The Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing) Regulations 2008 (POCA Regulations) require the Bermuda regulated sector and relevant persons to apply enhanced customer due diligence to high-risk countries.
Regulation 11 (1)(aa) of the Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing) Regulations 2008, requires that a relevant person must apply on a risk-sensitive basis enhanced customer due diligence measures to business relationships with customers in instances where a person or a transaction is from or in a country that has been identified as having a higher risk by the Financial Action Task Force or the Caribbean Financial Action Task Force; and
Regulation 11 (1)(ab) requires a relevant person to apply, on a risk-sensitive basis, enhanced customer due diligence in instances where a person or transaction is from or in a country which represents a higher risk of money laundering, corruption, terrorist financing or being subject to international sanctions.
As the international anti-money laundering and countering the financing of terrorism (AML/CFT) standard-setter, FATF regularly publishes statements that identify high-risk countries based on assessments of their AML/CFT regimes. In accordance with Regulation 11 (1)(aa), the Minister for Legal Affairs and Constitutional Reform would like to draw the regulated sector’s and relevant persons’ attention to the latest FATF publication on high risk jurisdictions.
FATF Public Statement
On 21 February, 2021 FATF published two statements identifying jurisdictions with strategic deficiencies in their AML/CFT regimes. These statements are included at Annexes A and B.
In response to the latest FATF statements, the Minister of Legal Affairs and Constitutional Reform advises the regulated sector and relevant persons to consider the following:
Minister of Legal Affairs and Constitutional Reform Advice:
Consider as a high risk and apply counter measures and enhanced due diligence measures in accordance with the risks
Take appropriate actions to minimise the associated risks, which may include enhanced due diligence measures in high risk situations
Democratic People’s Republic of Korea* (DPRK)
To ensure that an appropriate determination of the risks relating to these jurisdictions can be carried out, it is important that the annexed statements are read in their entirety. All financial institutions and relevant persons, in the implementation of their systems and controls to combat financial crime, should give consideration to the FATF assessments and take appropriate actions in light of the associated risks.
*These jurisdictions are subject to sanctions measures at the time of publication of this notice which require firms to take additional measures, in accordance with the International Sanctions Regulations 2013. Details can be found here:
Please see the following links for more information about international sanctions: https://www.gov.bm/international-sanctions-measures and https://www.gov.uk/government/collections/financial-sanctions-regime-specific-consolidated-lists-and-releases
CFATF Public Statement
On 11 December, 2020, the CFATF LI Plenary recognised that Sint Maarten has made significant progress in addressing the deficiencies identified in its 2013 Mutual Evaluation Report; therefore, Sint Maarten has exited the 3rd Round Follow-Up Process. The CFATF Public Statement is included at Annex C.
This Advisory replaces all previous advisory notices issued by the Minister of Legal Affairs and Constitutional Reform on this subject.
The Financial Action Task Force is an inter-governmental body established by the G7 in 1989 and today its members include 35 member jurisdictions and two regional organisations (the European Commission and the Gulf Co-Operation Council).
The Bermuda Government’s strategy is to use financial tools to deter crime and terrorism; detect it when it happens; and disrupt those responsible and hold them accountable for their actions. The FATF is central to Bermuda’s international objectives within this strategy.
The Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing) Regulations 2008 require the regulated sector and relevant persons to put in place policies and procedures in order to prevent activities related to money laundering and terrorist financing. The regulated sector and relevant persons are also required to apply enhanced customer due diligence and enhanced ongoing monitoring on a risk-sensitive basis in certain defined situations and in “any other situation, which by its nature can present a higher risk of money laundering or terrorist financing”.
This Advisory applies to all entities and persons subject to the POCA Regulations as provided for in Regulation 4, namely:
AML/AFT regulated financial institutions;
dealers in high value goods, who are registered with the FIA; and
real estate brokers and real estate agents.
Therefore, these sectors shall comply with the above AML-ATF Ministerial Advisory.
A large number of jurisdictions have not yet been reviewed by the FATF, thus the jurisdictions included in the FATF public statement and ‘ongoing compliance’ document are not intended to provide an exhaustive list of jurisdictions that should be considered by relevant persons to present a higher risk of money laundering or terrorist financing.
Annex A: High-Risk Jurisdictions subject to a Call for Action – 21 February 2021
High-risk jurisdictions have significant strategic deficiencies in their regimes to counter money laundering, terrorist financing, and financing of proliferation. For all countries identified as high-risk, the FATF calls on all members and urges all jurisdictions to apply enhanced due diligence, and, in the most serious cases, countries are called upon to apply counter-measures to protect the international financial system from the money laundering, terrorist financing, and proliferation financing (ML/TF/PF) risks emanating from the country. This list is often externally referred to as the “black list”.
Since February 2020, in light of the COVID-19 pandemic, the FATF has paused the review process for countries in the list of High-Risk Jurisdictions subject to a Call for Action, given that they are already subject to the FATF’s call for countermeasures. Therefore, please refer to the statement on these jurisdictions adopted in February 2020. While the statement may not necessarily reflect the most recent status of Iran and the Democratic People’s Republic of Korea’s AML/CFT regimes, the FATF’s call for action on these high-risk jurisdictions remains in effect.
High-Risk Jurisdictions subject to a Call for Action – 21 February 2020
Annex B: Jurisdictions under Increased Monitoring – 25 February 2021
Jurisdictions under increased monitoring are actively working with the FATF to address strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing. When the FATF places a jurisdiction under increased monitoring, it means the country has committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring. This list is often externally referred to as the ‘grey list’. *
The FATF and FATF-style regional bodies (FSRBs) continue to work with the jurisdictions noted below and to report on the progress made in addressing the identified strategic deficiencies. The FATF calls on these jurisdictions to complete their agreed action plans expeditiously and within the proposed timeframes. The FATF welcomes their commitment and will closely monitor their progress. The FATF does not call for the application of enhanced due diligence to be applied to these jurisdictions, but encourages its members to take into account the information presented below in their risk analysis.
The FATF continues to identify additional jurisdictions, on an on-going basis, that have strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing. A number of jurisdictions have not yet been reviewed by the FATF and FSRBs.