Bermuda Life Insurance Subsector’s Low Vulnerability to Money Laundering and Terrorist Financing Risks
The Bermuda Monetary Authority (BMA) has conducted a comprehensive risk assessment exercise, concluding that the Bermuda life insurance subsector has a low vulnerability to money laundering and terrorist financing (ML/TF) risks. While this assessment does not imply complete immunity to ML/TF risks, it highlights the BMA’s efforts to identify and mitigate potential exposure.
Risk-Based Approach
The risk-based approach (RBA) is a crucial component of the Financial Action Task Force (FATF) Recommendations and International Cooperation Review Group (ICRG) standards. It requires countries to assess and understand the ML/TF risks they are exposed to, and take measures commensurate with those risks to mitigate them effectively.
Stages of Risk Assessment
The BMA’s RBA involves three stages:
- Identification: Gathering data and information on potential ML/TF risk factors
- Analysis: Examining these risks in depth to understand their likelihood and consequences
- Evaluation: Making decisions based on the analysis and taking into account other external factors
Identifying ML/TF Risk Factors
The BMA’s approach to identifying ML/TF risk involves analyzing relevant information from various sources, including:
- International standards
- Global trends
- Best practices
- FATF guidance, ICP 22, and ESA standards on AML/CFT
- Conducting an extensive review of international best practices and typologies
Assessment Findings
The BMA’s assessment found that the Bermuda life insurance subsector has a low vulnerability to ML/TF risks due to various factors, including:
- Robust regulatory framework
- Effective supervision
- Strong industry culture
The subsector is considered to be a low-risk environment for money laundering and terrorist financing activities.
Continued Vigilance
However, the BMA remains vigilant in monitoring the subsector’s exposure to ML/TF risks and will continue to work closely with industry stakeholders to identify and mitigate potential threats. The Authority’s efforts are designed to ensure that the Bermuda life insurance sector remains a safe and reputable place to do business.