Financial Crime World

Turks and Caicos Islands: Progress on Anti-Money Laundering/Counter-Terrorism Financing Recommendations

Assessment by the Caribbean Financial Action Task Force (CFATF)

The Fourth Round Mutual Evaluation Report of Turks and Caicos Islands (TCI) has been conducted by the CFATF to assess the country’s compliance with various anti-money laundering/counter-terrorism financing (AML/CFT) recommendations. This report highlights key areas where TCI has addressed deficiencies in its AML/CFT framework.

Customer Due Diligence (CDD)

  • Addressing Deficiencies: TCI has made amendments to its AML/CFT framework, which now requires financial institutions (FIs) to review existing customers’ CDD based on materiality and risks of accounts.
  • Enhanced Review Process: FIs are expected to conduct a thorough review of their customer base to ensure compliance with the updated CDD requirements.

Enhanced Due Diligence (EDD) Measures

  • Risk-Based Approach: No changes have been made to the AML/CFT framework, but FIs apply EDD measures for specific listed situations and circumstances that present a higher risk of money laundering/terrorist financing (ML/TF).
  • Proactive Risk Management: FIs are expected to proactively identify and assess potential ML/TF risks associated with their customers and business relationships.

Simplified CDD Measures

  • No Provisions: There are no provisions that allow FIs to apply simplified CDD measures.
  • Comprehensive Approach: All FIs are required to adhere to the comprehensive CDD requirements, ensuring a robust approach to customer due diligence.

Failure to Complete CDD

  • Consequences of Non-Compliance: If there is a failure to satisfactorily complete CDD, FIs shall not establish the business relationship or carry out the occasional transaction or terminate the business relationship and consider making a suspicious transaction report (STR).
  • Suspicious Transaction Reporting: In cases where CDD is incomplete, FIs are required to file a STR with the relevant authorities.

Suspicious Activity Reporting (SAR)

  • Deficiency Addressed: A deficiency was cited in the Summary of TCI deficiencies table in the MER, as Paragraph 32A of the AML Code requires that a financial business not pursue CDD where the Money Laundering Reporting Officer (MLRO) has a suspicion of ML/TF and believes performing CDD will tip off the customer.
  • Revised Guidance: Revised guidance has been issued to clarify the requirements for SAR, ensuring that FIs can effectively identify and report suspicious activities.

Recommendation 14

  • Addressing Technical Deficiencies: TCI was rated PC with R.14 in its 4th round MER, citing technical deficiencies related to proactive measures for identifying natural or legal persons carrying on money value transfer services (MVTS) business without a license.
  • Amendments Made: Amendments have been made to the AML/CFT framework, including defining “legal entity” more broadly to capture partnerships and other legal arrangements that lack separate legal personality.

Conclusion

TCI has made significant progress in addressing deficiencies in its AML/CFT framework. The country’s efforts to enhance customer due diligence, implement risk-based approaches, and improve suspicious activity reporting have contributed to a stronger anti-money laundering regime.