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Mutual evaluation report praises Bermuda's strong AML action

Monday, 20 January, 2020

The Caribbean Financial Action Task Force (CFATF) has issued a positive evaluation of Bermuda's anti-money laundering (AML) legislation and enforcement practices.

The assessment, conducted between March and October 2018, analysed Bermuda's compliance with the Financial Action Task Force’s (FATF's) 40 recommendations on AML legislation and the effectiveness of its enforcement system, and suggested ways in which the system might be strengthened.

The review team concluded that the jurisdiction has a good understanding of its exposure to money laundering risks, including the legal persons vulnerabilities assessment and the risks posed by emerging industries such as the casino gaming and digital coin industries. The report also found that there has been a marked improvement in the measures taken by banks, money services businesses and regulated professional firms to combat money laundering. Although not all financial institutions (FIs) and non-financial professionals have reached the highest standard, ‘Bermuda continues to do significant work to bring about a high level of compliance across all sectors,’ it says.

The jurisdiction is particularly strong in its recording of beneficial ownership information, says CFATF. The Bermuda Monetary Authority (BMA) has maintained such information on corporate legal entities for decades, and has recently significantly enhanced its beneficial ownership regime with requirements for companies, limited liability companies and partnerships to maintain registries, keep them updated and file the information with the BMA.

Since April 2017, legislative requirements in relation to beneficial ownership have been monitored and enforced. Regulated FIs and trust and company service providers are required to conduct customer due-diligence on all customers, including the requirement to maintain up to date and current beneficial ownership information that is available to competent authorities and for international cooperation. A framework for the licensing and supervision of relevant private trust companies has also been introduced.

The review found that investigation of money laundering offences is actively pursued in Bermuda, and there have been prosecutions for these offences. 'Whilst Bermuda has not yet demonstrated that all the relevant sanctions are proportionate and dissuasive, the penalties applied to supervised entities by the BMA appear to have been dissuasive although limited', it says.

Suggested further actions for the Bermuda authorities to consider include:

  • amending the Proceeds of Crime Act 1997 to ensure restraint powers are available before charges are laid;
  • increasing focus on the recovery of criminal proceeds moved across borders;
  • conducting AML business risk assessments by entities in all relevant sectors; and
  • ensuring suspicious activity reporting obligations are observed by the real estate and legal sectors.

Bermuda's finance ministry said the review's conclusions were 'an excellent result and a major accomplishment for Bermuda'.

Sources