This memorandum provides an overview of the Anti-Money Laundering/Counter Terrorism Financing ("AML/CFT") regime in Bermuda.
Bermuda is a British Overseas Territory and is a member of the Caribbean Financial Action Task Force ("CFATF"), a regional body of the Financial Action Task Force ("FATF"). FATF sets international standards to combat money laundering and the financing of terrorism which is adhered to by 170 countries.
The main pieces of legislation dealing with AML/CFT in Bermuda include the following:
- Proceeds of Crime Act 1997 (as amended) ("POCA");
- Anti-Terrorism (Financial and Other Measures) Act 2004 (as amended) (the "ATF Act");
- Financial Intelligence Agency Act 2007 (as amended) (the "FIA Act");
- Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing Supervision and Enforcement) Act 2008 (as amended);
- Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing) Regulations 2008 (the "POC Regulations"); and
- Proceeds of Crime (Anti-Money
Laundering and Anti-Terrorist Financing Supervision and
Enforcement) Designation Order 2012 (the "POC
(together the "AML/CFT Legislation").
In addition to the AML/CFT Legislation, there is also other specific legislation and guidance notes issued by the Bermuda Monetary Authority (the "BMA").
Bermuda Monetary Authority
The BMA is the main regulatory body for financial institutions in Bermuda, and is designated as the regulator of the financial services sector in relation to compliance with the AML/ CFT Legislation.
The BMA has issued guidance notes to regulated financial institutions on AML/CFT (the "Guidance Notes"). Whilst these are not legally binding, the Bermuda courts and the BMA are required to consider whether an AML/CFT regulated financial institution has followed any relevant guidance in determining whether it has committed an offence. Departures from the Guidance Notes (and the rationale for so doing) should be documented and institutions should be prepared to justify any departures.
In addition to the Guidance Notes, a statement of principles has been issued by the BMA pursuant to the AML/CFT Legislation, which sets out the principles by which the BMA will act in exercising its powers under the AML/CFT Legislation.
Below is a brief summary of the various pieces of AML/CFT Legislation:
POCA is considered as the primary piece of legislation dealing with AML/CFT in Bermuda. POCA provides for law enforcement and empowers the courts to trace and confiscate of proceeds from drug trafficking and other indictable offences, whether the offence occurred in Bermuda or would have constituted an offence if it occurred in Bermuda.
POCA also extends to crimes in relation to money laundering, and provides for investigative powers by the police and the ability for the Bermuda government to require regulated financial services institutions to undertake actions in cases of identified money laundering risks.
POCA established the National Anti-Money Laundering Committee to advise on detection and prevention of money laundering in Bermuda and to advise on the participation of Bermuda in international efforts against money laundering.
The ATF Act
The ATF Act established offences in relation to the involvement in the financing of terrorism and covers Bermuda's financial service sector.
The ATF gave powers to the Bermuda government to target specific persons believed to be known to be involved in terrorist financing.
The Bermuda government is able to issue directions to financial institutions for the purpose of protecting the reputation and integrity of Bermuda's financial sector.
In addition the ATF Act gives the Bermuda government the power to make regulations and orders relating to controls to prevent financing of terrorism and to create offences of failing to comply with the regulations and orders.
The FIA Act
The FIA Act established the Financial Intelligence Agency ("FIA"), whose main responsibility is to attend to suspicious activity reporting.
FIA's powers also include the ability to enter into arrangements to exchange information with regulatory bodies and law enforcement agencies abroad, to serve freezing notices and to serve notices seeking information on suspicious transactions.
Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing Supervision and Enforcement) Act 2008
This act designates the BMA as the supervising body for responsible for AML/CFT regulated financial institutions.
The BMA is required to keep a register of all AML/CFT regulated financial institutions (both licensed and non-licensed entities) and to monitor such institutions.
The Proceeds of Crime Regulations
The POC Regulations cover both AML/CFT regulated financial institutions and independent professionals, and requires them to establish policies and procedures in order to prevent money laundering or terrorist financing such as customer due diligence, record keeping, systems, training and wire transfers.
Proceeds of Crime Order
The POC Order established the Barristers and Accountants Anti-Money Laundering and Anti-Terrorist Financing Board as the supervisory authority for the legal and accountancy service business.
Bermuda has a long standing tradition of legislation to deal with AML/CTF. As a global international financial jurisdiction, Bermuda has taken a robust and pragmatic approach to being at the forefront of combating the global threat of money laundering and the financing of terrorism.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.