Definition
Public procurement refers to the process by which government departments or public sector bodies acquire goods or services from the private sector. This typically involves competitive tendering processes and the expenditure of public funds.
From a financial crime perspective, public procurement is a higher-risk area because it creates opportunities for:
Bribery and corruption (e.g., kickbacks to secure contracts)
Bid rigging and collusion
Fraudulent invoicing or contract inflation
Misappropriation or diversion of public funds
Money laundering using government contracts as a front for cleaning illicit proceeds
Who should tick ‘Yes’ on the ‘Does the person's employer engage in public procurement?’ question?
Every account holder should consider the public procurement question on the platform and answer either ‘Yes’ or ‘No’.
Account holders will need to answer ‘Yes’ if:
They are employed by, or otherwise work for, a government owned or operated entity that outsources any function to the private sector. This could include hospitals, the military, or the civil service.
They are employed by, otherwise work for, or own a private sector firm that contracts with any government owned or operated entity in any capacity. This could be an IT company that operates the IT environment for a government department or a delivery firm that delivers equipment to hospitals.
What if the account holder does not know if their employer is engaged in public procurement?
If there is doubt, it is recommended that ‘Yes’ be selected as the answer. As stated above, selecting ‘Yes’ will not make an account holder high risk by itself. It would be expected that any employee of a government owned or operated entity would select ‘Yes’ as the answer.
What if a firm the account holder works for or owns did have government contracts in the past but no longer has those contracts?
In the situation where a private sector firm previously had government contracts but, at the time of the transaction application with DCSL, no longer has active contracts, the following should be selected:
‘Yes’ should be selected if the private sector firm has only ceased to have active contracts within the past 12 months.
‘No’ should be selected if the private sector firm has ceased to have active contracts for longer than 12 months, unless the exception described below applies.
12 months in this section means 12 months from the date the transaction is approved by the account holder and sent to DCSL for processing.
The exception mentioned above will apply if an account holder’s source of wealth and/or source of funds for the DCSL account transaction is significantly formed from the proceeds of public procurement. In these cases, ‘Yes’ should always be selected. “Significantly formed” in this context would include, for example:
A business whose sole or large majority of revenue came from public procurement contracts, even if that business is now changing, or has recently changed, to stop those contracts. If an account holder worked for or owned such a business, ‘Yes’ should be selected.
A business that engaged in multiple contracts with government owned or operated entities, even if such was not a majority of the business’ revenue. If an account holder worked for or owned such a business, ‘Yes’ should be selected.