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ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
THE NASSAU CONFERENCE 2019
"EVOLUTION: SUBSTANCE, TRANSPARENCY AND OPPORTUNITY".
FROM THE OUTSIDE LOOKING IN: FIGHTING FINANCIAL CRIME
A COMPARATIVE ANALYSIS OF THE BAHAMAS’ COMPLIANCE
WITH THE FATF RECOMMENDATIONS
CALVIN E J WILSON
PRINCIPAL
CALVIN WILSON AND ASSOCIATES
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
THE BAHAMAS CFATF MER RESULTS AND RE-Rating Exercise December 2018
1-PC-LC, 2- PC-C, 3-C-C, 4 C-C, 5 LC-LC, 6-NC-PC, 7-PC-PC, 8-PC-PC, 9-C-C, 10- PC-C
11- LC-LC, 12-PC-C, 13-C-C, 14-C-C, 15-PC-LC, 16-LC-LC, 17-PC-C, 18-PC-LC, 19- PC-PC,
20-C-C
21-C-C, 22-PC-PC, 23-PC-LC, 24-PC-PC, 25-PC-LC, 26-PC-PC, 27-PC-PC, 28-PC-PC, 29-PC-C
30-PC-C, 31-LC-LC, 32-PC-LC, 33-PC-PC, 34-LC-LC, 35-PC-LC, 36-LC-LC, 37-LC-LC, 38-LC-LC,
39-LC-LC, 40- LC-LC
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
TRINIDAD AND TOBAGO CFATF MER RESULTS AND RE-Rating Exercise May 2019
1-PC-LC, 2- LC-LC, 3-LC-LC, 4 LC-LC, 5 C-C, 6-PC-C, 7-NC-LC, 8-NC-PC, 9-C-C, 10- LC-C
11- C-C, 12-C-C, 13-C-C, 14-C-C, 15-C-C, 16-LC-C, 17-C-C, 18-C-C, 19- PC-C, 20-C-C
21-LC-C, 22-LC-C, 23-LC-C, 24-PC-C, 25-PC-PC, 26-PC-C, 27-LC-LC, 28-PC-PC, 29-LC-C
30-C-C, 31-LC-C, 32-PC-C, 33-PC-C, 34-C-C, 35-PC-PC, 36-LC-LC, 37-PC-C, 38-PC-PC,
39-LC-C, 40- PC-LC
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
ICELAND FATF MER RESULTS AND RE-Rating Exercise June 2019
1-PC-PC, 2- PC-PC, 3-C-C, 4 LC-LC, 5 LC-LC, 6-PC-PC, 7-PC-PC, 8-NC-NC, 9-LC-C, 10- PC-C
11- C-C, 12-PC-C, 13-PC-C, 14-LC-C, 15-PC-LC, 16-PC-C, 17-PC-C, 18-PC-LC, 19- PC-C,
20-LC-C,
21-C-C, 22-PC-C, 23-PC-LC, 24-PC-PC, 25-PC-PC, 26-PC-PC, 27-LC-C, 28-NC-PC, 29-LC-LC,
30-C-C,
31-C-C, 32-PC-PC, 33-LC-LC, 34-PC-PC, 35-PC-LC, 36-LC-LC, 37-LC-LC, 38-LC-LC, 39-LC-LC,
40- LC-LC
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
IOs Def BAHAMAS T and T ICELAND
1 Risk/Policy/
CoordinationMod Mod Low
2 Intl Coop Mod Mod Substantial
3 Supervision Mod Mod Low
4 Preventive Measures Mod Mod Low
5 Legal Persons and
ArrangementsMod Mod Low
6 Financial Intelligence Low Mod Mod
7 ML
Investigation/Prosec
utions
Low Low Mod
8 Confiscation Low Low Mod
9 TF Investigations
ProsecutionsLow Low Mod
10 TF Preventive
Measures/Financial
Sanctions
Low Low Low
11 PF Financial
SanctionsLow Low Low
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
Results of Fourth Mutual Evaluation Reports
Trinidad and Tobago
Technical Compliance - C-12, LC-13, PC- 13, NC-2
Effectiveness- Moderate-6 Low - 5
CFATF-Enhanced/Follow up FATF-ICRG
The Bahamas
Technical Compliance - C-8, LC-10, PC-21 , NC-1
Effectiveness- Moderate-5 Low-6
FATF-Enhanced Follow up/FATF-ICRG
Iceland
Technical Compliance - C-5, LC-13, PC-20 , NC-2
Effectiveness- Substantial-1, Moderate-4, Low-6
FATF-Enhanced Follow up
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
R RFR FRR December 2018
1 PC LC Risk policy and coordination
2 PC C Nat Co-op & Co-ord
7 PC PC Targ-Fin Sanc Prolif
8 PC PC Non Prof Orgs
10 PC C Cust Due Diligence
12 PC C PEPS
15 PC LC New Technologies
17 PC C Reliance on 3rd Parties
18 PC LC Int Contr-Forgn
Branches/Subsids
19 PC PC High Risk Jurisdictions
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
22 PC PC DNFBPs CDD
23 PC LC DNFBPs Other measures
25 PC LC Trans/ Ben Owns Leg Pers
26 PC PC Reg/Supv FIs
27 PC PC Powers Fin Supv
28 PC PC DNFBPs Reg/Supv
30 PC C Resp Law Enf/Invg Auth
32 PC LC Cash Couriers
33 PC PC Statistics
35 PC LC Sanctions
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
ICELAND FATF RE-Rating Exercise June 20199 – Financial institution secrecy laws from largely compliant to compliant
10 – Customer due diligence from partially compliant to compliant
12 – Politically exposed persons from partially compliant to compliant
15 – New technologies from partially compliant to largely compliant
16 – Wire transfers from partially compliant to compliant
17 – Reliance on third parties from partially compliant to compliant
19 – Higher-risk countries from partially compliant to compliant
20 – Reporting of suspicious transactions from largely compliant to compliant
22 – Designated non-financial businesses and professions (DNFBPs): customer due
diligence from partially compliant to compliant
23 – Designated non-financial businesses and professions (DNFBPs): Other
measures from partially compliant to largely compliant
27 – Powers of supervision from largely compliant to compliant
28 – Regulation and supervision of DNFBPs from non compliant to partially compliant
35 – Sanctions from partially compliant to largely compliant
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
TRINIDAD AND TOBAGO CFATF MER RESULTS AND RE-Rating Exercise May 2019
1-PC-LC, 2- LC-LC, 3-LC-LC, 4 LC-LC, 5 C-C, 6-PC-C, 7-NC-LC, 8-NC-PC, 9-C-C, 10- LC-C
11- C-C, 12-C-C, 13-C-C, 14-C-C, 15-C-C, 16-LC-C, 17-C-C, 18-C-C, 19- PC-C, 20-C-C
21-LC-C, 22-LC-C, 23-LC-C, 24-PC-C, 25-PC-PC, 26-PC-C, 27-LC-LC, 28-PC-PC, 29-LC-C
30-C-C, 31-LC-C, 32-PC-C, 33-PC-C, 34-C-C, 35-PC-PC, 36-LC-LC, 37-PC-C, 38-PC-PC,
39-LC-C, 40- PC-LC
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
ICELAND BAHAMAS T & T
9 LC-C C C Financial institution secrecy laws
10 PC-C PC-C LC-C Customer due diligence
12 PC-C PC-C C Politically exposed persons
15 PC-LC PC-LC C New technologies
16 PC-C LC LC-C Wire transfers
17 PC-C PC-C C Reliance on third parties
19 PC-C PC-PC PC-C Higher-risk countries
20 LC-C C C Reporting of suspicious transactions
22 PC-C PC-PC LC-C Designated non-financial businesses
23 PC-LC PC-LC LC-C Designated non-financial businesses and
professions (DNFBPs): Other measures
27 LC-C PC-PC LC-LC Powers of supervision
28 NC-PC PC-PC PC-PC Regulation and supervision of DNFBPs
35 PC-LC PC-LC PC-PC Regulation and supervision of DNFBPs
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
THE BAHAMAS
On-site visit November 30 to December 11, 2015. MER adopted July 2017. First
Enhanced Follow up (Re-Rating) Report December 2018
Entered FATF ICRG October 2018
TRINIDAD AND TOBAGO
On-site visit January 12-23, 2015. MER adopted June 2016 Third Enhanced
Follow up (Re-Rating) Report May 2019
Entered FATF ICRG October 2017
ICELAND
Onsite visit July 2017, MER adopted February 2018, First Enhanced Follow (Re-
Rating) Report September 2019
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
However, in June 2019 the FATF ICRG and Plenary encouraged The Bahamas
to continue working on implementing its action plan to address its strategic
deficiencies, including by:
• Enacting the Beneficial Ownership Law
• Issuing Codes of Practice for lawyers, accountants, and the real estate sector
and
• Beginning initial implementation of the recent Beneficial Ownership Law,
• Bringing the Anti-Terrorism Regulations into force.
(1) Completing the comprehensive electronic case management system for
international cooperation;
(2) Demonstrating risk-based supervision of non-bank financial institutions;
(3 Completing the process to ensure the timely access to adequate, accurate
and current basic and beneficial ownership information;
(4) Increasing the quality of the FIU’s products to assist LEAs in the
pursuance of ML/TF investigations, specifically complex ML/TF and stand-
alone ML investigations;
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
However, in June 2019 the FATF ICRG and Plenary encouraged The Bahamas
to continue working on implementing its action plan to address its strategic
deficiencies, including by:
(5) Demonstrating that authorities are investigating and prosecuting all types
of money laundering, including complex ML cases, stand-alone money
laundering, and cases involving proceeds of foreign offences;
(6) Increasing the identification, tracing and freezing or restraining of assets
and to present cases linked with foreign offences and standalone ML cases;
and
(7) Addressing remaining gaps in the TF and PF TFS frameworks and
demonstrating implementation.
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
FATF – International Cooperation Review Group – Improving Global
AML/CFT Compliance: On-going Process November 3rd 2017
Trinidad and Tobago -In October 2017, Trinidad and Tobago made a high-level
political commitment to work with the FATF and CFATF to strengthen the
effectiveness of its AML/CFT regime and address any related technical
deficiencies. Trinidad and Tobago will work to implement its action plan to
accomplish these objectives, including by:
(1) adopting and implementing the relevant measures to enhance international
cooperation;
(2) addressing measures for transparency and beneficial ownership;
(3) completing the legislative efforts to enhance the processing of ML charges
before the courts;
(4) taking measures to enhance tracing and confiscation of criminal assets;
(5) enforcing TF measures and adopting appropriate measures for NPOs;
(6) enacting the necessary amendments related to targeted financial sanctions;
and
(7) developing, adopting, and implementing the necessary framework to counter
proliferation financing
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
Trinidad and Tobago June 2019 ICRG
Since November 2017, when Trinidad and Tobago made a high-
level political commitment to work with the FATF and CFATF to
strengthen the effectiveness of its AML/CFT regime and address
any related technical deficiencies, Trinidad and Tobago has
taken steps towards improving its AML/CFT regime, including by
proclaiming laws on NPO supervision and civil asset recovery.
Trinidad and Tobago should continue to work on implementing its
action plan to address its strategic deficiencies, including by
implementing:
(1) the remaining measures to further enhance international
cooperation;
(2) the issues related to transparency and beneficial ownership;
and
(3) the measures to monitor NPOs on the basis of risk.
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
FATF RECOMMENDATION 1 NATIONAL RISK ASSESSMENT
Before conducting an ML/TF risk assessment, it is essential that there be the
political will to carry out this work and ensure that the objectives of the
exercise are achieved.
Identifying, assessing, and understanding ML/TF risks central to the FATF
standards
Essential to implementation, development and improvement of the national
(AML/CFT) regime of laws, regulations, enforcement and other measures to
mitigate ML/TF risks.
Facilitates prioritisation and allocation of resources by authorities.
Provides useful information to financial institutions and designated non-financial
businesses and professions (DNFBPs) to support the conduct of their own risk
assessments.
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
Assist national authorities to apply AML/CFT measures
commensurate with the risks – i.e,. the risk-based approach
(RBA)
High Risks –Apply Enhanced Measures
Low Risk- Simplified Measures
NRAs –National, supranational assessments (of a group of
countries), and sub-
national assessments (of a particular sector, region, or
operational function within a country)
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
Involvement of the private sector –
Risk assessments by Financial institutions and DNFBPs could be valuable
to the building a complete picture of national ML/TF risks
FIs and DNFBP Staff – best source of critical information on the structure,
organisation and size of sectors, customers, features and characteristics of
particular financial products to determine the level of risks and assist in
identifying vulnerabilities
May have commercial interests that might preclude a completely impartial
view of ML/TF risk.
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
Trinidad and Tobago as at the date of the on-site visit of January 12-23,
2015.
Trinidad and Tobago is currently undertaking its National Risk
Assessment (NRA
At the time of the on-site, Trinidad and Tobago had commenced, but
not completed its NRA.
Draft sector reports had been compiled and preliminary results had been
communicated to the relevant sectors,
However the Authorities advised that the draft reports could not be
shared with the Assessors at that time.
RATINGS TECHNICAL COMPLIANCE- PARTIALLY COMPLIANT
EFFECTIVENESS -MODERATE
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
The Bahamas On-site visit (November 30 to December 11, 2015)- Mutual
Evaluation Report adopted in May 2017
The Bahamas is still completing its ML/TF National Risk Assessment
(NRA) and has yet to develop documented national AML/CFT
policies.
There is a reasonable understanding of ML/TF risks among competent
authorities in the Bahamas on account of the NRA exercise there is a need
for this understanding to be placed within the context of The Bahamas as
an international financial centre and for it to be shared with relevant
stakeholders.
Measures also need to be taken to mitigate ML/TF risks.
RATINGS
TECHNICAL COMPLIANCE- PARTIALLY COMPLIANT
EFFECTIVENESS – LOW
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
1st Enhanced Follow-up Report (FUR). December 2018
Utilized the World Bank Methodology in the completion of its NRA on the
December 6th, 2017.
The Bahamas has identified and assessed its ML/TF risks and has
developed a risk-based approach at various levels of the financial sector
and DNFBPs.
|However, a risk-based approach has not been identified or adopted by the
law enforcement agencies (LEAs). On this basis, The Bahamas is re-rated
as largely compliant with R.1.
TECHNICAL COMPLIANCE –LARGELY COMPLIANT
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
Jamaica as at the date of the onsite visit (1st – 12th June, 2015).
Key Findings
Jamaica does not have a completed National Risk Assessment
(NRA),
but as a result of the National Security Policy (NSP) and subsequent
work done by the National Anti-Money Laundering Committee
(NAMLC),
There is a reasonable level of understanding of ML/TF risk at the country
level and mitigation strategies have been put in place to address those
risks.
However, greater effort needs to be made to involve all stakeholders.
RATINGS
TECHNICAL COMPLIANCE- PARTIALLY COMPLIANT
EFFECTIVENESS -MODERATE
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
Antigua and Barbuda as at the date of the on-site visit June 5th – 16th,
2017
Antigua and Barbuda, with the use of the World Bank Risk Assessment
Tool,
had identified and assessed its ML/FT risks
The Assessors were satisfied that there is a reasonable understanding of
these risks by the jurisdiction.
It should be noted that the exercise was only concluded one month
prior to onsite assessment,
and at the time of the assessment the country had yet to develop a
corresponding policy to address the findings and conclusions of the
exercise or prioritise actions.
RATINGS
TECHNICAL COMPLIANCE- LARGELY COMPLIANT
EFFECTIVENESS - MODERATE
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
Barbados as at the date of the on-site visit 5-16th December 2016. National
Risk Assessment (NRA), dated June 30, 2016, submitted in advance of
the onsite examination.
The NRA process was sub optimum. The scope and depth of analysis did
not comprehensively identify the ML/TF threats and vulnerabilities to
which the country was currently exposed.
There was limited analysis of terrorist financing (TF) risk, Transparency of
legal
persons and arrangements, Trust and Corporate Service Providers (TCSPs)
Cross border cash movements.
RATINGS
TECHNICAL COMPLIANCE- PARTIALLY COMPLIANT
EFFECTIVENESS -LOW
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
United Kingdom- National Risk Assessments in 2015 and
2017 (Published)
Onsite visit- March 5-23 2018
Ratings
Technical Compliance – Largely Compliant
Effectiveness- High
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
The region is now four years into the Fourth Round of Mutual Evaluations and based
on the results of the Mutual Evaluation Reports (MERs) adopted as final thus far by
the CFATF, there is a strong likelihood that countries in our region will continue to
be monitored through the current FATF International Cooperation Review Group
(ICRG) initiative.
The mediocrity of enhanced follow up or FATF ICRG is dangerous, not acceptable,
nor in our collective best interests
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
The G20 July 2018 Communique noted as follows: We call for
full, effective and swift implementation of the FATF standards.
We call on FATF to further enhance its efforts to counter
proliferation financing.
Our region’ has a long history since 2000 of being blacklisted for
being non cooperative, having weak AML/CFT regimes and
strategic deficiencies which pose threats to the global financial
system.
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
In response to the G20 July 2018 call for full, swift and effective compliance with
the FATF standards, similar sentiments were voiced by The Honourable Carl
Wiltshire Bethel, Attorney General of the Commonwealth of the Bahamas, in an
article appearing in the Bahamas Investor of July –December 2018, under the
theme, “Adapting to Changing Times.” which have been echoed in one form or
another by other political leaders in the region;
• “the Bahamas like so many international financial centres, stands at a
crossroads. We can do nothing and become the maudlin old man of the
Caribbean, tearfully muttering the words of ‘Auld Lang Syne’ to an empty cup,
or we can embrace change, make it our own and rise to the challenges posed.
Irresolution, foot dragging, and delay are not options; well enough is no longer good enough.
• The very real threats of blacklisting, consequent reputational damage and the
loss of correspondent relations through the de-risking initiatives pose clear and
present dangers.
• The government is therefore determined to make all changes necessary to
dramatically improve the ‘Ease of Doing Business’, to remove any clouds of
regulatory uncertainty, and to restore to our jurisdiction the primacy and
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
The government is therefore determined to make all changes necessary to dramatically
improve the ‘Ease of Doing Business’, to remove any clouds of regulatory uncertainty,
and to restore to our jurisdiction the primacy and prestige it once enjoyed in financial
circles and so richly deserved.
The creation of a new architecture of legal supervision and compliance is a time
consuming and onerous task, which must be undertaken and driven to completion, after
due consultation and with the consent and involvement of all industry players and civil
society.
These steps are necessary, not only to meet global expectations, but also to do everything
necessary to ensure that the Bahamas itself is safe from the perils of terrorism, money
laundering and other serious criminal activities.
The Bahamas is committed at the highest political level, to taking all reasonable and
necessary steps to modernize our jurisdiction, and to achieve necessary full compliance
with international best practices in the provision of financial services.
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
Currently, a multiplicity of initiatives from international institutions and governments in the
developed world, continue to pose serious challenges to the global reputation, economic
well-being, prosperity, and national security of regional jurisdictions
These eleven international initiatives are as follows;
The Fourth Round of Mutual Evaluation Programme and Follow up process and the
Financial Action Task Force (FATF) International Cooperation Review Group
(ICRG) initiative.
The Organisation for Economic Cooperation and Development (OECD) Global
Forum on
Transparency and Exchange of Information for Tax Purposes.
The Organisation for Economic Cooperation and Development (OECD) Residence
and Citizenship by Investment (CBI/RBI) schemes/Common Reporting Standards.
The Organisation for Economic Cooperation and Development (OECD) Base Erosion
Profit Shifting (BEPS). Action 14 peer review and monitoring process.
es.
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
The European Union List of Non Co-operative Jurisdictions for
tax purposes
The European Commission List on High Risk Third Countries.
United States Government through its International Narcotics
Control Strategy Report (INCSR).
Transparency International's Corruption Perception Index.
Amnesty International Report on Human Rights.
The World Bank Ease of Doing Business Country Rankings.
The ongoing De-Risking/Loss of correspondent banking
relationships crisis.
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
FATF RECOMMENDATION 19 – HIGH RISK COUNTRIES
Financial institutions should be required to apply enhanced due diligence
measures to business relationships and transactions with natural and
legal persons, and financial institutions, from countries for which this is
called for by the FATF.
The type of enhanced due diligence measures applied should be effective
and proportionate to the risks.
Countries should be able to apply appropriate countermeasures when called
upon to do so by the FATF.
Countries should also be able to apply countermeasures independently of
any call by the FATF to do so. Such countermeasures should be effective
and proportionate to the risks.
ASSOCIATION OF INTERNATIONAL BANKS AND TRUSTS
Thank You
Questions and Answers
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