New deadlines imposed for FIA information requests

New response deadlines have been imposed for Financial Investigation Agency (FIA) information requests.

The Financial Investigation Agency Act, 2003 (FIA Act) has been amended, as of 2 December 2013, to require any entity or individual subject to the FIA’s jurisdiction to respond to information requests within a new statutorily-imposed deadline. Under the amendments responses from the private sector must be submitted within five working days following receipt of the information request.

Indications are that the timeframe is interpreted very rigidly by the FIA and any requests for time extensions are likely to be denied. Indeed, in contrast to many statutory timeframes, there is no express provision enabling the FIA to agree to extend the period.

What to do when a request is received?

The FIA typically issues requests for information in response to requests for mutual legal assistance from overseas law enforcement agencies pursuing persons involved, or perceived to be involved, in money laundering, terrorist financing or other financial offences anywhere in the world. Receipt of a request for information from the FIA is therefore an important and serious matter to be dealt with appropriately by all recipients.

Requests for information are subject to strict “anti-tipping off” rules, meaning that the existence and details of the requests must not be disclosed to any third parties, excluding legal counsel.

Given the short timeframe for compliance, all businesses operating in the financial services sector should review their internal procedures to ensure that information can be delivered in time. In particular, registered agents who operate with one or more qualified introducer(s) should review the terms of their agreements with introducer(s) so that AML information can be retrieved in a very short timescale. 

A further complication is that a carve out exists for information subject to legal professional privilege.  While, historically, most requests have concerned information such as AML records which are very unlikely to be subject to privilege there is nothing to stop the FIA from making much more comprehensive requests which does include material subject to privilege. Determining what material is subject to legal professional privilege and what is not can be a very difficult and time consuming exercise. One would hope that the FIA is pragmatic should the request concern such material.  What is worse for the recipient of the request is that anti-tipping off makes it difficult to seek a waiver of privilege from the client and/or enable a fee to be charged for the work that must be done in separating material that is or is not subject to privilege.

What happens if a request is not complied with?

Under the FIA Act, a recipient which fails to comply with a request for information commits a criminal offence and is liable on summary conviction to a fine not exceeding US$20,000 or to imprisonment for a term not exceeding two years, or to both. In addition, firms licensed by the Financial Services Commission in the BVI may face serious repercussions from the regulator in the event that they fail to comply with any FIA request.

Topics:  Deadlines, Financial Regulatory Reform, Investigations, Request For Information

Published In: Civil Procedure Updates, General Business Updates, Finance & Banking Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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