JAMAICA’S CENTRAL BANK IMPLEMENTS RISK-BASED APPROACH TO MITIGATE MONEY LAUNDERING AND TERRORIST FINANCING

Introduction

The Bank of Jamaica (BOJ) has implemented a risk-based approach to identify and mitigate the risks associated with money laundering and terrorist financing. This approach involves assessing threats, risks, and vulnerabilities to prevent these illegal activities.

Risk-Based Approach

The BOJ’s risk-based approach is designed to identify weaknesses or gaps in AML/CTF laws and regulations, national infrastructures, internal controls, and resources. The approach includes:

• Identifying areas where enhanced measures are needed to prevent money laundering and terrorist financing
• Assessing threats, risks, and vulnerabilities on an ongoing basis to take account of new risks and changing circumstances

Main Risks Faced by the BOJ

According to the report, some of the main risks faced by the BOJ include:

• Corrupt officers and employees
• Undue influence from the private sector or politically exposed persons
• Transactions attempted or conducted with:
  • Counterfeit notes
  • Forged signatures
  • High cash value transactions
  • Handling mutilated bank notes
  • Transactions with overseas counterparts that may have facilitated a financial crime

Importance of Due Diligence

The report highlights the importance of conducting due diligence on transactions undertaken by the BOJ, particularly those involving local coins for Jamaican dollar notes. Although no typology has been identified to date that involves the use of coins, the BOJ will continue to apply requisite due diligence to these transactions.

Key Challenges

The risk assessments must be undertaken properly, identifying threats, risks, and vulnerabilities, as well as the ability to respond effectively and in a timely manner to emerging issues such as:

• Business transacted using electronic messaging and electronic transfers
• The rise in cybercrime
• Fast-changing typologies in relation to money laundering and the financing of terrorism

Implementation and Commitment

The BOJ’s risk-based approach demonstrates its commitment to mitigating money laundering and terrorist financing risks and ensuring a safe and secure financial system for Jamaica. This implementation highlights the importance of awareness, commitment, knowledge, and resources within the wider national AML/CFT framework, particularly amongst clients of the Central Bank.

Conclusion

The BOJ’s risk-based approach is a proactive measure to prevent money laundering and terrorist financing risks in Jamaica. By identifying weaknesses or gaps and taking steps to address them, the BOJ is ensuring a safe and secure financial system for its citizens and stakeholders.