Consultation Paper - AML/ATF Sectoral Guidance Notes for Digital Assets Business (Annex VIII SSGN)

Summary

This is a draft consultation document from the Bermuda Monetary Authority setting out proposed Sector-Specific Guidance Notes (SSGN) for Digital Asset Business (DAB), issued as Annex VIII to the BMA's general AML/ATF Guidance Notes. It explains how existing anti-money laundering and anti-terrorist financing obligations under Bermuda's POCA, POCR, ATFA and the Digital Asset Business Act 2018 (DABA) apply specifically to firms conducting digital asset activities. As a consultation, the content is not yet final guidance but reflects the BMA's proposed approach and is open for industry comment.

• Who is covered: Persons or licensed undertakings carrying on Digital Asset Business (DAB) in or from Bermuda under Section 4 of DABA are treated as AML/ATF regulated financial institutions (RFIs), including those exempted from licensing but still subject to AML/ATF obligations.
• DAB activities in scope: Issuing, selling or redeeming digital assets; acting as a payment service provider using digital assets; operating a digital asset exchange, digital asset trust services, custodial wallet services, a digital asset derivative exchange, or a digital asset services vendor.
• Core guidance areas: Senior management responsibilities and internal controls, customer due diligence (CDD) and beneficial ownership identification in a DAB context, enhanced due diligence, international sanctions screening, ongoing monitoring, suspicious activity reporting, employee training, record-keeping, and sector-specific ML/TF risk factors for DAB (e.g. use of mixers, dark web, agent networks).

The guidance reiterates that non-compliance with underlying POCR, POCA and ATFA provisions can result in criminal penalties or BMA civil penalties, and that departures from the guidance must be documented and justifiable to the BMA. Because the document is a consultation draft, its requirements are proposed and subject to change before being finalised as binding sectoral guidance.

Key obligations

• Senior management of RFIs conducting DAB must ensure compliance with the acts and regulations, approve AML/ATF policies and procedures, and identify, assess and mitigate ML/TF risks
• RFIs conducting DAB must appoint a compliance officer at managerial level and a reporting officer to process disclosures
• RFIs must establish and maintain detailed AML/ATF policies, procedures and controls adequate to forestall and prevent ML/TF
• Persons carrying on DAB in or from Bermuda must obtain a licence from the BMA prior to commencing business, unless exempted under Section 11 of DABA
• An RFI conducting DAB must include its AML/ATF policies and procedures with its application for a licence under Section 12(6)(c) of DABA, along with a business risk assessment and client risk assessment
• RFIs must screen employees, provide appropriate AML/ATF training, and independently audit and periodically test their AML/ATF controls for effectiveness
• RFIs should document any departure from the guidance and be prepared to justify such departures to the BMA

Applies to

Digital Asset Business (DAB) licensees, AML/ATF regulated financial institutions (RFIs) conducting digital asset business, Persons exempted from DABA licensing but conducting DAB, Digital asset exchanges, custodial wallet providers, digital asset trust service providers, digital asset derivative exchange providers, digital asset services vendors