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Bermuda’s Financial Institution Risk Assessment Reveals Areas of Improvement

A recent evaluation by the Financial Action Task Force (FATF) has highlighted several areas where Bermuda can improve its risk assessment and anti-money laundering (AML) framework. The report, which assesses the island nation’s compliance with FATF recommendations, reveals that while Bermuda has made significant progress in implementing AML measures, there are still some gaps to be addressed.

Risk-Based Approach

The evaluation noted that Bermuda is largely compliant with the requirement to assess risk and apply a risk-based approach (R.1). However, it recommended that the country improve its understanding of the risks associated with correspondent banking relationships and high-risk countries.

National Cooperation and Coordination

Bermuda was found to be compliant with the recommendation to ensure national cooperation and coordination among law enforcement agencies, financial institutions, and other stakeholders (R.2).

Money Laundering Offence

The country is also considered compliant in relation to its money laundering offence (R.3), which includes criminal penalties for individuals who engage in money laundering activities.

Terrorist Financing and Proliferation

Bermuda was found to be largely compliant with the requirements related to terrorist financing and proliferation, including the implementation of targeted financial sanctions (R.5, R.6, and R.7).

Non-Profit Organisations and Financial Institution Secrecy Laws

The evaluation noted that Bermuda is compliant with the requirement to implement customer due diligence measures for non-profit organisations (R.8) and has secrecy laws in place that are consistent with international standards (R.9).

Correspondent Banking and Wire Transfers

Bermuda was found to be compliant with the requirements related to correspondent banking relationships (R.13), wire transfers (R.16), and reliance on third parties (R.17).

Higher-Risk Countries and Reporting of Suspicious Transactions

The country is also considered compliant with the requirement to report suspicious transactions involving higher-risk countries (R.19) and individuals (R.20).

Internal Controls and Transparency

Bermuda was found to be largely compliant with the requirements related to internal controls, transparency, and beneficial ownership (R.24, R.25, and R.26).

Responsibilities of Law Enforcement and Investigative Authorities

The evaluation noted that Bermuda is compliant with the requirement to ensure that law enforcement agencies have the necessary powers and resources to investigate and prosecute AML-related crimes (R.31).

International Cooperation and Statistics

Bermuda was found to be largely compliant with the requirements related to international cooperation, including mutual legal assistance, extradition, and other forms of cooperation (R.36-R.40). The country also has a comprehensive system in place for collecting and analyzing AML-related statistics (R.33).

Overall, while Bermuda has made significant progress in implementing its AML framework, there are still some areas where improvement is needed. The FATF evaluation provides a roadmap for the country to address these gaps and strengthen its anti-money laundering measures.