Money Laundering and Proceeds of Crime

Editor's note: Former chapter 9 of this title on Major Crimes (§§ 901-951) was repealed in its entirety by PL 11-72 § 1. This new chapter 9 was enacted by PL 11-72 § 84 and is part of the Revised Criminal Code Act.

The purpose of this chapter is to provide for the confiscation of the proceeds of crime and property used in the commission of serious crime, and to prevent the use of the financial system to launder the proceeds of serious crime.

The provisions of this chapter shall extend and apply throughout all of the Federated States of Micronesia, including the land and waters and the airspace above such land and waters with respect to which the Federated States of Micronesia has legislative jurisdiction.

(3) "Authorized officer" means a person or class of persons designated or authorized by the Secretary pursuant to applicable law as an authorized officer or officers for the purposes of enforcing or implementing the provisions of this chapter and related laws.

(b) a person who carries on a business of dealing in bullion, of issuing, selling or redeeming travelers checks, money orders or similar instruments, or of collecting, holding and delivering cash as part of a business providing payroll services;

(6) "Currency" means the 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) "Defendant" means a person charged or about to be charged with a serious offense, whether or not he or she has been convicted of the offense, and includes, in the case of proceedings for a restraining order under section 957 of this title, a person who is about to be charged with a serious offense.

(8) "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, and any record of information, and includes:

(g) trading for their 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 instruments, and transferable securities;

(d) where the conduct is conduct of a natural person, without reasonable excuse, failing to take reasonable steps to ascertain whether or not the property is derived or realized directly or indirectly, from some form of unlawful activity; or

(14) "Proceeding"or " proceedings" means any procedure conducted by or under the supervision of a judge or judicial officer, however described, in relation to any alleged or proven offense, or property derived from such offense, and includes an inquiry, investigation, or preliminary or final determination of facts.

(15) "Proceeds of crime" means fruits of a crime, or any property derived or realized directly or indirectly from a serious offense and includes, on a proportional basis, property into which any property derived or realized directly from the offense was later successively converted, transformed or intermingled, as well as income, capital or other economic gains derived or realized from such property at any time since the offense.

(16) "Property" means currency and all other real or personal property of every description, whether situated in the Federated States of Micronesia or elsewhere and whether tangible or intangible, and includes an interest in any such property.

(19) "Secretary" means and is synonymous with the Secretary of the Department of Justice' of the Federated States of Micronesia, or with the chief law enforcement officer of the Federated States of Micronesia, whatever the title of such position is or in the future becomes.

(b) a law of a foreign state, in relation to acts or omissions, which, had they occurred in the Federated States of Micronesia or any of its States or political subdivisions, would have constituted a criminal offense punishable by imprisonment for a term of more than one year;

(23) 'Unit trust" means any arrangement made for the purpose or having the effect of providing for a person to have the funds available for investment; facilitates for the participation by a person as a beneficiary under a trust, or in any profits or income arising from the acquisition, holding, management or disposal of any property pursuant to the trust.

(c) any foreign state, includes a reference to a written or unwritten law of, or in force in, any part of the Federated States of Micronesia (including its States and political subdivisions); any part of that State of the Federated States of Micronesia, or any part of that foreign state, as the case may be.

Any reference in this act to a person being charged, or about to be charged, with a serious offense is a reference to a procedure, however described, in the Federated States of Micronesia or elsewhere, by which criminal proceedings may be commenced.

(c) the Supreme Court, with the consent of the convicted person, takes the offense, of which the person has not been found guilty, into account in passing sentence on the person for another serious offense.

(2) References in this chapter to the value of a gift, or the value of any payment or reward, means the value of the gift, payment or reward to the recipient when it was received, adjusted to account for any subsequent changes in the value of money.

(a) it was made by a defendant charged with or convicted of a serious offense, at any time after the commission of the offense to which the proceedings relate (or where more than one offense was committed, at any time after commission of the earliest of the offenses to which the proceedings relate); and, the Supreme Court considers it appropriate, after consideration of all of the relevant circumstances, to take the gift into account; or where

(ii) which (in whole or in part, directly or indirectly) represented (when in the defendant's hands) property received by the defendant in connection with the commission of a serious offense by the defendant or another person.

(a) the circumstances in which a defendant must be treated as making a gift include those where the defendant transfers property to another person, directly or indirectly, for a consideration, the value of which is significantly less than the value of the property transferred by the defendant; and

(b) in those circumstances, the court shall apply the provisions of section 907 of this title, taking into account the difference between the value of the gift and the consideration, if any, provided to the defendant by the recipient.

A reference to a benefit derived or obtained by or otherwise accruing to a person, includes a reference to a benefit derived, or obtained by, or accruing to, a third party at the first person's request or direction.

(1) A person has benefitted from an offense if that person has at any time (whether before or after the commencement of this act) received any payment or other reward in connection with, or derived any pecuniary advantage from, the commission of a serious offense, whether committed by that person or someone else.

(3) The value of a person's proceeds of a serious offense is the aggregate of the values of all payments, rewards or pecuniary advantages received by that person in connection with, or derived by the person from, the commission of the offense.

(2) may enter the premises of any financial institution or cash dealer during ordinary business hours to inspect any records kept, pursuant to section 914(1) of this title, and ask any question relating to such records, make notes and take copies of the whole or any part of the records;

(4) may compile statistics and records, disseminate information within the Federated States of Micronesia or elsewhere, make recommendations arising out of any information received, promulgate regulations to be followed by financial institutions and cash dealers, and advise the President;

(5) may provide lists of training facilities for any financial institution in respect of transaction record-keeping and reporting obligations provided for in sections 914(1) and 915(1) of this title;

(7) may enter into joint law agreements with the States of the Federated States of Micronesia with respect to the enforcement and implementation of the provisions of this chapter, as deemed appropriate.

(1) A financial institution or cash dealer shall take reasonable measures to satisfy itself as to the true identity of any applicant seeking to enter into a business relationship with it, or to carry out a transaction or series of transactions with it, by requiring the applicant to produce an official record reasonably capable of establishing the true identity of the applicant, such as a birth certificate, passport or other official means of identification, and in the case of a corporation, a certificate of incorporation together with its latest tax return filed with the Government of the Federated States of Micronesia.

(2) Where an applicant requests a financial institution or cash dealer to enter into a continuing business relationship, or in the absence of such a relationship, any transaction, then the institution or cash dealer shall take reasonable measures to establish whether the person is acting on behalf of another person.

(3) If it appears to a financial institution or cash dealer that an applicant requesting to enter into any transaction, whether or not in the course of a continuing business relationship, is acting on behalf of another person, then the institution or cash dealer shall take reasonable measures to establish the true identity of any person on whose behalf, or for whose ultimate benefit, the applicant may be acting in the proposed transaction, whether as trustee, nominee, agent or otherwise.

(b) there is a transaction or a series of transactions taking place in the course of a business relationship, in respect of which the applicant has already produced satisfactory evidence of identity.

(b) where evidence of a person's identity is obtained in accordance with section 913 of this title, a record that indicates the nature of the evidence obtained, and which comprises either a copy of the evidence or such information as would enable a copy of it to be obtained.

(a) name, address and occupation (or where appropriate, business or principal activity) of each person conducting the transaction, or if known, on whose behalf the transaction is being conducted, as well as the method used by the financial institution or cash dealer to verify the identity of each such person;

(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

(4) Records required under subsection (1) of this section shall be kept by the financial institution for a period of at least five (5) years from the date the relevant business or transaction was completed.

(1) Whenever a financial institution or cash dealer is a party to a transaction and has reasonable grounds to suspect that the information it has concerning the transaction may be relevant to an investigation or prosecution of a person for a serious offense, it shall as soon as possible, but no later than three (3) working days after forming that suspicion, and wherever possible before the transaction is carried out:

(3) A financial institution or a cash dealer which has reported a suspicious transaction in accordance with this subchapter shall, if requested to do so by the Department of Justice, give such further information as it has in relation to the transaction.

(1) identify persons to whom an employee is to report any information which comes to the employee's attention in the course of employment, and which gives rise to knowledge or suspicion by the employee that another person is engaged in money laundering, and enables any person so identified to have reasonable access to any information relevant to determine if a sufficient basis exists to report the matter pursuant to section 915(1) of this title; and

(1) take appropriate measures for the purpose of making employees aware of domestic laws relating to money laundering, and the procedures and related policies established and maintained by it pursuant to this act;

(i) the conversion or transfer of property derived directly or indirectly from the acts or omissions referred to in subsection (1)(a) of this section, with the intention of concealing or disguising the illicit origin of that property, or of aiding any person involved in the commission of the offense to evade the legal consequences thereof; or

(ii) concealing or disguising the true nature, origin, location, disposition, movement or ownership of the property derived directly or indirectly from the acts or omissions referred to in subsection (1)(a) of this section.

(2) The offense of money laundering, established under subsection (1) of this section, is a felony offense, punishable by imprisonment for a maximum term of ten years or a maximum fine of $100,000, or both; PROVIDED, however, in the case of a corporation, company, commercial enterprise, commercial entity or other legal person, the maximum fine shall be increased to $500,000.

(1) A person who knowingly opens or operates an account with a financial institution or a cash dealer under a false name commits a felony offense, punishable by imprisonment for a maximum of five years or a maximum fine of $50,000, or both; PROVIDED, however, in the case of a corporation, company, commercial enterprise, commercial entity or other legal person, the maximum fine shall be increased to $250,000.

(2) A financial institution or cash dealer who fails to comply with any requirement of this subchapter for which no penalty is specified commits a felony offense, punishable by imprisonment for a maximum of five (5) years or a maximum fine of $50,000, or both; PROVIDED, however, in the case of a corporation, company, commercial enterprise, commercial entity or other legal person that is not also a natural person, the maximum fine shall be increased to $250,000.

(3) In determining whether a person, or a financial institution or cash dealer has complied with or failed to comply with any requirement of this subchapter, the Supreme Court shall have regard to all the circumstances of the case, including such custom and practice as may, from time to time, be current in the relevant trade, business profession or employment, and may take into account any relevant regulations adopted and/or approved by a public authority, exercising public interest supervisory functions in relation to the financial institution or cash dealer, or any other body that regulates or is representative of any trade, business, profession or employment carried on by that person.

(4) Any person who knows or suspects that a report under section 915(1) of this title is being prepared or has been sent to the Department of Justice and discloses to another person information or other matters which are likely to prejudice any investigation of an offense, or possible offense of money laundering under section 918 of this tile, commits a felony offense; such offense is punishable by imprisonment for a maximum of five years or a maximum fine of $50,000, or both; PROVIDED, however, in the case of a corporation, company, commercial enterprise, commercial entity or other legal person, the maximum fine shall be increased to $250,000.

(5) In proceedings for an offense against subsection (4) of this section, it is an affirmative defense that the person did not know, or have reasonable grounds to suspect, that the disclosure was likely to prejudice any investigation of an offense or possible offense of money laundering under section 918 of this title.

(1) An authorized officer may seize and, in accordance with this section, detain any currency which is being imported into or exported from the Federated States of Micronesia if the authorized officer has probable cause to believe that it was derived from a serious offense, or is intended by any person for use in the commission of a serious offense.

(2) Currency detained under subsection (1) of this section shall not be detained for more than 24 hours after seizure, unless a justice of the Supreme Court grants an order of continued detention for a period not exceeding three months from the date of seizure, upon being satisfied that:

(ii) consideration is given to the institution in the Federated States of Micronesia or elsewhere of criminal proceedings against any person for an offense with which the currency is connected; PROVIDED, however, upon request by the person from whom the currency was seized and detained, the court shall grant a hearing before entering an order of continued detention.

(3) A justice of the Supreme Court may subsequently order, after hearing, with notice to all parties concerned, the continued detention of the currency if satisfied of the matters mentioned in subsection (2) of this section, but the total period of detention shall not exceed two years from the date of the order.

(a) by order of a justice of the Supreme Court that its continued detention is no longer justified, upon application by or on behalf of that person and after considering any views of the Secretary to the contrary; or

(b) proceedings are instituted in the Federated States of Micronesia or elsewhere against any person for an offense with which the currency is connected, unless and until the proceedings relating to the relevant application or the proceedings for the offense as the case may be have been concluded.

(1) The Department of Justice may apply to the Supreme Court for a warrant, under this section or title 12 of the Code of the Federated States of Micronesia, to enter any premises belonging to or in the possession or control of a financial institution, cash dealer, or any officer or employee thereof, and to search the premises and remove any document, material or other thing therein for the purposes of the Department of Justice as ordered by the Supreme Court and specified in the warrant.

For the purpose of determining whether any property belongs to, or is in the possession or under the control of any person, the Department of Justice may, upon application to the Supreme Court, obtain an order:

(b) identifying or locating any document necessary for the transfer of any such property, belonging to, or in the possession or control of that person; be delivered forthwith to the Department of Justice; or

(2) that the financial institution or cash dealer forthwith produce to the Department of Justice all information obtained about any transaction conducted by or for that person during such period before or after the order as the Supreme Court directs.

(1) The Department of Justice may, upon application to the Supreme Court, after satisfying the Court by a preponderance of the evidence, that a financial institution or cash dealer has failed to comply with any obligation provided for under sections 913, 914, 915, 916, or 917 of this title, obtain an order against all or any officers or employees of the institution or dealer in such terms as the Supreme Court deems necessary, in order to enforce compliance with such obligation.

(2) In granting the order pursuant to subsection (1) of this section, the Supreme Court may order that should the financial institution or cash dealer fail, without reasonable excuse, to comply with all or any provisions of the order, such institution, dealer, officer or employee shall pay a financial penalty in the sum and in the manner directed by the Supreme Court.

(3) Nothing in this section shall preclude the Department of Justice from instituting criminal charges and seeking other orders, warrants, remedies or penalties; and notwithstanding any other penalty which may be imposed under this act, the Department of Justice may apply for an order directing compliance with any requirement of this act or regulations.

The provisions of this act shall have effect notwithstanding any obligation as to secrecy, confidentiality, or other restriction on the disclosure of information imposed by law and regulations, including the policies, practices and regulations of any financial institution, cash dealer or other commercial entity or person, with respect to secrecy and confidentiality of banking matters, in the Federated States of Micronesia.

No action, suit or other proceedings shall lie against any financial institution or cash dealer, or any officer, employee or other representative of the institution acting in the ordinary course of the person's employment or representation, in relation to any action taken in good faith by that institution or person pursuant to section 915(1) of this title.

No suit, prosecution or other legal proceedings shall lie against the Government of the Federated States of Micronesia, or any officer or other person in respect of anything done by or on behalf of that person, with due diligence and in good faith, in the exercise of any power or the performance of any function under this act or any regulation or order made pursuant to this act.

(3) a conviction for that serious offense in the Federated States of Micronesia is quashed or reversed and no subsequent complaint is filed within a reasonable time thereafter; the Supreme Court shall order restitution of the restrained property together with the interest, if any, which has actually accrued, if such property is held in a financial institution.

Nothing in this act affects the right of a person, whose property has been restrained, to seek redress for due process or civil rights violations pursuant to the laws of the Federated States of Micronesia.

(b) a pecuniary penalty order against the defendant in respect of benefits derived by the defendant from the commission of the offense; provided, however, such application must be made within one year of the date the defendant was convicted for the serious offense.

(3) Where an application under this section is finally determined, no further application for a confiscation order or a pecuniary penalty order may be made in respect of the offense for which the defendant was convicted without the leave of the Supreme Court. The Supreme Court shall not give such leave unless it is satisfied that:

(a) the Secretary must give no less than 14 days written notice of the application to the defendant and to any other person who the Secretary has reason to believe may have an interest in the property;

(ii) announce on public radio, post a notice at the main Post Office and all branch offices, and at the National Government headquarters in Palikir, and publish in a newspaper published and circulating in the Federated States of Micronesia, a notice of the application.

(1) The Supreme Court, upon hearing the application under section 929(1) of this title, may, before the final determination of the application, and on the application of the Secretary, amend the application to include any other property or benefit, as the case may be, upon being satisfied that:

(2) Where the Secretary applies to amend an application for a confiscation order and the amendment would have the effect of including additional property in the application for confiscation, the Secretary must give no less than 14 days written notice of the application to amend, to any person who the Secretary has a reason to believe may have an interest in the property to be included in the application for a confiscation order.

(4) Where the Secretary applies to amend an application for a pecuniary penalty order against a defendant and the effect of the amendment would be to include an additional benefit in the application, the Secretary must give the defendant no less than 14 days written notice of the application to amend.

(1) Where an application is made to the Supreme Court for a confiscation order or a pecuniary penalty order in respect of a defendant's conviction of a serious offense, the Supreme Court may, in determining the application, have regard to the transcript of any proceedings against the defendant for the offense.

(2) Where an application is made for a confiscation order or a pecuniary penalty order to the Supreme Court before which the defendant was convicted, and the Supreme Court has not, when the application is made, passed sentence on the defendant for the offense, the Supreme Court may, if it is satisfied that it is reasonable to do so in all circumstances, defer passing sentence until it has determined the application for the order.

(1) Where an information or a complaint has been filed alleging the commission of a serious offense by a person and a warrant for the arrest of the person has been issued in relation to that information or complaint, the Secretary may apply to the Supreme Court for a confiscation order in respect of any tainted property if the defendant has died or absconded.

(2) For the purposes of subsection (1) of this section and section 934 of this title, the person is deemed to have absconded if reasonable attempts to arrest the person pursuant to the warrant have been unsuccessful during a period of six months commencing on the day the warrant was issued, and the person shall be deemed to have so absconded on the last day of that period.

(b) direct that notice of the application be announced on public radio, posted at the main Post Office and all branch offices, and at the National Government headquarters in Palikir, and published in a newspaper published and circulating in the Federated States of Micronesia, containing such particulars and for so long as the Supreme Court may require.

(1) Subject to section 933(3) of this title, where an application is made to the Supreme Court under section 933(1) of this title, for a confiscation order against any tainted property by reason of a person having died, or absconded in connection with a serious offense, and the Court is satisfied that:

(c) the accused charged with the offense referred to in subsection (1)(b) of this section has died or absconded; the Supreme Court may order that the property or such property as is specified by the Supreme Court in the order be confiscated.

(1) Where, upon application by the Secretary, the Supreme Court is satisfied that property is tainted property in respect of a serious offense of which a person has been convicted, the Supreme Court may order that specified property be confiscated.

(a) that the property was used in or in connection with, the commission of the offense if it was in the person's possession at the time of, or immediately after, the commission of the offense for which the person was convicted; and/or

(b) that the property was derived, obtained or realized as a result of the commission of the offense if it was acquired by the person before, during or within a reasonable time after the period of the commission of the offense of which the person was convicted, and the Supreme Court is satisfied that the income of that person, from sources unrelated to criminal activity of that person, cannot reasonably account for the acquisition of that property.

(3) Where the Supreme Court orders that property, other than money, be confiscated, the Supreme Court shall specify in the order the amount that it considers to be the value of the property at the time when the order is made, taking account of how such value is to be determined under section 907 of this act.

(1) Subject to subsection (2) of this section, where a Court makes a confiscation order against any property, the property vests absolutely in the Federated States of Micronesia by virtue of the order, except with respect to real property, where any legislation then in force in any State of the Federated States of Micronesia prohibits the Federated States of Micronesia from taking title to such real property, in which case a lien shall be immediately attached to the property in favor of the Federated States of Micronesia, in the amount of the value of the property less any prior recorded encumbrances. In the case of such real property, the Secretary shall be authorized to make application to the Supreme Court, and the Supreme Court may grant an order forcing the sale of such property (unless the sale of such property is prohibited by legislation then in force in the State), with proceeds to be paid to the Federated States of Micronesia after sale, less prior recorded encumbrances.

(a) the property vests in the Federated States of Micronesia in equity but does not vest in the Federated States of Micronesia at law until the applicable recordation requirements have been complied with;

(c) the Secretary has power, on behalf of the Federated States of Micronesia, to do or authorize the doing of anything necessary or convenient to obtain the recordation of the Federated States of Micronesia as owner, including the execution of any instrument to be executed by a person transferring an interest in property of that kind.

(a) the property shall not, except with the leave of the Supreme Court, and in accordance with any directions of the Supreme Court, be disposed of, or otherwise dealt with, by or on behalf of the Federated States of Micronesia before the relevant appeal date; and

(b) if, after the relevant appeal date, the order has not been discharged, the property may be disposed of and the proceeds applied or otherwise dealt with in accordance with the direction of the Secretary.

(i) the date on which the period allowed by rules of court for the lodging of an appeal against a person's conviction, or for the lodging of an appeal against the making of a confiscation order expires without an appeal having been lodged, whichever is the later; or

The Supreme Court may, before making a confiscation order and in the case of property in respect of which a restraining order was made, where the order was served in accordance with section 960 of this title, set aside any conveyance or transfer of the property that occurred after the seizure of the property, or the service of the restraining order, unless the conveyance or transfer was made for valuable consideration to a person acting in good faith and without notice.

(1) Where an application is made for a confiscation order against property, a person who claims an interest in the property may apply to the Supreme Court, before the confiscation order is made, for an order under subsection (2) of this section.

(ii) without knowing, and in circumstances such as not to arouse a reasonable suspicion, that the property was, at the time he or she acquired it, tainted property; the Supreme Court shall make an order declaring the nature, extent and value (at the time the order is made) of the person's interest.

(3) Subject to subsection (4) of the this section, where a confiscation order has already been made directing the confiscation of property, a person who claims an interest in the property may, before the end of the period of twelve (12) months, commencing on the day on which the confiscation order is made, apply to the Supreme Court for an order under subsection (2) of this section.

(5) A person who makes an application under subsections (1) or (3) of this section must give no less than fourteen (14) days written notice of the making of the application to the Secretary, who shall be a party to any proceedings in the application.

(7) Any person appointed by the Supreme Court under section 968 of this title shall, on application by any person who has obtained an order under subsection (2) of this section, and where the period allowed by the rules of court with respect to the making of a claim has expired and any appeal from that order has been determined:

(1) Where the Supreme Court makes a confiscation order against property in reliance on a person's conviction of a serious offense and the conviction is subsequently reversed by a court of final jurisdiction, the reversal of the conviction discharges the order. However, upon notice of intent by the Department of Justice to recharge the matter, the court may order continued detention of the property pursuant to section 935 of this act.

(2) Where a confiscation order against property is discharged as provided for in subsection (1) of this section or by the Supreme Court, hearing an appeal against the making of the confiscation order, any person who claims to have an interest in the property immediately before the making of the confiscation order may apply to the court in writing for the transfer of the interest to the person.