Bahamas Financial Institutions Ordered to Enhance Due Diligence Requirements
Nassau, Bahamas - The Bahamian government has announced that all financial institutions operating in the country will be required to enhance their due diligence requirements to combat money laundering and terrorist financing.
Enhanced Customer Due Diligence (CDD) Requirements
According to a statement from the Ministry of Finance, section 6 of the Financial Transactions Reporting Act, 2018 mandates that every financial institution shall undertake customer due diligence (CDD) measures when opening an account for or otherwise establishing a business relationship with a facility holder.
The CDD process involves understanding the customer’s background, purpose of the relationship, expected activity, source of funds, and source of wealth. Financial institutions will be required to apply due diligence measures in certain circumstances, including:
- Doubts about identification information: Where doubts exist about the veracity or adequacy of previously obtained identification information
- Suspicious activities: When there is a suspicion of activities related to money laundering or terrorist financing
- Politically Exposed Persons (PEPs): When dealing with PEPs
Developing High-Risk Client Profiles
Financial institutions are also required to develop a profile of high-risk clients and ascertain their expected activity. This profile should be regularly reviewed and updated as necessary.
Ongoing Transaction Monitoring
In addition to the CDD requirements, the regulations also specify that financial institutions must maintain ongoing monitoring of transactions for high-risk clients. This includes being reasonably capable of detecting any changes in the way the facility is being operated.
Impact on Financial Institutions
The enhanced due diligence requirements will apply to all financial institutions operating in the Bahamas, including banks, insurance companies, and securities dealers. The new regulations aim to strengthen the country’s anti-money laundering (AML) regime and prevent the misuse of its financial system for illicit activities.
Consequences of Non-Compliance
Financial institutions operating in the Bahamas must ensure that they meet these new regulations to avoid any penalties or reputational damage. Failure to comply with the regulations may result in severe consequences, including fines and revocation of licenses.
Conclusion
The enhanced due diligence requirements for financial institutions operating in the Bahamas are aimed at strengthening the country’s AML regime and preventing the misuse of its financial system for illicit activities. Financial institutions must adapt to these new regulations to maintain a strong reputation and avoid any penalties or consequences.