Bahamas Central Bank Issues Guidelines for Financial Crime Risk Assessments

Strengthening Prevention Measures in the Bahamian Financial Sector

In a significant move aimed at bolstering the prevention of money laundering, terrorist financing, and proliferation financing within the country’s financial sector, the Central Bank of the Bahamas has issued guidance notes for the completion of Money Laundering, Terrorist Financing and Proliferation Financing (ML/TF/PF) Risk Assessments.

Guidelines for Supervised Financial Institutions

These guidelines are designed to be used by Supervised Financial Institutions (SFIs) in conjunction with the existing Guidelines for Supervised Financial Institutions on the Prevention of Money Laundering, Countering the Financing of Terrorism & Proliferation Financing. The risk assessment is a critical component of an SFI’s anti-money laundering and combating the financing of terrorism (AML/CFT) framework.

Key Components of the Risk Assessment

According to the guidance notes, SFIs are required to conduct a comprehensive risk assessment that takes into account their inherent ML/TF/PF risks, control environment, and residual risks where necessary. The assessment should include:

• Risk Assessment Methodology: A methodology that outlines the approach used to identify and assess inherent risks.
• Risk Appetite and Tolerance: An identification of the SFI’s risk appetite and tolerance.
• Evaluation of Controls: An evaluation of the effectiveness of controls in place to mitigate identified risks.
• Corrective Action Plan: A corrective action plan where applicable.
• Ongoing Monitoring: Ongoing monitoring and update of the risk assessment.

Implementation and Availability

The Central Bank expects SFIs to use these guidelines to identify and address gaps in their risk assessment frameworks from a proportionate and risk-based approach. The guidance notes are available on the Central Bank’s website, accessible through the main page Latest News under Press Releases or in the Bank Supervision area.

Aims of the Guidelines

By implementing these guidelines, the Central Bank aims to enhance the effectiveness of AML/CFT measures in the Bahamas’ financial sector and reduce the risks associated with money laundering, terrorist financing, and proliferation financing.