Financial Crime World

Barbados Financial Services Commission Warns of Penalties for Non-Compliance with Money Laundering Regulations

The Barbados Financial Services Commission (FSC) has issued a reminder to financial institutions about the consequences of failing to comply with the Money Laundering and Financing of Terrorism (Prevention and Control) Act, 2011. The Commission has the power to impose penalties to encourage adherence to the regulations.

1.0 Introduction

The FSC reaffirmed its authority to enforce financial regulations and the potential penalties for non-compliance. These penalties include monetary fines, license suspensions, and cancellation of registration. Before taking these measures, the Commission typically issues warnings or directives to non-compliant financial institutions.

2.0 Factors Considered

The FSC considers several factors when determining the level of enforcement action against a financial institution:

  • The Extent of the Identified Breach: The severity and impact of the non-compliance.
  • Previous Efforts Taken by the Institution: Any steps taken by the institution to prevent or minimize damage.
  • Compliance History: Past disciplinary actions against the institution.
  • Intent or Negligence of the Institution: Whether the breach was intentional or due to negligence.
  • Duration and Frequency of the Breaches: How long the non-compliance has continued and how frequently it occurs.
  • Efficiency of Remedial Measures: The effectiveness of the remedial measures taken by the institution.
  • Cooperation with the FSC: The level of cooperation during inspections, investigations, and inquiries.
  • Recurrence Potential: The likelihood of future non-compliance.
  • Accuracy and Completeness of Information Provided: The quality of information provided to the FSC.

3.0 Escalation Approach

The FSC outlined an escalation approach to enforcement action:

3.1 Warning Letter

For minor breaches, the FSC may send a warning letter requesting swift correction.

3.2 Directive

If a financial institution fails to correct a violation noted in a warning letter, a directive may be issued, followed by escalating penalties.

3.3 Pecuniary Penalties

Institutions that fail to cooperate with the FSC following a directive may face financial penalties in the amount of $5,000.00, with additional fines of $500.00 daily for persistent non-compliance up to 30 days.

3.4 Suspension or Revocation of License

For more severe violations, the FSC may choose to suspend or revoke a financial institution’s license.

The FSC emphasized its right to apply an appropriate enforcement method on a case-by-case basis.

4.0 Opportunity to be Heard

Financial institutions issued with enforcement action must be given the opportunity to respond and explain why the imposed penalty should be reconsidered.

5.0 Regulatory Inspections

The FSC emphasized its capacity to perform inspections to evaluate each financial institution’s compliance with the Money Laundering and Financing of Terrorism regulations.