Financial Crime World

Central Bank Enhances AML/CFT Oversight to Combat Financial Crime

New Measures Introduced to Strengthen Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Oversight

NASSAU, BAHAMAS - The Central Bank has implemented a range of measures to strengthen its Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) oversight following a comprehensive survey of the financial industry in 2018.

Areas of Concern Identified by Survey

The survey identified several areas of concern, including:

  • Lack of enterprise risk assessments: Many institutions failed to incorporate money laundering/terrorist financing risks into their overall risk assessment processes.
  • Independence issues: Certain internal functions were found to lack independence, which can compromise the effectiveness of AML/CFT controls.
  • Incomplete periodic client reviews: Some institutions struggled to complete timely and thorough periodic client reviews.

Initiatives Introduced by Central Bank

In response to these concerns, the Central Bank introduced a range of initiatives designed to enhance AML/CFT oversight and improve the industry’s ability to manage ML/TF risks:

  • Creation of an Analytic Unit: A dedicated unit focused on monitoring and analyzing ML/TF risk surveillance.
  • Development of granular AML/CFT risk rating model: A more detailed and accurate model for assessing ML/TF risks.
  • Continuous supervision of ML/TF risks: Regular, ongoing reviews rather than periodic checks.
  • Enhanced monitoring and reporting requirements: More stringent requirements for financial institutions to monitor and report on ML/TF risks.

Additional Measures

The Central Bank has also:

  • Published its first “State of ML/TF Risk Management in The Bahamas” report, highlighting the country’s efforts to combat financial crime.
  • Introduced new training programs for supervisors to improve their understanding of AML/CFT risks.
  • Engaged with industry stakeholders to develop a more proactive and effective approach to ML/TF risk management.

Enhancements to Supervisory Framework

The Central Bank has clarified expectations around:

  • Internal and external audit engagements
  • Communication with Money Laundering Reporting Officers (MLROs)
  • Regular flow of documents and data from financial institutions to the Central Bank.

These enhancements have been praised by industry stakeholders, who welcome the enhanced oversight and support for improved AML/CFT risk management practices.