Barbados Central Bank Issues New Guidelines for Anti-Money Laundering and Combating Terrorist Financing

Strengthening Efforts to Prevent Financial Crimes

The Central Bank of Barbados has issued new guidelines for anti-money laundering (AML) and combating terrorist financing (CFT), effective October 2006. These guidelines aim to strengthen the country’s efforts in preventing financial crimes and protecting its financial system.

Key Requirements

• Customer Identification: Financial institutions are required to take reasonable measures to verify and document the identity of customers and account holders at the outset of a business relationship.
  • Understand ownership and control structure
  • Obtain information on purpose and nature of business relationship
  • Determine source of funds and wealth
• Enhanced Due Diligence: For high-risk customers or transactions, financial institutions must conduct enhanced due diligence procedures, including:
  • Verification of identity and address
  • Background checks
  • Review of transaction history
• Regular Updates: Financial institutions are expected to update identification records regularly to ensure they are current and valid.
• Monitoring Account Activity: Institutions must monitor account activity throughout the life of a business relationship and review existing records if there is a material change in how an account is operated or if doubts arise about previously obtained customer identification data.

Definitions

• Customer: Any individual or entity maintaining an account with a financial institution, as well as those who exercise control over the account or transaction.
  • Beneficial owners
  • Professional intermediaries
  • Individuals connected to financial transactions that pose a significant risk to the institution

Transaction Thresholds

• Occasional Transactions: Due diligence required for transactions below certain thresholds:
  • Encashment of cheques
  • Exchange of coins for cash
  • Purchase of foreign currency for holiday travel
  • Currency exchanges
• Enhanced Due Diligence: Required for transactions above:
  • BDS$10,000 or its equivalent in foreign currency
  • Wire transfers above BDS$2,000 or its equivalent in foreign currency
  • All currency exchange transactions above BDS$2,000 or its equivalent in foreign currency

Additional Requirements

• Monitoring for Abuse: Financial institutions must maintain an effective system to monitor for abuse of occasional transactions.
• Reporting Suspicious Transactions: Establish clear instructions for the timely reporting of unusual and suspicious transactions.
• Interviews: Require prospective customers to be interviewed in person whenever possible.

Conclusion

The Central Bank has emphasized that these guidelines are aimed at protecting the integrity of Barbados’ financial system and preventing it from being used for money laundering or terrorist financing. Compliance with the guidelines is mandatory for all licensed financial institutions in the country.