Attorney General and Minister of Legal Affairs Hon. Trevor Moniz, JP, MP, today issued the following advisory about the risks in a number of jurisdictions arising from inadequate systems and controls to combat money laundering and terrorist financing. Details on these risks were provided by the Financial Action Task Force (FATF) and the Caribbean Financial Action Task Force (CFATF) in statements which were released following their respective Plenaries held in October and November 2016. The Minister noted that the advice is especially relevant to those entities that have or are considering any business relationships with the specified jurisdictions or persons (individuals or corporate entities) in such jurisdictions.
The Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing) Regulations 2008 (the Regulations) require AML/ATF regulated financial institutions and other relevant persons to have policies, procedures or systems in place to prevent money laundering or terrorist financing. Under the Regulations, relevant persons are also required, under certain specified situations and also in those situations which are deemed to present a higher risk of money laundering or terrorist financing, to apply enhanced customer due diligence measures and/or on-going monitoring on a risk-sensitive basis.
Advisory
1. FATF Public Statement
On 21 October 2016, the FATF issued a public statement (Annex A) drawing attention to serious deficiencies in the Democratic People’s Republic of Korea (DPRK), which has been identified in previous FATF public statements but continues to raise concerns for the FATF by its continued failure to adequately address on-going and substantial deficiencies in its anti-money laundering and combating the financing of terrorism (AML/CFT) regime and the serious threat this poses to the integrity of the international financial system. The FATF is particularly and exceptionally concerned about the threat posed by DPRK’s illicit activities related to the proliferation of weapons of mass destruction and its financing. The FATF therefore reaffirmed its call on its members and other jurisdictions to apply counter-measures against DPRK.
In addition, the FATF separately drew attention in the public statement to Iran, and in June 2016 the FATF welcomed Iran’s adoption of, and high-level political commitment to, an Action Plan to address its strategic AML/CFT deficiencies, and its decision to seek technical assistance in the implementation of the Action Plan. Consequently the FATF suspended counter-measures for twelve months in order to monitor Iran’s progress in implementing its Action Plan. If it is determined that Iran has not demonstrated sufficient progress in implementing the Action Plan at the end of that period, FATF’s call for countermeasures will be re-imposed. However if Iran meets its commitments under the Action Plan the FATF will consider next steps in this regard. Iran will remain on the FATF Public Statement until the full Action Plan has been completed. Until Iran implements the measures required to address the deficiencies identified in the Action Plan, the FATF will remain concerned with the terrorist financing risk emanating from Iran and the threat this poses to the international financial system. The FATF, therefore, calls on its members and urges all jurisdictions to continue to advise their financial institutions to apply enhanced due diligence to business relationships and transactions with natural and legal persons from Iran, consistent with FATF Recommendation 19. The FATF urges Iran to fully address its AML/CFT deficiencies, in particular those related to terrorist financing.
2. ‘On-going process to improve global AML/CFT compliance’ document
In a separate publication on the on-going process to improve global AML/CFT compliance (Annex B), the FATF once again highlighted a number of jurisdictions with strategic deficiencies in their AML/CFT regimes and provided information on these deficiencies. These jurisdictions were previously identified by the FATF as working with the FATF and relevant regional bodies to address those deficiencies. However the FATF has now called for the expeditious implementation of their agreed action plans. The jurisdictions listed in this category are: Afghanistan, Bosnia and Herzegovina, Iraq, Lao PDR, Syria, Uganda, Vanuatu and Yemen.
The FATF welcomed the significant progress of Guyana in improving its AML/CFT regime. Thus Guyana is no longer subject to monitoring under the FATF’s on-going global AML/CFT compliance process, but will work with its relevant FATF-style regional body, as it continues to address the issues identified in its Mutual Evaluation Report to further strengthen its AML/CFT regimes.
3. CFATF Public Statement
Jurisdiction with strategic AML/CFT deficiencies
On 9 November 2016, the CFATF issued a public statement (Annex C) drawing attention to serious deficiencies in Haiti, which underwent a High Level Mission by the CFATF in April 2015, however Haiti has failed to make sufficient progress in addressing its significant strategic AML/CFT deficiencies, including certain legislative reforms. If Haiti fails to take specific steps by November 2016, then the CFATF will consider whether additional steps of calling upon its Members to consider implementing counter measures against Haiti will be required to protect their financial systems from ongoing money laundering and terrorist financing risks emanating from Haiti. At CFATF Plenary in November 2016 Haiti demonstrated that sufficient progress has been made through: the amended Law Sanctioning Money Laundering and Terrorist Financing (LSMLTF) by the Chamber of Deputies on September 9th, 2016 and by the Senate on September 28th, 2016; the enactment of the new UCREF law seeking to establish the l’Unité Centrale de Renseignements Financiers (Central Financial Intelligence Unit) (UCREF) as an autonomous administrative financial intelligence unit; and the publication in the National Gazette of the Decree establishing procedures for the implementation of measures aimed at freezing funds and other assets connected with the financing of terrorism.
Haiti is encouraged to continue the reform process including the passage of the legislative framework and continue addressing its AML/CFT deficiencies.
Haiti and the CFATF should continue to work together to ensure that Haiti’s reform process is completed, by addressing its remaining deficiencies and continue implementing its Action Plan.
Jurisdiction with strategic AML/CFT deficiencies that has made significant progress in addressing these deficiencies
The CFATF welcomed the significant progress of Suriname in improving its AML/CFT regime. Particularly, the CFATF acknowledges that Suriname has established the legal and regulatory framework to meet its commitments in its agreed Action Plan regarding the strategic deficiencies identified by CFATF. Suriname is encouraged to continue the reform process and CFATF ICRG has agreed that Suriname has met the criteria to enter into the process to exit CFATF ICRG.
Jurisdictions no longer subject to the CFATF-ICRG review process
Guyana
Guyana was placed in the CFATF’s ICRG process in November 2011 and was publicly listed by the CFATF in May 2013. Since the FATF’s adoption of Guyana’s ICRG action plan in October 2014, Guyana has made significant progress on AML/CFT matters, including those items contained in the trargeted review and action plan. On the basis of progress made, with Guyana substaintially completing all its action plan items, the FATF Plenary meeting in October 2016 decided to allow Guyana to exit the FATF ICRG process.
Having made significant progress in improving its AML/CFT regime and adequately addressing the key AML/CFT deficiencies identified, the CFATF Plenary of November 2016 agreed that Guyana be removed from the CFATF ICRG process and therefore Guyana is no longer subject to monitoring by CFATF ICRG.
To ensure that an appropriate determination of the risks relating to these jurisdictions can be carried out, it is important that the annexed statements are read in their entirety. All financial institutions and other relevant persons, in the implementation of their systems and controls to combat financial crime, should give consideration to the FATF assessments and take appropriate actions in light of the associated risks.
It should be noted that a large number of jurisdictions have not yet been reviewed by the FATF, therefore the jurisdictions included in the FATF public statement and ‘ongoing compliance’ document are not intended to provide an exhaustive list of jurisdictions that should be considered by relevant persons to present a higher risk of money laundering or terrorist financing.
This advisory supersedes all previous advice issued by the Minister in connection with deficiencies in the AML/ATF systems and controls in the specified jurisdictions. It should be noted that the previous such advisory (AML-ATF Ministerial Advisory 2/2016) was issued in April 2016. Copies of previous advisories are available at www.gov.bm, using the search term ‘NAMLC’.
Annex A: FATF Public Statement – October 2016
FATF Public Statement – 21 October 2016
Paris, 21 October 2016 - The Financial Action Task Force (FATF) is the global standard setting body for anti-money laundering and combating the financing of terrorism (AML/CFT). In order to protect the international financial system from money laundering and financing of terrorism (ML/FT) risks and to encourage greater compliance with the AML/CFT standards, the FATF identified jurisdictions that have strategic deficiencies and works with them to address those deficiencies that pose a risk to the international financial system.
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Jurisdiction subject to a FATF call on its members and other jurisdictions to apply counter-measures to protect the international financial system from the on-going and substantial money laundering and terrorist financing (ML/FT) risks Democratic People's Republic of Korea (DPRK) The FATF remains concerned by the DPRK’s failure to address the significant deficiencies in its anti-money laundering and combating the financing of terrorism (AML/CFT) regime and the serious threat this poses to the integrity of the international financial system. The FATF urges the DPRK to immediately and meaningfully address its AML/CFT deficiencies. Further, FATF has serious concerns with the threat posed by DPRK’s illicit activities related to the proliferation of weapons of mass destruction (WMDs) and its financing. |
Jurisdiction subject to a FATF call on its members and other jurisdictions to apply enhanced due diligence measures proportionate to the risks arising from the jurisdiction
Iran
In June 2016, the FATF welcomed Iran’s adoption of, and high-level political commitment to, an Action Plan to address its strategic AML/CFT deficiencies, and its decision to seek technical assistance in the implementation of the Action Plan. Accordingly, in June 2016, the FATF suspended counter-measures for twelve months in order to monitor Iran’s progress in implementing the Action Plan. If the FATF determines that Iran has not demonstrated sufficient progress in implementing the Action Plan at the end of that period, FATF’s call for counter-measures will be re-imposed. If Iran meets its commitments under the Action Plan in that time period, the FATF will consider next steps in this regard.
Iran will remain on the FATF Public Statement until the full Action Plan has been completed. Until Iran implements the measures required to address the deficiencies identified in the Action Plan, the FATF will remain concerned with the terrorist financing risk emanating from Iran and the threat this poses to the international financial system. The FATF, therefore, calls on its members and urges all jurisdictions to continue to advise their financial institutions to apply enhanced due diligence to business relationships and transactions with natural and legal persons from Iran, consistent with FATF Recommendation 19. The FATF urges Iran to fully address its AML/CFT deficiencies, in particular those related to terrorist financing.
The FATF will continue to engage with Iran and closely monitor its progress.
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Annex B: Improving Global AML/CFT Compliance: update on-going process – 21 October 2016
Paris, 21 October 2016 - As part of its on-going review of compliance with the AML/CFT standards, the FATF identifies the following jurisdictions that have strategic AML/CFT deficiencies for which they have developed an action plan with the FATF. While the situations differ among each jurisdiction, each jurisdiction has provided a written high-level political commitment to address the identified deficiencies. The FATF welcomes these commitments.
A number of jurisdictions have not yet been reviewed by the FATF. The FATF continues to identify additional jurisdictions, on an on-going basis, that pose a risk to the international financial system.
The FATF and the FATF-style regional bodies (FSRBs) will continue to work with the jurisdictions noted below and to report on the progress made in addressing the identified deficiencies. The FATF calls on these jurisdictions to complete the implementation of action plans expeditiously and within the proposed timeframes. The FATF will closely monitor the implementation of these action plans and encourages its members to consider the information presented below.
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Jurisdictions with strategic deficiencies |
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Jurisdiction no longer subject to the FATF’s on-going global AML/CFT compliance process |
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Afghanistan |
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Afghanistan
In June 2012, Afghanistan made a high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies. Afghanistan has taken significant steps to improve its AML/CFT regime, including issuance of a freeze order that automatically requires the implementation of changes to the UNSCR 1267 list. However, Afghanistan should provide additional information regarding the implementation of its legal framework for identifying, tracing and freezing terrorist assets. The FATF encourages Afghanistan to continue implementing its action plan to address the remaining AML/CFT deficiency.
Bosnia and Herzegovina
In June 2015, Bosnia and Herzegovina made a high-level political commitment to work with the FATF and MONEYVAL to address its strategic AML/CFT deficiencies. Since June 2016, Bosnia and Herzegovina has taken steps towards improving its AML/CFT regime, including by finalising a regulation for freezing terrorist assets under UNSCR 1373. Bosnia and Herzegovina should continue to implement its action plan to address its deficiencies, including by: (1) harmonising criminalisation of terrorist financing and money laundering in all criminal codes; (2) implementing the framework for freezing terrorist assets under UNSCR 1373; (3) implementing an adequate supervisory framework; (4) implementing adequate AML/CFT measures for the non-profit sector; (5) establishing and implementing adequate cross-border currency controls; and (6) ensuring adequate procedures for the confiscation of assets. The FATF encourages Bosnia and Herzegovina to continue implementing its action plan to address its AML/CFT deficiencies.
Iraq
In October 2013, Iraq made a high-level political commitment to work with the FATF and MENAFATF to address its strategic AML/CFT deficiencies. Since June 2016, Iraq has taken steps towards improving its AML/CFT regime, including by: addressing remaining issues related to its criminalisation of money laundering and terrorist financing; establishing a legal framework and procedures for identifying and freezing terrorist assets; and ensuring a fully operational and functioning financial intelligence unit. Iraq should continue to implement its action plan to address its remaining deficiencies, including by: (1) implementing the legal framework and appropriate procedures for identifying and freezing terrorist assets; (2) ensuring that all financial institutions are subject to adequate customer due diligence requirements; (3) ensuring that all financial institutions are subject to adequate suspicious transaction reporting requirements; and (4) establishing and implementing an adequate AML/CFT supervisory and oversight programme for all financial sectors. The FATF encourages Iraq to continue implementing its action plan to address its remaining AML/CFT deficiencies.
Lao PDR
In June 2013, Lao PDR made a high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies. Since June 2016, Lao PDR has taken steps towards improving its AML/CFT regime, including the introduction of a cross-border declaration regime. However, the FATF has determined that certain strategic deficiencies remain. Lao PDR should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing; (2) implementing adequate AML/CFT controls for MVTS providers; and (3) implementing effective controls for cross-border currency transactions. The FATF encourages Lao PDR to continue implementing its action plan to address its AML/CFT deficiencies.
Syria
Since February 2010, when Syria made a high-level political commitment to work with the FATF and MENAFATF to address its strategic AML/CFT deficiencies, Syria has made progress to improve its AML/CFT regime. In June 2014, the FATF determined that Syria had substantially addressed its action plan at a technical level, including by criminalising terrorist financing and establishing procedures for freezing terrorist assets. While the FATF determined that Syria has completed its action plan agreed upon with the FATF, due to the security situation, the FATF has been unable to conduct an on-site visit to assess whether the process of implementing the required reforms and actions is underway. The FATF will continue to monitor the situation, and will conduct an on-site visit at the earliest possible date.
Uganda
In February 2014, Uganda made a high-level political commitment to work with the FATF and ESAAMLG to address its strategic AML/CFT deficiencies. Since its original action plan, Uganda was subject to a mutual evaluation, which highlighted additional strategic deficiencies. These deficiencies have been included in the revised action plan, to which a renewed political commitment was provided in June 2016. Since June 2016, Uganda enacted amendments to its regulation implementing UNSCRs 1267 and 1373. Uganda should continue to work on addressing the following deficiencies: (1) adequately criminalise terrorist financing; (2) implement adequate procedures for freezing terrorist assets in accordance with UNSCRs 1267 and 1373, and their successor resolutions; (3) ensure that all financial institutions are subject to adequate record-keeping requirements; (4) and ensure that all financial services and the FIA have the power to supervise and enforce compliance with AML CFT requirements (5) establish a fully operational and effectively functioning financial intelligence unit; (6) introduce and implement an appropriate legal basis to permit the competent authorities to provide a wide range of mutual legal assistance; and (7) ensure that appropriate laws and procedures are in place with regard to international co-operation for the financial intelligence unit and supervisory authorities. The FATF encourages Uganda to continue implementing its action plan to address its AML/CFT deficiencies.
Vanuatu
In February 2016, Vanuatu made a high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies. Since June 2016, Vanuatu has passed amendments to improve obligations to obtain beneficial ownership information and prohibit bearer shares and bearer share warrants for international companies. Vanuatu should continue to work on implementing its action plan to address its deficiencies, including by: (1) adequately criminalising money laundering and terrorist financing; (2) establishing and implementing adequate procedures for the confiscation of assets related to money laundering; (3) establishing and implementing an adequate legal framework for identifying, tracing and freezing terrorist assets and other UNSCR sanctions; (4) ensuring a fully operational and effectively functioning financial intelligence unit; (5) strengthening preventive measures, including for wire transfers; (6) establishing transparency for the financial sector, and for legal persons and arrangements; (7) implementing an adequate AML/CFT supervisory and oversight programme for all the financial sector and trust and company service providers; and (8) establishing appropriate channels for international co-operation and domestic coordination policies and actions on identified risks and ensuring effective implementation. The FATF encourages Vanuatu to continue implementing its action plan to address its AML/CFT deficiencies.
Yemen
Since February 2010, when Yemen made a high-level political commitment to work with the FATF and MENAFATF to address its strategic AML/CFT deficiencies, Yemen has made progress to improve its AML/CFT regime. In June 2014, the FATF determined that Yemen had substantially addressed its action plan at a technical level, including by adequately criminalising money laundering and terrorist financing; establishing procedures to identify and freeze terrorist assets; improving its customer due diligence and suspicious transaction reporting requirements; issuing guidance; developing the monitoring and supervisory capacity of the financial sector supervisory authorities and the financial intelligence unit; and establishing a fully operational and effectively functioning FIU. While the FATF determined that Yemen has completed its action plan agreed upon with the FATF, due to the security situation, the FATF has been unable to conduct an on-site visit to assess whether the process of implementing the required reforms and actions is underway. The FATF will continue to monitor the situation, and conduct an on-site visit at the earliest possible date.
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Jurisdictions no Longer Subject to the FATF’s On-Going Global AML/CFT Compliance Process
Jurisdiction no Longer Subject to the FATF’s On-Going Global AML/CFT Compliance Process
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Guyana The FATF welcomes Guyana’s significant progress in improving its AML/CFT regime and notes that Guyana has established the legal and regulatory framework to meet its commitments in its action plan regarding the strategic deficiencies that the FATF had identified in October 2014. Guyana is therefore no longer subject to the FATF’s monitoring process under its on-going global AML/CFT compliance process. Guyana will work with CFATF as it continues to address the full range of AML/CFT issues identified in its mutual evaluation report. |
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Annex C: CFATF Public Statement – November 2016
Providenciales, Turks and Caicos Islands 9 November 2016, - The Caribbean Financial Action Task Force (CFATF) is an organisation of twenty-seven jurisdictions of the Caribbean Basin Region, which have agreed to implement the international standards for Anti-money Laundering and Combating the Financing of Terrorism (AML/CFT), Financial Action Task Force Recommendations (FATF Recommendations). In order to protect the international financial system from money laundering and financing of terrorism (ML/FT) risks and to encourage greater compliance with the AML/CFT standards, the CFATF identified jurisdictions that have strategic deficiencies and works with them to address those deficiencies that pose a risk to the international financial system.
Jurisdiction with strategic AML/CFT deficiencies that has not made sufficient progress in addressing the deficiencies or has not complied with the Action Plan developed with the CFATF to address these deficiencies. The CFATF calls on its members to consider the risks arising from the deficiencies associated with each jurisdiction, as described below:
Haiti
The CFATF undertook a High Level Mission (HLM) to the Republic of Haiti on Monday 27th of April 2015. Thereinafter, a letter from the CFATF Chair, was sent to Haiti on the 17th of September 2015, making reference that Haiti would remain in the second stage of enhanced of follow-up but would need to demonstrate progress. At the CFATF Plenary in November 2015, Haiti demonstrated some progress on non-legislative measures. Plenary determined that Haiti should remain in the status quo and demonstrate to the May 2016 Plenary substantial compliance with both non-legislative and legislative requirements. At the CFATF Plenary in June 2016, Haiti demonstrated that had taken steps towards improving its AML/CFT compliance regime with non-legislative actions, including providing training to FIU, Police officers, Prosecutors and Magistrates; and taking steps to join the Egmont Group. However, Plenary was not satisfied with the pace of reforms and agreed to the issuance of a public statement against Haiti asking members to consider the risk posed by Haiti. Plenary also agreed that Haiti must make sufficient progress and demonstrate such progress by the November 2016 Plenary. At the CFATF Plenary in November 2016, Haiti demonstrated that sufficient progress has been made through: the amended Law Sanctioning Money Laundering and Terrorist Financing (LSMLTF) by the Chamber of Deputies on September 9th, 2016 and by the Senate on September 28th, 2016; the enactment of the new UCREF law seeking to establish the l’Unité Centrale de Renseignements Financiers (Central Financial Intelligence Unit) (UCREF) as an autonomous administrative financial intelligence unit; and the publication in the National Gazette of the Decree establishing procedures for the implementation of measures aimed at freezing funds and other assets connected with the financing of terrorism.
Haiti is encouraged to continue the reform process including the passage of the legislative framework and continue addressing its AML/CFT deficiencies.
Haiti and the CFATF should continue to work together to ensure that Haiti’s reform process is completed, by addressing its remaining deficiencies and continue implementing its Action Plan.
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Jurisdiction with strategic AML/CFT deficiencies that has made significant progress in addressing these deficiencies:
Suriname
The CFATF acknowledges the significant progress made by Suriname in improving its AML/CFT regime and notes that Suriname has established the legal and regulatory framework to meet its commitments in its agreed Action Plan regarding the strategic deficiencies that the CFATF had identified. Suriname is encouraged to continue the reform process and CFATF ICRG has agreed that Suriname has met the criteria to enter into the process to exit CFATF ICRG.
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Jurisdictions no longer subject to the CFATF-ICRG review process
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Guyana Guyana was placed in the CFATF’s ICRG process in November 2011 and was publicly listed by the CFATF in May 2013. Since the FATF’s adoption of Guyana’s ICRG action plan in October 2014, Guyana has made significant progress on AML/CFT matters, including those items contained in the targeted review and action plan. On the basis of progress made, with Guyana substantially completing all its action plan items, the FATF Plenary meeting in October 2016 decided to allow Guyana to exit the FATF ICRG process. Having made significant progress in improving its AML/CFT regime and adequately addressing the key AML/CFT deficiencies identified, the CFATF Plenary of November 2016 agreed that Guyana be removed from the CFATF ICRG process and therefore Guyana is no longer subject to monitoring by CFATF ICRG. |