Financial Crime World

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Bermuda Financial Institutions Face Stringent Due Diligence Requirements

HAMILTON, BERMUDA - In a bid to combat money laundering and terrorist financing, Bermuda’s financial institutions have been subjected to increasingly stringent anti-money laundering (AML) and anti-terrorist financing (ATF) regulations.

A Brief History of Anti-Money Laundering Regulations in Bermuda

The Proceeds of Crime Act was implemented in 1998 to establish an AML framework for banks, trust companies, insurance entities, and other regulated institutions operating on the island. However, the regulations underwent significant revisions with the introduction of the Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing) Regulations 2008.

Stringent Obligations on Regulated Financial Institutions

The new regulations, which came into effect on January 1st, 2009, impose a detailed set of obligations on AML/ATF regulated financial institutions. These requirements include:

  • Enhanced customer due diligence: Regulated institutions must conduct thorough background checks on customers and maintain accurate records.
  • Robust record-keeping procedures: Institutions are required to keep comprehensive records of all transactions, including documentation of source of funds and source of wealth.
  • Comprehensive systems for monitoring transactions: Regulated institutions must have robust systems in place to monitor and detect suspicious transactions.

Additional Guidance and Support from the Bermuda Monetary Authority

The BMA has issued Guidance Notes aimed at assisting financial institutions in complying with the Proceeds of Crime Act and Regulations. The BMA has also published a Statement of Principles outlining its approach to exercising powers created by the Supervision Act.

Consequences of Non-Compliance

Regulated institutions operating on the island are expected to adhere strictly to the revised AML/ATF framework in order to safeguard their reputation and avoid potential penalties.

Accessing Guidance Notes and Statement of Principles

Regulated institutions can access copies of the Guidance Notes and Statement of Principles through the BMA’s website, under Policy and Guidance/AML/ATF.