Part 1: Preliminary provisions

This section outlines the scope, definitions, and applicability of the regulations. Key terms such as “beneficial owner”, “AML/ATF regulated financial institution”, and “customer due diligence” are defined. The regulations apply to a wide range of entities, including financial institutions, independent professionals, casino operators, dealers in high-value goods, and real estate brokers. The concept of a “beneficial owner” is central, requiring identification of individuals with significant control or ownership in corporate entities, partnerships, trusts, or other legal arrangements.

Part 2: Customer due diligence (CDD)

Customer due diligence is a cornerstone of the regulations, mandating entities to verify customer identities, understand ownership structures, and assess the purpose of business relationships. Enhanced due diligence is required for high-risk scenarios, such as dealings with politically exposed persons (PEPs) or transactions involving high-risk jurisdictions. Simplified due diligence may apply in low-risk cases, provided specific conditions are met. Ongoing monitoring of business relationships ensures that transactions align with the customer’s profile and risk assessment. Casinos are subject to additional requirements, including verifying the identity of patrons engaging in significant transactions and prohibiting anonymous accounts or transactions that could facilitate money laundering.

Part 3: Record-keeping, systems, and training

Entities must maintain detailed records of customer identification, transactions, and due diligence measures for at least five years. These records must be sufficient to reconstruct individual transactions and support investigations. Internal systems and controls are required to identify and mitigate risks, including policies for reporting suspicious activities, managing compliance, and ensuring effective communication across branches and subsidiaries. Training programs are mandated to ensure employees are equipped to recognise and address money laundering and terrorist financing risks. The appointment of a Compliance Officer and a Reporting Officer is compulsory, with responsibilities for overseeing compliance programs and reporting suspicious activities to the Financial Intelligence Agency (FIA). An independent audit function must evaluate the effectiveness of AML/ATF frameworks.

Part 4: Transfer of funds (including wire transfers)

This section governs the transfer of funds, emphasising the need for complete and accurate information on payers and payees. Payment service providers (PSPs) must verify and retain this information, ensuring traceability of transactions. Special provisions address batch file transfers, intermediary PSPs, and cross-border transactions. Missing or incomplete information must be treated as a potential indicator of suspicious activity, warranting further investigation and possible reporting to the FIA. PSPs are also required to implement measures to detect and address deficiencies in information accompanying transfers.

Offences and penalties

Non-compliance with the regulations can result in significant penalties, including fines up to US$750,000 or imprisonment for up to two years. Courts consider adherence to relevant guidance issued by supervisory authorities when determining liability. Entities are encouraged to take all reasonable steps and exercise due diligence to avoid violations.

Schedule: Simplified due diligence and politically exposed persons

The schedule provides detailed criteria for simplified due diligence, emphasising low-risk products and transactions. It also defines politically exposed persons (PEPs) and their associates, requiring enhanced scrutiny and monitoring of their transactions.

Designation of supervisory authority: The 2012 order

Complementing the 2008 regulations, the Bermuda Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing Supervision and Enforcement) Designation Order 2012 (BR 64/2012) further strengthens the supervisory framework. Issued by the Minister of Justice under the Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing Supervision and Enforcement) Act 2008, this order designates the Barristers and Accountants AML/ATF Board as a supervisory authority. This designation specifically applies to independent professionals, as defined in the 2008 regulations, ensuring that barristers and accountants adhere to AML/ATF compliance standards. The order underscores Bermuda’s commitment to robust oversight and enforcement mechanisms, particularly for professionals who play a critical role in financial and legal transactions.

Conclusion

In summary, the Bermuda Proceeds of Crime (AML/ATF) Regulations 2008, alongside the 2012 Designation Order, establish a robust legal framework to prevent and detect money laundering and terrorist financing. By mandating stringent due diligence, record-keeping, and reporting requirements, and by designating supervisory authorities for key sectors, these measures aim to safeguard Bermuda’s financial system and uphold international standards.

Further reading

• Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing) Regulations 2008
• Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing Supervision and Enforcement) Designation Order 2012