New Regulations to Combat Money Laundering and Terrorist Financing in the Islands
The government has introduced new regulations aimed at facilitating frequent transactions between individuals and businesses while ensuring that anti-money laundering and counter-terrorist financing measures are in place.
Definitions and Scope
The Anti-Money Laundering Regulations 2023 Revision define a “close associate” as:
- Any individual who holds ownership or control of a legal instrument or person jointly with a politically exposed person
- Or who maintains a close business or personal relationship with such an individual
This definition is intended to capture individuals who may be connected to high-risk activities.
Additionally, the regulations introduce the concept of a “connected person,” which refers to:
- An individual who has a managerial, directorial, or ownership role in a company, partnership, or unincorporated body
- Natural persons who ultimately own or control more than 10% of shares or voting rights in a legal person
Customer Due Diligence and Transaction Recording
The regulations specify that any person carrying out relevant financial business must:
- Establish a relationship with customers
- Maintain records of transactions
Cross-Border Wire Transfers and Domestic Wire Transfers
The regulations define “cross-border wire transfers” as the transfer of money across international borders, and “domestic wire transfers” as the transfer of money within the Islands.
Designated Non-Financial Businesses and Professions (DNFBPs)
The regulations define DNFBPs as natural or legal persons designated under Regulation 55A. DNFBPs are required to:
- Implement anti-money laundering measures
- Report suspicious transactions to the authorities
Discretionary Fines Framework
The government has introduced a new framework for dealing with discretionary fines, which refers to proposed fines for which a supervisory authority has discretion to impose.
Strengthening Efforts Against Money Laundering and Terrorist Financing
These regulations aim to strengthen the Islands’ efforts to combat money laundering and terrorist financing by providing a clearer definition of who is considered a close associate or connected person. They will help financial institutions and businesses to identify high-risk transactions and prevent illegal activities.
FATF Commendation
The Financial Action Task Force (FATF) has praised the Islands for their efforts to implement anti-money laundering measures, and these new regulations demonstrate the government’s commitment to continuing this work.
Effective Date and Scope
The regulations come into effect on [date] and apply to all persons carrying out relevant financial business in the Islands.