Online Reporting System

FAQ

Are all transactions subject to financial monitoring?
All transactions are not subject to monitoring. Article 5 of the Law of Georgia on Facilitating the Prevention of Illicit Income Legalization defines transactions subject to monitoring.

 

Transaction subject to monitoring, shall be the transaction concluded or implemented by the person and/or the series of concluded or implemented transactions aimed at partition of the transaction (its amount) (other than transactions that are implemented through commercial banks, broker and insurance companies), if one or both of the following provisions exist:

 

a) The amount of the transaction or the series of transactions exceeds GEL 30,000 (or its equivalent in other currency) in case of cash, as well as non-cash settlements;

b) The transaction is suspicious according to Article 2(h) of this Law.

 

Suspicious transaction – a transaction (regardless its amount and operation type) supported with reasonable grounds to suspect that it had been concluded or implemented for the purpose of legalizing illicit income or/and the property (including funds) on the basis of which the transaction had been concluded or implemented is the proceeds of criminal activity or/and the transaction had been concluded or implemented for the purpose of terrorism financing (person participating in the transaction or the transaction amount causes suspicion, or other reasons exist for considering transaction as suspicious), or any person involved in the transaction is on the list of terrorists or persons supporting terrorism, or / and is likely to be connected with them, or / and funds involved in the transaction may be related with or used for terrorism, terrorist act or by terrorists or terrorist organization or persons financing terrorism, or any involved person’s legal or real address or place of residence is located in a non-cooperative zone or the transaction amount is transferred to or from such zone.

The Law and the respective regulations adopted on its basis differentiate the types of transactions subject to monitoring, implemented by commercial banks, broker and insurance companies and persons pursuing accounting or/and auditing activities.

Subject to monitoring by commercial banks shall be suspicious transactions as well as a transaction concluded or implemented by the person and/or series of concluded or implemented transactions aimed at partition of the transaction, if the amount of such transaction or the series of transactions exceeds GEL 30,000 (or its equivalent in other currency) and by content it represents the following transaction (operation):

 

a) Receipt of money using bank checks, in bearer form;

b) Trade of foreign currency in cash form;

c) Transfer of funds by the account holder from the bank operating or registered in watch or suspicious zone to the bank account in Georgia or transfer of funds from Georgia to account in the bank operating or registered in such zone;

d) Extension or receipt of loan by the person registered in watch or suspicious zone, or implementation of any other transaction (operation) by such person through banking institution operating in Georgia;

e) Transfer of funds from Georgia to another country to the account of an anonymous person or transfer of funds to Georgia from the bank account of an anonymous person in another country;

f) Contribution of funds into the issued capital of an enterprise other than the purchase of stocks of accountable enterprises, as defined under the Law of Georgia on Securities Market.

g) Placement of funds in the form of cash to the bank account and following transfer by an individual (non-entrepreneur) (other than transfer of funds to the budget and transfer of funds among such person’s bank accounts within Georgia);

h) Extension of a loan to bearer, secured by securities;

i) Transfer of funds from or to the account of a legal entity within 90 calendar days from the date of its registration;

j) Transfer of funds from or to the account of grant or charity assistance, except for grants transferred from the state or local self – governance budget of Georgia;

k) Transaction (operation) implemented through participation of a suspicious financial institution.

 

Subject to broker company monitoring shall be suspicious transactions as well as transactions concluded or implemented by a person or/and the series of concluded or implemented transactions aimed at partition of the transaction, if the amount of such transaction or the series of transactions exceeds GEL 30,000 (or its equivalent in other currency) and by content it represents the following transaction (operation):

 

a) Transactions implemented through securities, in bearer form;

b) Transaction (operation) carried out through participation of a suspicious financial institution;

c) Transactions implemented in securities by person residing and registered in watch

or suspicious zone or/and through use of bank account operating in such zone.

d) Transactions implemented in cash.

 

Subject toinsurance companies’ monitoring shall be suspicious transactions as well as transactions concluded or implemented by a person or/and the series of concluded or implemented transactions aimed at partition of the transaction, if the amount of such transaction or the series of transactions exceeds GEL 30,000 (or its equivalent in other currency) and it represents the following transaction (operation):

 

a) Returnable life insurance;

b) Annuity or pension insurance;

c) Personal insurance with the condition of returning the premium;

d) Transactions implemented by person residing and registered in watch or suspicious zone or/and through use of bank account operating in such zone.

e) Insurance contract terminated by the initiative of an insurer within the first three months;

f) Transactions (operations) performed with the participation of a suspicious financial institution;

g) Transactions implemented in cash.


For persons conducting accountancy or / and auditorial activity subject to monitoring shall be suspicious transaction if this person is engaged by order of the client or on behalf of the client in the following activities/transactions:

a) Buying and selling of real estate;

b) Management of funds, securities or other assets;

c) Management of bank, savings or securities accounts;

d) Organization of contributions for creation, operation or management of legal entity;

e) Creation, operation or management of legal entity or organizational formation;

f) Buying and selling of legal entity (share).

 

Subject to monitoring shall also be an attempt to conclude or implement the suspicious transaction and other fact (circumstance), which, pursuant to written instructions of the FMS of Georgia, may be related to legalization of illicit income or funding of acts of terrorism.

What is the required timeframe for a monitoring entity to get registered at the Financial Monitoring Service of Georgia and what is needed for this?
Timeframe for registration at the Financial Monitoring Service of Georgia for monitoring entities is defined by the respective regulations and differ for various monitoring entities:

· Commercial Banks–20 days following receipt of the license from the National Bank of Georgia;

· Microfinance Organizations - 20 days following registration at the National Bank of Georgia;

· Insurance Companies - 20 days following receipt of the license from the National Bank of Georgia;

· Securities Registrars - 20 daysfollowing receipt of the license from the National Bank of Georgia;

· Brokerage Companies - 20 days following receipt of the license from the National Bank of Georgia;

· Currency Exchange Bureaus - 10 days following registration at the National Bank of Georgia;

· Money Remittance Entities - 10 days following registration at the National Bank of Georgia;

· Non-bank depository institutions Credit Unions - 20 days following receipt of the license from the National Bank of Georgia;

· Entities, organizing lotteries and other commercial games and casinos –10 days following receipt of permit;

· Person pursuing accountancy or/and auditing activity - a month following receipt of permit to pursue the activities.

 

Authorized employee of the monitoring entity, for the purpose of registration, has to fill and send an electronic registration form through web portal (link Online System for Submission of Reports) placed at the official webpage of the Service (http://www.fms.gov.ge)

What period is to be monitored to reveal partitioned transactions (operations)?
The Georgian legislation does not specify a period with respect to partitioned transactions. Monitoring entities have to evaluate themselves the risks related with partition of the amount by the client and act with consideration of peculiarities of each client and transactions implemented by such client. It is not reasonable for a monitoring entity to add up amounts of various transactions mechanically in order to identify partitioned operation (transaction). Detection of the amount partitioned by the client must rely on the analysis of the client’s business activity, related risks and the other factors.
Are the various transactions implemented by one and the same person subject to monitoring if their total amount exceeds GEL 30,000 (e.g. a person takes a loan from Microfinance Organization in the Amount of GEL 20,000 and on the same day converts it into another currency)?
Various transactions (operations) implemented by one and the same person shall be subject to monitoring if the amount of each (separate) implemented transaction exceeds GEL 30,000.The principle of adding up amounts of various transactions (operations) in this case does not apply.
Are several operations, implemented simultaneously, with the same content and the total amount over GEL 30,000 subject to monitoring, if the amount of separate operations does not exceed this threshold? e.g. Client holding the amount over GEL 30,000 purchases simultaneously two or more currencies or securities.
Several operations of one and the same content above GEL 30,000 (or its equivalent in other currency) shall be subject to monitoring whether the amount of each of them exceeds the stated threshold or not. For example: subject to monitoring shall be acquisition of two or more securities with the amount above GEL 30,000 by the Client, or purchase or sale of various currencies simultaneously with such amount.
Are unusual transactions subject to monitoring?
The measures to be undertaken by financial institutions with respect to unusual transactions are formulated in the respective FATF Recommendation, which are reflected in the Georgian legislation.

Article 2 (h1) of the Law of Georgia on Facilitating the Prevention of Illicit Income Legalization provides definition of unusual transaction and Paragraphs 9 and 10, Article 5 of the same Law specify obligations of monitoring entities with respect to unusual transactions. Namely, monitoring entities have to pay special attention on unusual transactions which do not have apparent or visible economic (commercial) content or lack lawful purpose, in addition, ascertain purpose of the transaction within the scope of their capability and register obtained results in writing. Monitoring entities themselves determine principles for considering transaction as unusual. Decision on considering transaction (operation) as unusual is made in each specific case, based on information obtained through identification and servicing of clients and the other relevant persons by respective structural units of the monitoring entity and also information available at the monitoring entity. In addition, according to Paragraph 3, Article 7 of the aforementioned Law, the monitoring entity shall retain records on unusual transaction at least for 6 years from the moment of concluding or implementing transaction.


Therefore, the effective legislation does not provide for an obligation to submit reports on unusual transactions to the Financial Monitoring Service of Georgia. Aforementioned procedures, provided for in the legislation, shall be applied to such transactions.