Bermuda’s Latest AML/TF National Risk Assessments: Identifying Risks and Mitigating Threats

Enhancing the Fight Against Money Laundering and Terrorist Financing

Bermuda has recently published its most up-to-date national risk assessments to combat money laundering (ML) and terrorist financing (TF). These assessments aim to identify the country’s vulnerabilities and provide a framework for financial institutions to effectively mitigate the risks associated with ML/TF.

Applying a Risk-Based Approach

• Senior management of regulated financial institutions (RFIs) must apply a risk-based approach to prevent and detect ML/TF.
• This involves identifying and documenting the risks faced by the institution, assigning risk ratings to customers, business relationships, countries or geographic areas, services, delivery channels, products, and transactions.

Considering Bermuda’s National Risk Assessments

• The latest national risk assessments highlight the importance of considering the country’s specific risks when developing AML/TF policies, procedures, and controls.
• RFIs must ensure that their risk ratings and mitigation strategies take into account the results of Bermuda’s most recent ML/TF national risk assessments.

Senior Management’s Role

• Senior management is accountable for ensuring that the RFI’s approach to AML/TF is effective and proportionate to the risks identified.
• They must be fully engaged in decision-making processes and take ownership of the risk-based approach.

Bermuda’s AML/ATF Framework

• The AML/ATF framework in Bermuda has been revised to align with international standards and requirements, including the FATF Recommendations and United Nations Security Council resolutions 1267 and 1373.
• RFIs may also find useful guidance from international regulatory pronouncements, such as those issued by:
  • Basel Committee on Banking Supervision
  • International Association of Insurance Supervisors
  • International Bar Association
  • Wolfsberg AML Principles

Extra-Territorial Matters

• RFIs with overseas correspondent banking relationships must be aware of the jurisdictional requirements applicable to those clearing institutions and monitor whether they stay abreast of the full range of AML/ATF requirements in place.
• Senior management should advise on how much the RFI’s activities may be affected by these requirements.

Regulatory Priorities

• No single body has overall responsibility for combating ML or TF in Bermuda. The division of responsibilities is described in Annex V, highlighting the importance of collaboration and coordination between regulatory bodies to effectively combat ML/TF.

Conclusion

By staying informed about Bermuda’s latest AML/TF national risk assessments and implementing a robust risk-based approach, RFIs can play a vital role in protecting the country’s financial system from ML/TF threats.