; or (b) in the case of a legal person that is not a natural person, by a maximum fine of $250,000.

Section 10.
Section 10.

Title 12 of the Code of the Federated States of 18 Micronesia, as amended, is hereby amended by adding a new section 19 1807 of chapter 18 to read as follows: "Section 1807.

Financial institutions to maintain account in true name.

(1) A financial institution shall maintain accounts in the true name of the account holder.

(2) A financial institution shall not open or maintain any anonymous or numbered account, or any account which 25 of 86 C.B.

NO.
NO.

15-134 is in a fictitious, false or incorrect name.
(3) Any financial institution, or director, officer, employee or agent of a financial institution, that knowingly violates subsection (1) or (2) of this section shall be guilty of a felony offense punishable on conviction: (a) in the case of a natural person, by imprisonment for a maximum of five (5) years, or a maximum fine of $50,000, or both; or (b) in the case of a legal person that is not a natural person, by a maximum fine of $250,000.” Section 11.
Title 12 of the Code of the Federated States of 13 Micronesia, as amended, is hereby amended by adding a new section 14 1808 of chapter 18 to read as follows: 26 "Section 1808.

Financial institutions to monitor transactions.
(1) A financial institution shall pay special attention to: (a) any complex, unusual or large transactions, and any unusual patterns of transactions, that have no apparent or visible economic or lawful purpose; (b) business relations and transactions with persons in or from jurisdictions that do not have adequate systems in place to prevent or deter money laundering or the financing of terrorism where such relations and transactions have no apparent economic or 26 of 86 26 C.B.
NO.

15-134 lawful purpose; and (c) electronic funds transfers, other than an electronic funds transfer referred to in subsections 1809(2) and 1809(3) of this chapter that do not contain complete originator information.
(2) In relation to subsection (1) of this section, a financial institution shall: (a) establish policies and procedures for identifying transactions requiring special attention; (b) examine as far as possible the background and purpose of the transactions or business relations and record its findings in writing; and (c) upon request, make available such findings to the Financial Intelligence Unit.
(3) A financial institution shall conduct ongoing due diligence on the business relationships with its customers to ensure that: (a) its obligations under section 1804 of this chapter are met and the transactions conducted by or on behalf of a customer are consistent with the information that the financial institution has of its customer and the profile of the customer’s business; and (b) any transaction undertaken throughout the course of the business relationship with a customer is consistent with the financial institution’s knowledge of the customer, the customer’s business and risk 27 of 86 C.B.
NO.

15-134 1 2 3 profile, including, where necessary, the source of funds.” Section 12.

Title 12 of the Code of the Federated States of 4 Micronesia, as amended, is hereby amended by adding a new section 5 1809 of chapter 18 to read as follows: "Section 1809.

Banks and money transmission service providers to include originator information.
(1) A financial institution shall include accurate originator information and other related messages on electronic funds, wire and other forms of funds transfers, and such information shall remain with the transfer.
(2) Subsection (1) of this section shall not apply to an electronic funds transfer, other than a money transfer effected as means of payment, that results from a transaction carried out using a credit or debit card; provided that, the credit or debit card number is included in the information accompanying such a transfer.
(3) Subsection (1) of this section shall not apply to electronic funds transfers and settlements between financial institutions where the originator and beneficiary of the funds transfer are acting on their own behalf."

Section 13.

Title 12 of the Code of the Federated States of 26 Micronesia, as amended, is hereby amended by adding a new 28 of 86 C.B.

NO.

15-134 1 subchapter III of chapter 18 entitled “Reporting Obligations”.

2 Section 14.
2 Section 14.

Title 12 of the Code of the Federated States of 3 Micronesia, as amended, is hereby amended by adding a new section 4 1810 of chapter 18 to read as follows: 26 "Section 1810.

Financial institutions to report certain financial transactions.
(1) A financial institution shall report to the Financial Intelligence Unit in such form and manner as prescribed by the Secretary through regulations promulgated pursuant to this chapter the following transactions: (a) any transaction of an amount in cash equal to or exceeding $10,000, or its equivalent in foreign currency in a single transaction, unless both the recipient and the sender is a financial institution carrying on the business or activity set out in subsection 1803(10)(a) of this chapter; (b) any transmission out of the Federated States of Micronesia at the request of a customer of an electronic funds or wire transfer equal to or exceeding $5,000,or its equivalent in foreign currency,in the course of a single transaction; and (c) the receipt from outside the Federated States of Micronesia at the request of, or for the benefit of, a customer of an electronic funds or wire transfer of an amount equal to or exceeding $5,000, or its equivalent 29 of 86 26 C.B.
NO.

15-134 in foreign currency, in the course of a single transaction.

(2) The Secretary may prescribe other threshold amounts for subsection (1) of this section through regulations promulgated pursuant to this chapter.
(3) Any financial institution, or director, officer, employee or agent of a financial institution, that knowingly fails to comply with subsection (1) of this section shall be guilty of a felony offense punishable on conviction: (a) in the case of a natural person, by imprisonment for a maximum of five (5) years, or a maximum fine of $50,000, or both; or (b) in the case of a legal person that is not a natural person, by a maximum fine of $250,000.
(4) Where a customer conducts two or more transactions or electronic funds transfers that are individually of an amount below the threshold set out in subsection (1) of this section but which cumulatively are equal to or exceed the threshold amount, a financial institution shall report the transactions to the Financial Intelligence Unit if it appears to the financial institution that the customer is trying to circumvent the reporting requirements of this section.
In making this determination, a financial institution shall consider the manner and form in which the transactions 30 of 86 C.B.

NO.
15-134 were conducted, including without limitation, the following: (a) the value of the currency involved in each transaction; (b) the aggregate value of the currency involved in the transactions; (c) the period of time over which the transactions occurred; (d) the interval of time between any of the transactions; (e) the locations at which the transactions were initiated or conducted; and (f) any explanation made by the customer as to the manner or form in which the transactions were conducted.” (5) A person who conducts 2 or more transactions or electronic funds transfers as described in subsection (4) shall be guilty of a felony offense punishable on conviction: (c) for an individual: to a fine not exceeding $50,000 or to a term of imprisonment not exceeding 10 years or both; (d) for a legal person who is not a natural person, by a fine not exceeding $250,000.
Section 15.

Title 12 of the Code of the Federated States of 26 Micronesia, as amended, is hereby amended by adding a new section 31 of 86 C.B.

NO.

15-134 1 1811 of chapter 18 to read as follows: 26 "Section 1811.

Financial institutions to report suspicious transactions.
(1) Where a financial institution: (a) suspects or has reasonable grounds to suspect that any transaction or attempted transaction may be related to the commission of, or preparation to commit, a serious offense, a money laundering offense, an offense of the financing of terrorism or a violation of this chapter; or (b) has any information that it suspects or has reasonable grounds to suspect may be relevant to: (i) the commission of, or preparation to commit, a serious offense, a money laundering offense, an offense of the financing of terrorism or a violation of this chapter; (ii) an investigation or prosecution of a person or persons for a serious offense, a money laundering offense, an offense of financing of terrorism or a violation of this chapter; or (iii) may otherwise be of assistance in the enforcement of this chapter, subchapter II of chapter 9 of title 11 of the Code of the Federated States of Micronesia or subchapter II of chapter 13 of title ll of the Code of the Federated States of Micronesia; then the financial institution shall, as soon as 32 of 86 26 C.B.
NO.

15-134 practicable, after forming that suspicion or receiving the information, but no later than three working days,(report the transaction, attempted transaction or the information to the Financial Intelligence Unit.
(2) A report under subsection (1) of this section shall be in writing and shall: (a) contain information concerning the purpose of the transaction, the origin and ultimate destination of the funds involved, the identity and address of the customer and beneficiary, and such other details as the Secretary may prescribe through regulations promulgated pursuant to this chapter; (b) contain a statement of the grounds on which the financial institution bases the suspicion; (c) be signed or otherwise authenticated by the financial institution; and (d) be transmitted in such form and manner as the Secretary may prescribe through regulations promulgated pursuant to this chapter.
(3) A financial institution that has made a report pursuant to this section, or has given any information to the Financial Intelligence Unit or a law enforcement agency that is carrying out an investigation arising from, or relating to, the information contained in the report, regarding a suspicious transaction, shall give the Financial Intelligence Unit or law enforcement 33 of 86 C.B.

NO.
NO.

15-134 agency any further information that it has about the transaction or attempted transaction or the parties to the transaction if requested to do so in writing by the Financial Intelligence Unit or law enforcement agency.
(4) Any financial institution, or director, officer, employee or agent of a financial institution, that knowingly fails to comply with subsection (1) or (3) of this section shall be guilty of a felony offense punishable on conviction: (a) in the case of a natural person, by imprisonment for a maximum of five (5) years, or a maximum fine of $50,000, or both; or (b) in the case of a legal person that is not a natural person, by a maximum fine of $250,000.” Section 16.
Title 12 of the Code of the Federated States of 16 Micronesia, as amended, is hereby amended by adding a new section 17 1812 of chapter 18 to read as follows: 26 "Section 1812.

Supervisory or auditing authority to report suspicious transactions.
A supervisory authority or auditing authority of a financial institution shall report to the Financial Intelligence Unit as soon as practicable any information that it has concerning any transaction or attempted transaction that it suspects or has reasonable grounds to suspect may be – (1) related to the commission of, or preparation to commit, a serious offense, a money laundering offense, 34 of 86 C.B.

NO.
15-134 an offense of financing of terrorism or a violation of this chapter; (2) relevant to an investigation or prosecution of a person or persons for a serious offense, a money laundering offense, an offense of financing of terrorism or a violation of this chapter; or (3) may otherwise be of assistance in the enforcement of this chapter, subchapter II of chapter 9 of title 11 of the Code of the Federated States of Micronesia or subchapter II of chapter 13 of title ll of the Code of the Federated States of Micronesia.” Section 17.
Title 12 of the Code of the Federated States of 13 Micronesia, as amended, is hereby amended by adding a new section 14 1813 of chapter 18 to read as follows: 26 "Section 1813.

Duty to disclose information relating to terrorist property.
(1) Every person shall immediately disclose to the Financial Intelligence Unit: (a) the existence of any property in his or her possession or control that he or she knows, or has reasonable grounds to suspect, is terrorist property; (b) any information regarding a transaction or attempted transaction that he or she knows, or has reasonable grounds to suspect, involves terrorist property; (c) the existence of any property in his or her 35 of 86 26 C.B.
NO.

15-134 possession or control, owned or controlled by or on behalf of a specified entity or for which there are reasonable grounds to suspect is owned or controlled by or on behalf of a specified entity.
(2) The Financial Intelligence Unit may disclose to the appropriate authority of a foreign state any information in its possession relating to any terrorist property, if such information is requested in accordance with chapter 17 of title 12 of the Code of the Federated States of Micronesia, or if the Financial Intelligence Unit is of the view that the information would be relevant to an investigation or prosecution of a terrorist or terrorist organization in the foreign state.
(3) Any person who knowingly fails to comply with subsection (1) of this section shall be guilty of a felony offense punishable on conviction: (a) in the case of a natural person, by imprisonment for a maximum of five (5) years, or a maximum fine of $50,000, or both; or (b) in the case of a legal person that is not a natural person, by a maximum fine of $250,000.” (4) False or Misleading Statements.
A person who, in making a report under section 13, 14, 15, or 16, makes any statement that the person knows is false or misleading in a material particular or omits from any 36 of 86 C.B.

NO.
NO.

15-134 statement any matter or thing without which the person knows that the statement is false or misleading in a material particular commits an offense and is liable on conviction: (a) for an individual: to a fine not exceeding $60,000 or to a term of imprisonment not exceeding 10 years or both; or Section 18.
Title 12 of the Code of the Federated States of 9 Micronesia, as amended, is hereby amended by adding a new section 10 1814 of chapter 18 to read as follows: 26 "Section 1814.

Disclosure of suspicious transaction reports and other information.
(1) A person shall not disclose to any other person: (a) that information or a report has been provided, or may be provided, to the Financial Intelligence Unit pursuant to subsection 1805, 1806(6), subsection 1808(2), section 1810, section 1811, section 1812 or section 1813 of this chapter; (b) that a financial institution or supervisory authority has formed a suspicion in relation to a transaction or attempted transaction for purposes of sections 1811 and 1812 of this chapter; or (c) that any other information from which the person to whom the information is disclosed could reasonably be expected to infer that a suspicion has been formed by a financial institution or that a 37 of 86 26 C.B.
NO.

15-134 financial institution has or may provide information or a report to the Financial Intelligence Unit regarding the transaction or attempted transaction.
(2) Subsection (1) of this section shall not apply to disclosures made to: (a) an officer, employee or agent of the person providing the information or report pursuant to section 1805, subsection 1806(6), subsection 1808(2), section 1810, section 1811, section 1812 or section 1813 of this chapter for any purpose connected with the performance of that person’s duties under this chapter; (b) an attorney or legal advisor for the purposes of obtaining legal advice in relation to the person’s obligations under this chapter; (c) a supervisory or auditing authority of a financial institution for the purposes of carrying out the authority’s functions; or (d) pursuant to an order of a court of competent jurisdiction in the Federated States of Micronesia.
(3) Nothing in this section prohibits the disclosure of any information for the purposes of the investigation or prosecution of any offence under section 1814.

(4) A person to whom a disclosure is made pursuant to subsection (2) of this section is subject to the nondisclosure requirements of subsection (1).

(5) Any person who knowingly violates subsection (1) 38 of 86 C.B.

NO.
NO.

15-134 or (3) of this section shall be guilty of a felony offense punishable on conviction: (a) in the case of a natural person, by imprisonment for a maximum of five (5) years, or a maximum fine of $50,000, or both; or (b) in the case of a legal person that is not a natural person, by a maximum fine of $250,000.
(6) Any person who knowingly violates subsection (1) or (3) of this section with the intent to prejudice an investigation of a serious offense, a money haundering offense, an offense of the financing of terrorism or a violation of this chapter, or for the purpose of obtaining a direct or indirect advantage or pecuniary gain for him or herself or any other person, shall be guilty of a felony offense punishable on conviction: (a) in the case of a natural person, by imprisonment for a maximum of ten (10) years, or a maximum fine of $100,000, or both; or (b) in the case of a legal person that is not a natural person, by a maximum fine of $500,000.” Section 19.
Title 12 of the Code of the Federated States of 22 Micronesia, as amended, is hereby amended by adding a new section 23 1815 of chapter 18 to read as follows: 24 25 26 "Section 1815.

Protection of identity of persons and information.

(1) Other than for the purpose of enforcing, 39 of 86 26 C.B.

NO.
15-134 investigating or prosecuting a serious offense, a money laundering offense, an offense of the financing of terrorism or a violation of this chapter, a person shall not disclose any information that will identify or is likely to identify: (a) any person who has handled a transaction in respect of which information or a report has been provided to the Financial Intelligence Unit pursuant to section 1805, subsection 1806(6), subsection 1808(2), section 1810, section 1811, section 1812 or section 1813 of this chapter; (b) any person who has made, prepared or submitted a suspicious transaction report pursuant to sections 1811 or 1812 of this chapter; or (c) any information contained in a suspicious transaction report or other reports or information provided to the Financial Intelligence Unit pursuant to section 1805, subsection 1806(6), subsection 1808(2), section 1810, section 1811, section 1812 or section 1813 of this chapter.
(2) No person shall be required to disclose any information to which this section applies in any judicial proceedings unless the judge or other presiding officer is satisfied that the disclosure of information is necessary and in the interests of justice.” (3) A person who contravenes subsection 1 commits an 40 of 86 C.B.

NO.
NO.

15-134 offense and is liable on conviction: (a) for an individual: to a fine not exceeding $50,000 or to a term of imprisonment not exceeding ten (10) years, or both; or (b) in the case of a legal person that is not a natural person by a maximum fine of $250,000 Section 20.
Title 12 of the Code of the Federated States of 8 Micronesia, as amended, is hereby amended by adding a new section 9 1816 of chapter 18 to read as follows: 26 "Section 1816.

Protection of persons reporting suspicious transactions.
(1) In relation to any action carried out in good faith under section 1805, subsection 1806(6), subsection 1808(2), section 1810, section 1811, section 1812 or section 1813 of this chapter, or in compliance with directions given by the Financial Intelligence Unit pusuant to subsections 1820(1)(b), (c) or (i), or in compliance with orders of the Supreme Court pursuant to sections 1828 and 1829 of this chapter, no civil, criminal or disciplinary proceedings shall be taken against: (a) a financial institution, or an auditing or supervisory authority of a financial institution; or (b) its director, officer, employee or agent acting the the course of that person’s employment or agency.
41 of 86 C.B.

NO.

15-134 1 2 3 4 (2) Subsection (1) of this section shall not apply in respect of proceedings for an offense against section 1814 of this chapter.” Section 21.

Title 12 of the Code of the Federated States of 5 Micronesia, as amended, is hereby amended by adding a new section 6 1817 of chapter 18 to read as follows: to: "Section 1817.

Other preventative measures by financial institutions.
(1) A financial institution shall: (a) appoint a compliance officer who shall be responsible for ensuring the financial institution’s compliance with the requirements of this chapter; (b) establish and maintain procedures and systems 26 (i) implement the customer identification requirements under section 1804 of this chapter; (ii) implement the record keeping and retention requirements under section 1806 and 1807 of this chapter; (iii) implement the monitoring requirements under section 1808 of this chapter; (iv) implement the reporting requirements under sections 1810 and 1811 of this chapter; (v) make its officers, employees and agents aware of the laws relating to money laundering and the financing of terrorism; and 42 of 86 26 C.B.
NO.

15-134 (vi) screen persons before hiring them as employees to ensure that they have not been covicted of a serious offense, a money laundering offense, an offense of the financing of terrorism or a violation of this chapter; (vii) manage the risks of misuse of technological developments and non-face-face-to transactions.
(c) establish an audit process to test its anti- money laundering and anti-financing of terrorism procedures and systems; (d) train its officers, employees and agents to recognize suspicious transactions.

(2) Subsection (1) of this section does not apply to an individual who, in the course of carrying on his or her business, does not employ or act in association with any other person.
(3) A financial institution shall ensure that its foreign branches and majority owned subsidiaries adopt and observe measures consistent with subchapters II and III of this chapter to the extent that local laws and regulations permit and where the foreign branch or subsidiary is unable to adopt and observe such measures, to report the matter to the relevant supervisory authority, or in the absence of a supervisory authority, to the Financial Intelligence Unit.” 43 of 86 C.B.

NO.

15-134 1 Section 22.


Title 12 of the Code of the Federated States of 2 Micronesia, as amended, is hereby amended by adding a new 3 subchapter IV of chapter 18 entitled “Financial Intelligence 4 Unit”.

5 Section 23.

Title 12 of the Code of the Federated States of 6 Micronesia, as amended, is hereby amended by adding a new section 7 1818 of chapter 18 to read as follows: 26 "Section 1818.

Establishment of Financial Intelligence Unit.


(1) A Financial Intelligence Unit is hereby established within the Department of Justice of the Federated States of Micronesia.

(2) The Financial Intelligence Unit shall be headed by a Director appointed by the Secretary on such terms as the Secretary may determine.
The Director shall exercise all the powers, duties and functions of the Financial Intelligence Unit under this chapter and shall report to the Secretary on the exercise and performance of these powers, duties and functions.
(3) An officer, employee or consultant of the Financial Intelligence Unit, or any other person acting on behalf of the Financial Intelligence Unit, shall take an oath of confidentiality and shall receive credentials that identify that person as authorized to act on behalf of the Financial Intelligence Unit.” (4) The Director may authorize in writing any person, 44 of 86 C.B.

NO.
NO.

15-134 1 2 3 4 subject to any terms and conditions that the Director may specify, to carry out any power, duty or function conferred on the Director under this chapter.

Section 24.

Title 12 of the Code of the Federated States of 5 Micronesia, as amended, is hereby amended by adding a new section 6 1819 of chapter 18 to read as follows: 26 "Section 1819.

Establishment of the Financial Crimes Task Force.
(1) The Financial Crimes Task Force is established and shall be comprised of the following or their respective designee: (a) The Secretary of Justice,Department of Justice of the Federated States of Micronesia; (a) the Director of the Financial Intelligence Unit; (b) the Chief of the National Police, Department of Justice of the Federated States of Micronesia; (c) the Assistant Secretary of the Division of Customs and Tax Administration, Department of Finance and Administration of the Federated States of Micronesia; (d) the Director of the Division of Immigration and Labor, Department of Justice of the Federated States of Micronesia; (e) the National Public Auditor of the Federated States of Micronesia; 45 of 86 26 C.B.
NO.

15-134 (f) the Banking Commissioner; (g) Team Leader, the Micronesia Transnational Crime Unit; and (h) representatives from such other departments, offices, agencies or institutions of the Federated States of Micronesia who the Secretary may determine will assist with the functions of the Financial Crimes Task Force.

(2) The Secretary may through regulations promulgated pursuant to this chapter prescribe the operational implementation of the functions of the Financial Crimes Task Force.
(3) The Financial Crimes Task Force shall: (a) advise the Financial Intelligence Unit on any matters relating to the prevention of money laundering or the financing of terrorism; (b) assist the Financial Intelligence Unit in the formation of policies or strategies relating to the prevention of money laundering or the financing of terrorism; and (c) assist the Financial Intelligence Unit in coordinating activities and information sharing between the various National and State government departments, offices, agencies and institutions, and liaising with the financial institutions and private sector.” (d) Except for the purpose of the performance of 46 of 86 C.B.
NO.
15-134 his duties or the exercise of his functions under this Act or when lawfully required to do so by any court, a member of the Task Force must not disclose any information or matter which has been obtained by him in the performance of his duties or the exercise of his functions under this Act, except: (i) for the detection, investigation or prosecution of a serious offence, a money laundering offence or an offense of the financing of terrorism; or (ii) for the enforcing of Title 11 FSMC Chapter 9, as amended.
Section 25.

Title 12 of the Code of the Federated States of 13 Micronesia, as amended, is hereby amended by adding a new section 14 1820 of chapter 18 to read as follows: 26 "Section 1820.

Functions and Powers of the Financial Intelligence Unit.
(1) The Financial Intelligence Unit – (a) shall receive information and reports provided under section 1805, section 1810, section 1811, section 1812, section 1813 and subsection 1826(7) of this chapter and information provided to the Financial Intelligence Unit by any agency of another country, information provided to the Financial Intelligence Unit by a law enforcement agency or a National or State government institution or agency, and any other information voluntarily provided to the Financial 47 of 86 26 C.B.
NO.
15-134 Intelligence Unit about a serious offense, a money laundering offense, the offense of the financing of terrorism, or a violation of this chapter; (b) shall have the authority to request information or reports from financial institutions under subsections 1806(6) and 1808(2); (c) for transactions or transfers that occurred prior to the entry into force of this chapter, shall have the authority to require a financial institution to disclose records in the financial institution’s possession, custody or control that pertain to transactions or transfers for a particular account or person, and for a particular time period, that meet the threshold amounts specified in section 1810 of this chapter; (d) may enter the premises of any financial instution during ordinary business hours with or without prior notice and without warrant to inspect any records kept pursuant to sections 1810 and 1811 of this chapter, ask any questions of any employee of the financial institution relating to such records, and make notes and take copies of the records.
(e) shall have the authority to collect any information that the Financial Intelligence Unit considers relevant to serious offenses, money laundering activities, the financing of terrorism or violations of 48 of 86 26 C.B.

NO.
15-134 this chapter whether or not publicly available, including commercially available databases, or information that is collected or maintained, including information that is stored in databases maintained by the National government, a State government or a subdivision or agency of the National or a State government; (f) shall have the authority to obtain from the Department of Finance and Administration of the Federated States of Micronesia tax and customs records of a person under investigation for committing, or attempting to commit, a serious offense, a money laundering offense, an offense of the financing of terrorism or a violation of this chapter; (g) shall have the authority to obtain from the Telecommunications Corporation of the Federated States of Micronesia telephone call records of a person under investigation for committing, or attempting to commit, a serious offense, a money laundering offense, an offense of the financing of terrorism or a violation of this chapter; (h) shall have the authority to act on behalf of the Federated States of Micronesia in seeking information from any National, State or foreign government agency, law enforcement agency, supervisory authority and auditing authority for purposes of this 49 of 86 26 C.B.
NO.
15-134 chapter; (i) shall analyze and assess all reports and information received; (j) may refer any report, and information pertaining to that report and any other information received, to the appropriate National or State law enforcement agency or foreign government agency if, on the basis of its analysis and assessment, the Financial Intelligence Unit has reasonable grounds to suspect that the transaction would be relevant to the investigation or prosecution of a serious offense, money laundering offense, or terrorist financing offense, and in connection therewith, the Financial Intelligence Unit may send a copy of such referral or information to the relevant supervisory authority; (k) shall have the authority to instruct any financial institution to take such steps as may be appropriate in relation to any information or report received by the Financial Intelligence Unit, to enforce compliance with this chapter and to facilitate any investigation anticipated by the Financial Intelligence Unit or a law enforcement agency; (m) shall compile statistics and records, and may disseminate information within the Federated States of Micronesia or elsewhere and make recommendations arising out of any information received; 50 of 86 26 C.B.
NO.
15-134 (n) in consultation with the relevant supervisory authority, may issue guidelines to financial institutions in relation to customer identification, record keeping and reporting obligations, and the identification of suspicious transactions; (o) shall, where appropriate, periodically provide feedback to financial institutions and relevant government departments, offices, agencies and institutions regarding outcomes relating to the reports or information provided pursuant to this chapter; (p) may obtain further information from any National or State government agency on persons or transactions referred to in a report made to it pursuant to this chapter; (q) may provide training programs for financial institutions in relation to customer identification, record keeping and reporting obligations, and the identification of suspicious transactions; (r) may conduct research into trends and developments in the area of money laundering and the financing of terrorism and improved ways of detecting, preventing and deterring money laundering and the financing of terrorist activities; (s) may educate the public and create awareness on matters relating to money laundering and the financing of terrorism; 51 of 86 26 C.B.
NO.
15-134 (t) may disclose any report, or information derived from such report or any other information received, to a National government department, office or agency subject to the confidentiality requirements of this chapter; (u) may disclose any report, or information derived from such report or any other information received, to a foreign or State government institution or agency, or an international organization, in accordance with section 1821 of this chapter; (v) may liaise with, and enter into any agreement or arrangement with, any foreign National or State government institution or agency, or international organization, regarding the exchange of information pursuant to section 1821 of this chapter; and (w) shall report to the President and the Congress of the Federated States of Micronesia prior to the end of each fiscal year on the activities of the Financial Intelligence Unit during the previous year and the expected activities of the Financial Intelligence Unit during the subsequent year, without disclosing confidential information or information that may jeapordize an ongoing investigation or prosecution; and (x) may undertake due diligence checks and other inquiries as may be requested in writing by a State or National government institution or agency.
52 of 86 C.B.

NO.
NO.

15-134 (2) The Attorney General may apply for a production order pursuant to section 971 of title 11 of the Code of the Federated States of Micronesia, or a restraining or monitoring order pursuant to subchapter VII of this chapter, or a search warrant from the Supreme Court to obtain information and evidence relevant to an investigation or prosecution of an actual or attempted serious offense, money laundering offense, terrorist financing offense or offense under this chapter."
10 Section 26.

Title 12 of the Code of the Federated States of 11 Micronesia, as amended, is hereby amended by adding a new section 12 1821 of chapter 18 to read as follows: 26 "Section 1821.
Information sharing arrangements with foreign and State governments" (1) The Financial Intelligence Unit may disclose any report or information to a foreign or State government agency or institution, or an international organization, that has powers and duties similar to those of the Financial Intelligence Unit – (a) on such terms and conditions as are set out in an agreement or arrangement between the Financial Intelligence Unit and the foreign national or state government institution or agency, or international organization, regarding the exchange of such information under subsection (2) of this section; or (b) where such an agreement or arrangement has 53 of 86 26 C.B.
NO.

15-134 not been entered into, on such terms and conditions as may be agreed upon by the Financial Intelligence Unit and the institution, agency or organization at the time of disclosure.
(2) The Financial Intelligence Unit, with the approval of the Secretary, may enter into a formal agreement or arrangement, in writing, with a foreign national or state government institution or agency, or international organization, with powers and duties similar to the Financial Intelligence Unit regarding the exchange of information between the Financial Intelligence Unit and that institution, agency or organization.
(3) The information exchanged under subsection (1) or (2) of this section shall be limited to information that the Financial Intelligence Unit, the foreign national or state government institution or agency, or the international organization has reasonable grounds to suspect would be relevant to the investigation or prosecution of a serious offense, a money laundering offense or a financing of terrorism offense, or an offense that is substantially similar to these offenses; and (4) Agreements or arrangements entered into under subsection (1) or (2) of this section shall include the following terms: (a) a restriction on the use of the report or 54 of 86 C.B.
NO.

15-134 information to purposes relevant to investigating or prosecuting a serious offense, a money laundering offense or an offense of the financing of terrorism, or an offense that is substantially similar to these offenses; and (b) a stipulation that the report or information be treated in a confidential manner and not be further disclosed without the express consent of the Financial Intelligence Unit.” 10 Section 27.
Title 12 of the Code of the Federated States of 11 Micronesia, as amended, is hereby amended by adding a new section 12 1822 of chapter 18 to read as follows: "Section 1822.

Protection against liability.


Any employee of the Financial Intelligence Unit, or any officer, agent or person authorized to act on behalf of the Financial Intelligence Unit, shall not be liable for damages for any acts or omissions made in the discharge of his or her duties under this chapter unless it is shown that the act or omission was made in bad faith."

Section 28.
Section 28.

Title 12 of the Code of the Federated States of 21 Micronesia, as amended, is hereby amended by adding a new 22 subchapter V of chapter 18 entitled "Compliance".

23 Section 29.

Title 12 of the Code of the Federated States of 24 Micronesia, as amended, is hereby amended by adding a new section 25 1823 of chapter 18 to read as follows: 26 "Section 1823.

Power to examine.

55 of 86 26 C.B.

NO.
15-134 (1) The Banking Commissioner, or his or her authorized representative, may examine the records and inquire into the business and affairs of any financial institution for the purpose of ensuring compliance with this chapter or any regulations promulgated pursuant to this chapter, and for that purpose may: (a) at any reasonable time and with or without warrant, enter any premises in which the Banking Commissioner or his or her authorized representative has reasonable grounds to believes that there are records relevant to ensuring compliance with subchapters II and III; (b) use or cause to be used any computer system or date processing system in the premises to examine any data contained in or available to the system; (c) reproduce any record, or cause it to be reproduced from the data, in the form of a printout or other intelligble output and remove the printout or other output for examination or copying; and (d) use or cause to be used any copying equipment in the premises to make copies of any record.
(2) The owner or person responsible for the premises referred to in subsection (1) of this section, and every person found therein, shall give the Banking Commissioner and any of his or her authorized representatives all reasonable assistance to enable them 56 of 86 26 C.B.

NO.
NO.

15-134 to carry out their responsibilities and shall furnish them with any information that they may reasonably require with respect to the administration of subchapters II and III or the regulations promulgated pursuant to this chapter.

(3) The Banking Commissioner shall report any instances of noncompliance with this chapter or any regulations promulgated pursuant to this chapter to the Financial Intelligence Unit.
(4) The Attorney General may apply for a search warrant from the Supreme Court to enter any premises belonging to a financial institution, or a director, officer, employee or agent of the financial institution, that the Financial Intelligence Unit has probable cause to believe has failed to comply with the obligations imposed by the provisions of this chapter, including an order of the Supreme Court pursuant to subsection (4) of section 1824 of this chapter.
(5) Any person who willfully obstructs, hinders, or fails to cooperate with an examination pursuant to subsections (1) and (2) of this section or a search pursuant to subsection (4) of this section, or threatens harm to a person conducting an examination or search pursuant to these subsections, shall be guilty of a felony offense punishable on conviction: (a) in the case of a natural person, by 57 of 86 C.B.

NO.
NO.

15-134 imprisonment for a maximum of five (5) years, or a maximum fine of $50,000, or both; or (b) in the case of a legal person that is not a natural person, by a maximum fine of $250,000.” Section 30.

Title 12 of the Code of the Federated States of 6 Micronesia, as amended, is hereby amended by adding a new section 7 1824 of chapter 18 to read as follows: "Section 1824.

Powers to enforce compliance.


(1) All directors, officers, employees and agents of a financial institution shall take all reasonable steps to ensure compliance by that financial institution with its obligations under this chapter or the regulations promulgated pursuant to this chapter.

Failure to implement an action plan to ensure compliance with this chapter and the regulations promulgated pursuant to this chapter shall be grounds for a finding of noncompliance under this subchapter.
(2) The Banking Commissionershall establish through regulations a schedule of fines for each instance of a financial institution’s noncompliance with this chapter, or regulations promulgated pursuant to this chapter.

(3) If the Banking Commissioner determines that a financial institution has without reasonable excuse failed to comply with this chapter, or the regulations promulgated pursuant to this chapter, he or she shall 58 of 86 26 C.B.
NO.

15-134 transmit his or her findings to the financial institution, including the amount of and justification for any fines imposed upon the financial institution for noncompliance.

The financial institution shall have thirty (30) days to respond in writing to the Banking Commissioner’s findings.
Upon receipt of the financial institution’s response, the Banking Commission shall have fifteen (15) days to review the financial institution’s response and either affirm, amend or revoke his or her decision to impose fines upon the financial institution.

Upon receipt of the Banking Commissioner’s decision to affirm, amend or revoke the fines, the financial institution shall have fifteen (15) days to file a complaint with the Supreme Court seeking review of the fines.
Judicial review shall be limited to determining whether the Banking Commissioner acted arbitrarily or abused his or her discretion in fining the financial institution for noncompliance.
(4) Where a financial institution fails without reasonable excuse to comply with this chapter, or the regulations promulgated pursuant to this chapter, or fails to comply with a decision of the Banking Commissioner under subsection (3) of this section, the Department of Justice for the Federated States of Micronesia may obtain an order from the Supreme Court against any or all of the directors, officers, employees 59 of 86 C.B.

NO.
NO.

15-134 or agents of that financial institution in such terms as the Court deems necessary to enforce compliance with such obligations.
If a financial institution, or any of its directors, officers, employees or agents, fail to comply with the Court’s order in the time period specified by the Court, the Court may impose a financial penalty of up to $1,000 for each day of noncompliance in addition to any fines imposed by the Banking Commissioner pursuant to subsection (3) of this section.” Section 31.
Title 12 of the Code of the Federated States of 12 Micronesia, as amended, is hereby amended by adding a new 13 subchapter VI of chapter 18 entitled “Cash or Bearer Negotiable 14 Instruments at the Border”.

15 Section 32.

Title 12 of the Code of the Federated States of 16 Micronesia, as amended, is hereby amended by adding a new section 17 1825 of chapter 18 to read as follows: 26 "Section 1825.

Reporting at the border.
(1) Any person referred to in subsection (3) of this section importing to or exporting from the Federated States of Micronesia, cash or bearer negotiable instruments of a collective value equal to or greater than $10,000 or any other such amount as prescribed by the Secretary, shall report the value and nature of the cash or bearer negotiable instruments to an authorized officer in the form and manner prescribed by the 60 of 86 C.B.

NO.
NO.

15-134 Secretary through regulations promulgated pursuant to this chapter.

(2) Any person who knowingly violates, or attempts to violate, the reporting requirements of subsection (1) of this section shall be guilty of a felony offense punishable on conviction: (a) in the case of a natural person, by imprisonment for a maximum of five (5) years, or a maximum fine of $50,000, or both; or (b) in the case of a legal person that is not a natural person, by a maximum fine of $250,000.
(3) Cash or bearer negotiable instruments shall be reported under subsection (1) of this section by the following persons: (a) where the cash or bearer negotiable instruments are in the possession, custody or control of a person leaving or entering the Federated States of Micronesia onboard a vessel, aircraft or other means of transport, or are carried onboard along with that person in his or her baggage or cargo, by that person; (b) where cash or bearer negotiable instruments are imported to the Federated States of Micronesia by courier or mail, by the importer; (c) where cash or bearer negotiable instruments are exported from the Federated States of Micronesia by 61 of 86 C.B.
NO.

15-134 courier or mail, by the exporter; (d) where cash or bearer negotiable instruments are imported into or exported from the Federated States of Micronesia, other than through the means specified in paragraphs (a), (b) and (c) of this subsection, by the person in charge of the means of transport; and (e) in any other case, by the person on whose behalf the cash or bearer negotiable instruments are imported or exported.
(4) For the purpose of this section and sections 1826 and 1827 of this chapter, the term ‘authorized officer’ means: (a) a Customs Officer of the Division of Customs and Tax Administration, Department of Finance and Administration of the Federated States of Micronesia; (b) a National Police Officer of the Department of Justice of the Federated States of Micronesia; (c) any other law enforcement officer authorized by the Secretary through regulations promulgated pursuant to this chapter.” Section 33.
Title 12 of the Code of the Federated States of 22 Micronesia, as amended, is hereby amended by adding a new section 23 1826 of chapter 18 to read as follows: 24 25 26 "Section 1826.

Searches and seizures.

(1) If an authorized officer has probable cause to believe that a person has failed to fully and accurately 62 of 86 26 C.B.

NO.
NO.

15-134 report cash or bearer negotiable instruments in his or her possession in contravention of subsection (1) of section 1825, the authorized officer may, with such assistance and force as is reasonable, search the person and any baggage, package, container or other article in the person’s possession, custody or control.
(2) If an authorized officer has probable cause to believe that there is onboard an aircraft, ship or other means of transport, cash or bearer negotiable instruments that has not been reported in accordance with subsection (1) of section 1825, the authorized officer may stop, board and search the vessel, and any baggage, package, container, cargo or other article onboard the vessel, or direct the vessel moved to a suitable location for the search.
(3) If an authorized officer has probable cause to believe that there is in any baggage, package or other article, cash or bearer negotiable instruments that has not been reported in accordance with subsection (1) of section 1825, the authorized officer may search the baggage, package, container or other article, or direct that the baggage, package or other article be moved to a suitable place for the search.
(4) If an authorized officer has probable cause to believe that there is mail which contains cash or bearer negotiable instruments that has not been reported in 63 of 86 C.B.

NO.

15-134 accordance with subsection (1) of section 1825, the authorized officer may search the mail, or direct that the mail to be moved to a suitable place for the search.
(5) An authorized officer may seize any cash or bearer negotiable instrument, or any other document or tangible object, discovered in the course of a search pursuant to this section that the officer has probable cause to believe is evidence of the commission or attempted commission of a a serious offense, a money laundering offense, an offense of the financing of terrorism or an offense under section 1825(2) of this chapter.
(6) An authorized officer who has seized cash or bearer negotiable instruments, or any other document or tangible object, under subsections (5) or (6) of this section shall report such seizure to the Financial Intelligence Unit within 24 hours of seizure.
(7) Nothing in this section shall be interpreted as preventing authorized agents from performing routine inspections of persons, articles or vessels at a border or port of entry of the Federated States of Micronesia consistent with the laws and constitution of the Federated States of Micronesia.” Section 34.

Title 12 of the Code of the Federated States of 24 Micronesia, as amended, is hereby amended by adding a new section 25 1827 of chapter 18 to read as follows: 26 "Section 1827.
Retention and release of seized cash and 64 of 86 26 C.B.

NO.

15-134 bearer negotiable instruments.

(1) Cash or bearer negotiable instruments seized under subsections (5) or (6) of section 1826 shall not be detained for more than five (5) business days, within which time an authorized officer shall file an ex parte application to the Supreme Court for an order for the continued detention of the seized cash or negotiable instruments.
(2) The Supreme Court shall issue an ex parte order within five (5) business days of the making of an application by an authorized officer, failing which the cash or bearer negotiable instruments shall be released to the person from whom the cash or negotiable instruments were seized.
(3) The Supreme Court shall grant an order for the continued detention of cash or bearer negotiable instruments seized pursuant to subsection (5) of section 1826 for a period not exceeding three months from the date of seizure upon being satisfied that: (a) there are reasonable grounds to suspect that the cash or bearer negotiable instruments are evidence of a serious offense, a money laundering offense or an offense of the financing of terrorism; and (b) the detention of the cash or bearer negotiable instruments is justified while the matter is further investigated.
65 of 86 26 C.B.

NO.
15-134 (4) The Supreme Court shall grant an order for the continued detention of cash or bearer negotiable instruments seized pursuant to subsection (6) of section 1826 for a period not exceeding six months from the date of seizure upon being satisfied that: (a) there is probable cause to believe that the cash or bearer negotiable instruments are evidence of a serious offense, a money laundering offense, an offense of the financing of terrorism or an offense under section 1825(2) of this chapter or is intended by any person for use in the commission of such an offense; and (b) the detention of the cash or bearer negotiable instruments is justified while the matter is further investigated.
(5) The Supreme Court may subsequently order, after a hearing, with notice to all parties concerned, the continued detention of the cash or bearer negotiable instruments seized pursuant to subsection (6) of section 1826 if it is satisfied that the conditions listed in subsection (4) of this section are still met; provided however, the total period of detention shall not exceed two years from the date of the seizure.

The notice to an interested party shall be mailed to the last known address of the party.
(6) No cash or bearer negotiable instrument shall be ordered released by the Supreme Court where: 66 of 86 C.B.

NO.
15-134 (a) an application has been made under subchapter III of chapter 9 of title 11 of the Code of the Federated States of Micronesia for a restraining, confiscation or pecuniary penalty order for all or part of the value of the cash or negotiable instrument; or (b) the cash or bearer negotiable instrument is relevant evidence in a pending criminal proceeding alleging a serious offense, a money laundering offense, an offense of the financing of terrorism, or a violation of this chapter or is relevant to an investigation, prosecution or proceedings under the Mutual Assistance Act and any written law relating to the financing of terrorism.
(7) Where the cash or bearer negotiable instrument seized pursuant to subsections (5) or (6) of section 1826 has not been claimed by any person within two (2) years of it being seized, an authorized officer may apply to the Supreme Court for such cash or negotiable instrument to be forfeited to the Forfeited Assets Fund established under section 980 of title 11 of the Code of the Federated States of Micronesia."

Section 35.
Section 35.

Title 12 of the Code of the Federated States of 23 Micronesia, as amended, is hereby amended by adding a new 24 subchapter VII of chapter 18 entitled “Restraining and Monitoring 25 Orders.

26 Section 36.

Title 12 of the Code of the Federated States of 67 of 86 C.B.

NO.

15-134 1 Micronesia, as amended, is hereby amended by adding a new section 2 1828 of chapter 18 to read as follows: 26 "Section 1828.

Restraining orders.
(1) Where the Attorney General’s Office has reasonable grounds to suspect that a transaction or attempted transaction may involve the proceeds of a serious offense, a money laundering offense, or an offense of the financing of terrorism, or be preparatory to the offense of the financing of terrorism, it may by an ex parte application in writing and supported by affidavit request that the Supreme Court order a financial institution not to proceed with the carrying out of that transaction or attempted transaction or any other transaction in respect of the funds affected by that transaction or attempted transaction in order to allow the Financial Intelligence Unit: (a) to make any necessary inquiries concerning the transaction or attempted transaction; and (b) if the Financial Intelligence Unit deems it appropriate, to consult or advise the relevant law enforcement agency.
(2) Upon receipt of an application submitted pursuant to subsection (1) of this section, and upon being satisfied that there are reasonable grounds to suspect that a transaction or attempted transaction may involve the proceeds of a serious offense, a money laundering 68 of 86 C.B.

NO.
NO.

15-134 offense, an offense of the financing of terrorism or may be preparatory to the offense of the financing of terrorism, the Supreme Court may grant the requested order in writing, or by telephone to be followed up in writing within 24 hours, for a period to be determined by the Court, which may not be more than fourteen (14) days.
(3) The Attorney General’s Office may apply for an extension of time setting out the grounds for the extension of the order set out in subsection (2) of this section.” Section 37.

Title 12 of the Code of the Federated States of 13 Micronesia, as amended, is hereby amended by adding a new section 14 1829 of chapter 18 to read as follows: 26 "Section 1829.

Monitoring orders.
(1) Where the Attorney General’s Office has probable cause to believe that a person has committed, was involved in the commission, or is about to commit or be involved in the commission of a serious offense, a money laundering offense, an offense of the financing of terrorism, the Attorney General’s Office may by an ex parte application in writing and supported by affidavit request the Supreme Court to issue a monitoring order directing a financial institution to give information to the Financial Intelligence Unit regarding any accounts held by that person with the financial institution.
69 of 86 26 C.B.

NO.
15-134 (2) The Supreme Court shall not issue a monitoring order unless the Court is satisfied that there is probable cause to believe that the person in respect of whose account the order is sought: (a) has committed or was involved in the commission, or is about to commit or be involved in the commission of a serious offense, a money laundering offense or an offense of the financing of terrorism; (b) has benefited directly or indirectly, or is about to benefit directly or indirectly from the commission of a serious offense, a money laundering offense, an offense of the financing of terrorism; or (c) has used the account for purposes of the commission of a serious offense, a money laundering offense, an offense of the financing of terrorism.
(3) A monitoring order: (a) may direct the financial institution to disclose information obtained by the institution about transactions conducted through an account held by a particular person with the institution; (b) shall not have retrospective effect; (c) shall only apply for a period of a maximum of 12 months from the date of making; and (d) shall specify the name or names in which the account is believed to be held and the type of information that the institution is required to give.
70 of 86 26 C.B.

NO.
NO.

15-134 (4) A financial institution that is, or has been subject to a monitoring order shall not knowingly disclose the existence or operation of the order to any person except: (a) an officer or agent of the institution for the purpose of ensuring compliance with the order; (b) a legal adviser for the purpose of obtaining legal advice or representation in respect of the order; or (c) a police officer authorized in writing by the Financial Intelligence Unit to receive the information.
(5) A person described in sections (4)(a), (b) or (c) shall not knowingly disclose the existence or operation of a monitoring order except to another such person, and may do so only for the purposes of the performance of the person’s duties or functions.
(6) Any financial institution, or director, officer, employee or agent of a financial institution, that knowingly fails to comply with a monitoring order issued pursuant to this section, or that provides the Financial Intelligence Unit with materially false or misleading information pursuant to a monitoring order issued pursuant to this section, shall be guilty of a felony offense punishable on conviction: (a) in the case of a natural person, by imprisonment for a maximum of five (5) years, or a maximum fine of $50,000, or both; or 71 of 86 C.B.
NO.

15-134 (b) in the case of a legal person that is not a natural person, by a maximum fine of $250,000.
(7) Any person who knowingly violates subsections (4) or (5) of this section shall be guilty of a felony offense punishable on conviction: (a) in the case of a natural person, by imprisonment for a maximum of five (5) years, or a maximum fine of $50,000, or both; or (b) in the case of a legal person that is not a natural person, by a maximum fine of $250,000.
(8) Nothing in this section prevents the disclosure of information concerning a monitoring order for the purposes of or in connection with legal proceedings or in the course of proceedings before a court, provided that nothing in this section shall be construed as requiring a legal adviser to disclose to any court the existence or operation of a monitoring order."

Section 38.
Section 38.

Title 12 of the Code of the Federated States of 19 Micronesia, as amended, is hereby amended by adding a new 20 subchapter VIII of chapter 18 entitled “Registration and Licensing 21 of Financial Institutions.

22 Section 39.

Title 12 of the Code of the Federated States of 23 Micronesia, as amended, is hereby amended by adding a new section 24 1830 of chapter 18 to read as follows: 25 26 "Section 1830.

Registration of financial institutions.


(1) A financial institution shall register with the 72 of 86 C.B.

NO.

15-134 Financial Intelligence Unit in the form, time period and manner prescribed by the Secretary through regulations promulgated pursuant to this chapter.
(2) After registering with the Financial Intelligence Unit, the financial institution shall provide written notification to the Financial Intelligence Unit, within thirty (30) days, of any information contained in the original registration form that has changed or that has become no longer accurate.” 10 Section 40.
Title 12 of the Code of the Federated States of 11 Micrknesia, as amended, is hereby amended by adding a new section 12 1831 of chapter 18 to read as follows: 26 "Section 1831.

Penalties for failure to register or provide truthful registration information.

(1) If a financial institution fails to comply with section 1830 of this chapter, the financial institution, and its owners and directors, shall be subject to a civil penalty of $20,000 for each violation.
(2) Any financial institution, or director, officer, employee or agent of a financial institution, that knowingly fails to comply with section 1828 of this chapter, or knowingly provides the Financial Intelligence Unit with materially false or misleading registration information, shall be guilty of a felony offense punishable on conviction: (a) in the case of a natural person, by 73 of 86 C.B.

NO.
NO.

15-134 imprisonment for a maximum of two (2) years, or a maximum fine of $20,000, or both; or (b) in the case of a legal person that is not a natural person, by a maximum fine of $100,000.” Section 41.

Title 12 of the Code of the Federated States of 6 Micronesia, as amended, is hereby amended by adding a new section 7 1832 of chapter 18 to read as follows: 26 "Section 1832.
Licensing of financial institutions engaging in money transmission services.

(1) All financial institutions that provide money transmission services shall be required to be licensed by the compotent supervisory authority established by law, or in absence of a supervisory authority, the Secretary.
(2) A financial institution shall receive a license to engage in money transmission services only after the supervisory authority, or in the absence of a supervisory authority, the Secretary, is satisfied that the financial institution is in compliance with the requirements of this chapter, regulations promulgated pursuant to this chapter, and any other applicable laws of the Federated States of Micronesia.
(3) The supervisory authority, or in the absence of a supervisor authority, the Secretary may promulgate regulations establishing the procedures and requirements for a financial institution seeking to engage in money 74 of 86 C.B.

NO.

15-134 1 2 3 transmission service to obtain and maintain a license, including any licensing fees.” Section 42.

Title 12 of the Code of the Federated States of 4 Micronesia, as amended, is hereby amended by adding a new 5 subchapter IX of chapter 18 entitled “Other Matters”.
6 Section 43.

Title 12 of the Code of the Federated States of 7 Micronesia, as amended, is hereby amended by adding a new section 8 1833 of chapter 18 to read as follows: 26 "Section 1833.

Obligations of supervisory authorities.
The relevant supervisory authority of a financial institution shall: (1) adopt any necessary measures to prevent or avoid any person who is unsuitable from controlling, or participating in, directly or indirectly, the directorship, management or operation of a financial institution; (2) verify through regular examinations, that the financial institution complies with the requirements of this chapter; (3) issue guidelines to assist the financial institution, and its directors, officers, employees and agents, in detecting suspicious transactions; and (4) cooperate with the Financial Intelligence Unit and other domestic and foreign law enforcement agencies in any investigation, prosecution or proceedings relating to a serious offense, a money laundering offense, an 75 of 86 C.B.
NO.

15-134 1 2 3 offense of the financing of terrorism, or an offense under this chapter.” Section 44.

Title 12 of the Code of the Federated States of 4 Micronesia, as amended, is hereby amended by adding a new section 5 1834 of chapter 18 to read as follows: "Section 1834.

Overriding of secrecy.
(1) A financial institution shall comply with the requirements of this chapter notwithstanding any obligation as to secrecy or other restriction on the disclosure of information imposed by any law, regulation or policy.” (2) Notwithstanding subsection (1), lawyers, notaries, other independent legal professionals, and accountants acting as independent legal professionals, are not required to report their suspicions if the relevant information was obtained in circumstances where they are subject to professional secrecy or legal professional privilege.
Section 44.

Title 12 of the Code of the Federated States of 20 Micronesia, as amended, is hereby amended by adding a new section 21 1835 of chapter 18 to read as follows: 22 23 24 25 26 "Section 1835.

Account in fictitious, false or incorrect name.

(1) A person shall not open, operate or authorize the opening or operation of an account with a financial institution in a numbered, ficticious, false or 76 of 86 26 C.B.

NO.
NO.

15-134 incorrect name.

(2) Where a person is commonly known by two or more different names, the person shall not use one of those names in opening an account with a financial institution, unless the person has previously disclosed the other name or names to the financial institution.
(3) Where a person using a particular name in his or her dealings with a financial institution discloses to it a different name or names by which he or she is commonly known, the financial institution shall make a record of the disclosure and shall alert the Financial Intelligence Unit and shall give the Financial Intelligence Unit a copy of that record upon request by the Financial Intelligence Unit.
(4) A person who knowingly violates subsection (1) or (2) of this section is guilty of a felony offense punishable on conviction: (a) in the case of a natural person, by imprisonment for a maximum of five (5) years, or a maximum fine of $50,000, or both; or (b) in the case of a legal person that is not a natural person, by a maximum fine of $250,000.
(5) For purposes of this section: (a) a person opens an account in a ficticious, false or incorrect name if the person, in opening the account, or becoming a signatory to the account, uses a 77 of 86 C.B.

NO.

15-134 name other than their real name or a name by which the person is commonly known having disclosed it in compliance with this Section.
(b) a person operates an account in a ficticious, false or incorrect name if the person does any act or thing in relation to the account, whether by way of making a deposit or withdrawal or by way of communiciation with the financial institution concerned or otherwise, and in doing so uses a name other than a person’s real name or name by which the person is commonly known; and (c) an account is in a ficticious, false or incorrect name if it was opened in a ficticious, false or incorrect name, whether before or after the commencement date of this chapter."
Section 46.

Title 12 of the Code of the Federated States of 17 Micronesia, as amended, is hereby amended by adding a new section 18 1836 of chapter 18 to read as follows: 26 "Section 1836.

False or misleading statements.


A person who in making a report under section 1805, subsection 1806(6), 1808(2), section 1810, section 1811, section 1812, section 1813 or subsection 1825(1) of this chapter makes a material representation that the person knows is false or misleading, or omits from any statement any matter or thing without which the person knows will render the statement materially false or 78 of 86 C.B.

NO.
NO.

15-134 misleading, is guilty of a felony offense punishable on conviction: (a) in the case of a natural person, by imprisonment for a maximum of five (5) years, or a maximum fine of $50,000, or both; or (b) in the case of a legal person that is not a natural person, by a maximum fine of $250,000.” Section 47.
Title 12 of the Code of the Federated States of 9 Micronesia, as amended, is hereby amended by adding a new section 10 1837 of chapter 18 to read as follows: "Section 1837.

Circumventing reporting requirements.
A person conducts two or more transactions or transfers in a manner or form for the purpose of ensuring that no report in relation to the transactions or transfers would be made by a financial institution under section 1810 is guilty of a felony offense punishable on conviction: (a) in the case of a natural person, by imprisonment for a maximum of five (5) years, or a maximum fine of $50,000, or both; or (b) in the case of a legal person that is not a natural person, by a maximum fine of $250,000.” Section 48.
Title 12 of the Code of the Federated States of 24 Micronesia, as amended, is hereby amended by adding a new section 25 1838 of chapter 18 to read as follows: 26 “Section 1838.

Liability of employers and principals.

79 of 86 C.B.

NO.
15-134 26 (1) If an offense under this chapter or any regulation promulgated pursuant to this chapter is committed by a person as an employee, the supervisor of the employee shall be guilty of the offense if he or she knew that the employee was committing the offense, or if he or she should have known, after a reasonable inquiry, that the employee was committing the offense and failed to take all necessary and reasonable measures within his or her powers to prevent the commission of the offense or to submit the matter to the Department of Justice for the Federated States of Micronesia for investigation and prosecution.
(2) If an offense under this chapter or any regulation promulgated pursuant to this chapter is committed by a person as an agent, the principal shall be guilty of the offense if he or she knew the agent was committing the offense, or if he or she should have known, after a reasonable inquiry, that the agent was committing the offense and failed to take all necessary and reasonable measures within his or her powers to prevent the commission of the offense or to submit the matter to the Department of Justice for the Federated States of Micronesia for investigation and prosecution.
This subsection shall only apply where the agent acted within the terms of his or her agency or contract.” Section 49.

Title 12 of the Code of the Federated States of 80 of 86 C.B.

NO.

15-134 1 Micronesia, as amended, is hereby amended by adding a new section 2 1839 of chapter 18 to read as follows: “Section 1839.

Liability of directors, controllers or officers of corporations.
Where any corporation is convicted of an offense under this chapter or any regulations promulgated pursuant to this chapter, every director, controller or officer concerned in the management of the corporation shall be guilty of the offense where the act or omission that constituted the offense took place with that person’s knowledge, authority, permission or consent.” Section 50.
Title 12 of the Code of the Federated States of 13 Micronesia, as amended, is hereby amended by adding a new section 14 1840 of chapter 18 to read as follows: 26 “Section 1840.

Regulations.
The Secretary may promulgate regulations consistent with this chapter: (1) for or with respect to any matter that by this chapter is required or permitted to be prescribed; (2) that are necessary or convenient for implementing or giving effect to the requirements and purposes of this chapter; (3) for the imposing of penalties and sanctions for the noncompliance with any regulations promulgated pursuant to this chapter; and (4) without limiting the foregoing, for: (i) the requirements, policies and 81 of 86 C.B.
NO.
15-134 procedures for customer identification and verification, record keeping and reporting obligations and internal controls required under this chapter; or (ii) where it is necessary to determine whether the amount of cash or negotiable instruments exceed any prescribed amount, and the manner and method of determining whether any cash denominated in a foreign currency is taken to be the equivalent in the domestic currency.” (iii) prescribing the relevant supervisory authority of a class of financial institution; or (iv) prescribing forms and fees for the purposes of this chapter.
Section 51.

This act shall become law upon approval by the President of the Federated States of Micronesia or upon its 20 becoming law without such approval.

21 22 Date: 5/30/08 Introduced by: /s/ Joe N. Suka 23 24 25 26 Joe N. Suka (by request) 82 of 86 C.B.

NO.

15-134 83 of 86