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Central Bank Cracks Down on Non-Compliant Financial Institutions

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In an effort to combat money laundering and terrorist financing, the Central Bank has issued new guidelines requiring financial institutions to comply with Anti-Money Laundering (AML) and Combatting of Terrorism Financing (CFT) regulations.

Compliance Requirements

According to the guidelines, financial institutions are required to:

  • Receive and review their AML/CFT external audit report annually.
  • Share information with the Financial Intelligence Unit (FIU), Securities Commission, and other regulatory agencies as required for the purposes of AML/CFT.
  • Disclose information to the FIU as soon as is reasonably practicable where the Central Bank has knowledge or has reasonable grounds for believing that a financial institution may have been engaged in money laundering or terrorist financing.

Regulatory Action

The Central Bank will take proportionate and dissuasive regulatory action against those that fail to comply adequately with AML/CFT statutory obligations and guidelines issued by the Central Bank. The Bank can also:

  • Issue compliance directions to ensure compliance with guidelines.
  • Take regulatory action against non-compliant financial institutions.

POCA and ATA Guidelines

The Central Bank has empowered itself to issue guidelines to aid compliance with the Prevention of Organized Crime Act (POCA) and the Anti-Terrorism Act (ATA). The Bank can also:

  • Issue compliance directions to ensure compliance with these guidelines.
  • Take regulatory action against non-compliant financial institutions.

Bureau de Change Requirements

The Terms and Conditions for the Operations of a Bureau de Change have been amended to require bureau operators to meet AML/CFT requirements. Non-compliance with these terms and conditions can result in the suspension or revocation of a bureau’s license.

Key Concepts

Money Laundering

  • The process by which criminals conceal the illegal origin and ownership of funds derived from criminal activities.
  • The process involves three main stages: placement, layering, and integration.

Terrorism Financing

  • The provision of funds to an individual or group to finance terrorist acts.
  • It is a separate offense under POCA not to establish appropriate policies and procedures to detect and prevent money laundering and terrorism financing.

Enforceability

The Central Bank is empowered to:

  • Issue guidelines to aid compliance with POCA, ATA, or any other written law relating to AML/CFT.
  • Issue compliance directions to ensure compliance with these guidelines.
  • Take regulatory action against non-compliant financial institutions.

Conclusion

The new guidelines are a significant step forward in the fight against money laundering and terrorist financing. Financial institutions must take proactive steps to comply with AML/CFT regulations, in order to prevent the misuse of financial systems for illegal activities. The Central Bank will continue to monitor compliance and take enforcement action against those that fail to meet their obligations.

Source

Guideline on Anti-Money Laundering and Combatting of Terrorism Financing (Central Bank)