Aruba’s Financial Institutions Face Compliance Risks Amidst Strict Regulations
Stricter Regulations to Combat Money Laundering and Terrorist Financing
In an effort to curb money laundering and terrorist financing, Aruba’s Central Bank of Aruba (CBA) has issued a revised handbook for financial institutions. This move sets the stage for increased compliance risks for financial service providers in the region.
Revised Guidelines Take Effect January 1, 2020
As of January 1, 2020, all financial service providers and designated non-financial service providers are required to comply with the AML/CFT State Ordinance’s revised guidelines. These guidelines include a more risk-based approach to anti-money laundering (AML) and combating the financing of terrorism (CFT).
CBA Supervision and Registration
The CBA is responsible for supervising these entities, ensuring they register with the bank and take note of the Financial Action Task Force (FATF) and Caribbean Financial Action Task Force (CFATF) warning lists.
Key Requirements from the Revised AML/CFT Handbook
- Conduct business risk assessments
- Handle funds transfers
- Identify sanctions, terrorist financing, and proliferation financing
- Designate a money laundering compliance officer based in Aruba
- Adhere to specific risk indicators for each sector
Importance of Compliance
The CBA emphasized that the AML/CFT Handbook is not intended as an internal manual for AML/CFT procedures. Instead, it serves as a resource for financial institutions to ensure they are meeting the revised regulatory requirements.
Compliance Risks for Financial Institutions
As Aruba’s financial institutions navigate these new regulations, they face significant compliance risks if they fail to adhere to the guidelines. The CBA’s increased scrutiny and penalties for non-compliance underscore the importance of strict adherence to AML/CFT regulations in the region.