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 SUPERVISION & REGULATION

 
 
The following information outlines the current legislative framework for anti-money laundering and anti-terrorist financing (AML/ATF) in Bermuda. There are significant new legislative initiatives which have recently been introduced including amendments made to the Proceeds of Crime Act 1997 and the Anti-Terrorism (Financial and Other Measures) Act 2004 that came into force on the 15th November 2008. On the 1st January 2009 the Proceeds (Anti-Money Laundering and Anti-Terrorist Financing Supervision and Enforcement) Act 2008 and the Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing) Regulations 2008 came into force.
 
Consolidated versions of the amended Acts and copies of the new legislation can be accessed in the Legislation section of this website.
The Proceeds of Crime (Money Laundering) Regulations 1998 have been replaced with the Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing) Regulations 2008 which broaden the range of entities regulated and require relevant AML/ATF regulated financial institutions to adopt "risk-based" AML/ATF systems and controls.

The new Regulations are detailed and are also available in the Legislation section of this website.

An AML/ATF regulated financial institution means a person who:

  1. carries on deposit-taking business within the meaning of section 4 of the Banks and Deposit Companies Act 1999;
  2. carries on investment business within the meaning of section 3 of the Investment Business Act 2003;
  3. is an insurer (and not a reinsurer) registered under section 4 of the Insurance Act 1978 who carries on long term business falling within paragraph (a) or (c) of the definition of “long-term business” in section 1(1) of the Insurance Act 1978;
  4. is an insurance manager or broker registered under section 10 of the Insurance Act 1978, but in relation to an insurance broker, only in so far as he acts as a broker in connection with long term business (other than reinsurance business) falling within paragraph (a) or (c) of the definition of “long-term business” in section 1(1) of the Insurance Act 1978;
  5. carries on the business of a fund administrator within the meaning of section 2(2) of the Investment Funds Act 2006;
  6. carries on money service business within the meaning of section 2(2) of the Money Service Business Act 2016;
  7. carries on trust business within the meaning of section 9(3) of the Trusts (Regulation of Trust Business) Act 2001 and is not otherwise exempted by or under paragraph 3 of the Trusts (Regulation of Trust Business) Exemption Order 2002;
  8. is the operator of an investment fund within the meaning of section 2 of the Investment Funds Act 2006; or
  9. carries on corporate service provider business within the meaning of section 2(2) of the Corporate Service Provider Business Act 2012.

The Bermuda Monetary Authority has been provided with powers to monitor financial institutions for compliance with the Regulations under the Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing Supervision and Enforcement) Act 2008 ("the Supervision Act") which came in effect on 1st January 2009. It should be noted that the Supervision Act gives the Authority the capacity to impose substantial penalties for failure to comply with many provisions in the Regulations.

Section 7 of the Supervision Act requires the Authority to publish a Statement of Principles relating to specified powers in the Act.

A copy of the Statement of Principles is available in the Document Centre under Policy & Guidance/AML/ATF.

In order to assist AML/ATF regulated financial institutions to comply with the provisions of the Proceeds of Crime Act and Regulations the Bermuda Monetary Authority has issued Guidance Notes with the approval of the Minister.

A copy of the Guidance Notes are available in the Document Centre under Policy & Guidance/AML/ATF.

Other key enhancements to the legislative framework include:

The establishment of the Financial Intelligence Agency (FIA) which became operational on the 15th November 2008 when the Financial Intelligence Agency Act 2007 came into force. This Act is available in the Legislation section of this website.

The FIA assumes the role previously undertaken by the Financial Investigation Unit of the Bermuda Police Service in relation to suspicious activity reporting. Suspicious Activity Reports should now be filed with the Financial Intelligence Agency.

Amendments to the Proceeds of Crime Act 1997 also modify the composition of the National Anti-Money Laundering Committee and provide for the appointment of a person with relevant experience to be the Chairman for a period not exceeding three years.

Registration of Non-Licensed Persons

Most of the institutions affected by the Regulations are already licensed by the Bermuda Monetary Authority under the various regulatory Acts. For those Institutions there is nothing further that needs to be done.

Some institutions are not currently licensed, however, in particular, institutions excluded or exempted under the Investment Funds Act 2006 or exempted under the Investment Business Act 2003. Such institutions are required by Section 9 of the Supervision Act to be registered with the Authority, and can begin that process by completing a copy of the relevant Registration Form. A registration fee of $105 is required as part of the application.

A copy of the Registration Form is available in the Document Centre under Reporting Forms & Guidelines/AML/ATF.

Background

Bermuda is a member of the Caribbean Financial Action Task Force (CFATF), a regional body of the Financial Action Task Force (FATF). The FATF sets international standards to combat money laundering and the financing of terrorism and has a membership of 170 countries. The FATF has issued 40 recommendations on preventing money laundering and nine special recommendations on combating terrorist financing. All member countries have committed to implementing the FATF standard.

The Proceeds of Crime Act 1997 (POCA Act) took effect on 19th January 1998. The POCA Act expanded provisions criminalising the laundering of proceeds of crime and also provided for the confiscation of a convicted person's benefits from criminal conduct.

The Proceeds of Crime Act 1997 and the Anti-Terrorism (Financial and Other Measures) Act 2004 establish a Suspicious Activity Reporting regime providing for the disclosure, to the FIA, of a knowledge or suspicion of money laundering or terrorist financing. It is an offence to fail to report such knowledge or suspicion to the FIA. Both Acts provide protection from civil liability that may result from making such a disclosure.

The requirement to report a knowledge or suspicion of money laundering or terrorist financing applies to all persons.

The Proceeds of Crime Act 1997 established the National Anti-Money Laundering Committee for the purpose of:

  1. Advising the Minister of Justice in relation to the detection and prevention of money laundering in Bermuda and the development of a national plan of action.
  2. Advising the Minister of Justice as to the participation of Bermuda in the international effort against money laundering.

Members of the National Anti-Money Laundering Committee include: the Chairman, the Solicitor General, the Director of the FIA, the Financial Secretary, the Director of Public Prosecutions, the Permanent Secretary of the Ministry of Justice, the Commissioner of Police, the Chief Executive Officer of the Bermuda Monetary Authority, the Collector of Customs and such other persons as the Minister of Justice may from time to time appoint.

The Proceeds of Crime Act allows the Minister, after consultation with the National Anti-Money Laundering Committee, to make regulations for the purpose of detecting and preventing money laundering. The Minister made new Regulations in this area in 2008 the Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing) Regulations 2008.

The Bermuda Monetary Authority (BMA) is the regulator of the financial services industry and has responsibility for licensing, prudential supervision, regulation and inspection of licensed entities. A strict licensing regime prevents those individuals, inclined on using Bermuda for illicit or criminal purposes, from establishing corporate structures on the island. The BMA ensures compliance with Bermuda's AML/ATF systems and controls through supervision and inspection of affected financial institutions through the Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing Supervision and Enforcement) Act 2008.