Letter to Stakeholders on AML Financial Groups (2018-07-19)

Summary

This is a stakeholder letter from the Bermuda Monetary Authority explaining upcoming legislative changes to Bermuda's AML/ATF regime concerning financial groups, ahead of the country's FATF Mutual Evaluation. It sets out the substantive requirements that FATF Recommendations 18, 23 and 26 impose on financial groups and on competent authorities, and flags that these will be embedded into POCA, ATFA, the POCA Regulations and the SEA through forthcoming legislative amendments.

Requirements for financial groups

• Group-wide programme: Develop, document and implement a group-wide AML/ATF programme covering internal policies and controls, a group compliance function, employee screening and training, an independent audit function, and intra-group information sharing policies.
• Information sharing: Establish mechanisms to share CDD information, account and transaction information, and information on suspicious transactions/SARs within the group.
• Higher-risk jurisdictions: Where the group operates in jurisdictions without comparable AML/ATF regimes, manage the additional risks and advise the competent authority.
• Reliance on group members for CDD: Where a member relies on another group member for CDD, apply CDD, record-keeping and PEP risk management measures (Recommendations 10, 11, 12), implement the group-wide programme, and establish and implement supporting policies and procedures.

Designation and supervisory approach

• Definition: A financial group will be a group designated by the Minister of Legal Affairs, on advice of competent authorities, comprising a parent/controlling entity plus branches and subsidiaries conducting activities under Section 42A(1) of POCA.
• Designation by Order: Designation occurs via Ministerial Order; designated financial groups will have 12 months to comply with the AML/ATF legislative provisions before the designation takes effect.
• Risk-based supervision: Competent authorities must apply a risk-based supervisory approach, considering factors such as the group's nature/scale/complexity, ML/TF risk exposure, adequacy of the group's AML/ATF programme, accessibility of information, compliance history, major changes/events, home country supervision, and periodic re-assessment of risk profile.

The Authority states it will consult stakeholders separately on the designation process, materiality/designation criteria, and forthcoming AML/ATF Guidance Notes for financial groups before these requirements become binding on specific entities. No immediate compliance action is required by this letter itself; it is advance notice of planned legislative and guidance developments.

Key obligations

• Financial groups that are designated by Ministerial Order must, within 12 months of designation, comply with the AML/ATF legislative provisions applicable to financial groups (group-wide programme, information sharing, higher-risk jurisdiction management, and CDD reliance requirements) before the designation takes effect.

Applies to

financial groups, BMA-supervised entities, parent companies and their branches and subsidiaries conducting activities under Section 42A(1) of the POCA

Deadlines

• 12 months from designation: Financial groups designated by Ministerial Order have 12 months to comply with the AML/ATF legislative provisions before the designation takes effect.