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The Importance of Customer Due Diligence discussed at the Domestic Financial Institutions Conference in Barbados

The Domestic Financial Institutions Conference (DFIC) was jointly hosted by the Central Bank of Barbados and the Financial Services Commission (FSC) in August 2020. Regulators and representatives from the financial sector discussed the topic "Customer Due Diligence, Reporting Obligations & Monitoring.”

Opening discussions by the panel focused on the need for financial institutions (FIs) to comply with international Anti-Money-Laundering and Combatting the Financing of Terrorism (AML/CFT) requirements. The panel clarified that the fulfilment of these requirements is the main rationale behind customers having to submit a checklist of documents that include ID, proof of address, and source of funds such as job letters.

Noting the findings of the Nationals Risk Assessment (NRA) for Barbados, Cyralene Benskin-Murray, General Counsel at the FSC stated that the country is particularly vulnerable to fraud and it posed a significant threat in terms of crime. In her contributions, Ms. Cyralene Benskin-Murray noted that FIs utilize the information requested from customers as part of the due diligence process to fight money laundering (ML) and terrorist financing (TF). She noted furthermore, the information facilitates monitoring, reporting purposes and developing customer profiles that help establish a pattern for incoming and outgoing funds, which greatly assist FIs to protect its customers from financial crimes.  

Using an example of fraudulent online activities to transfer money from one account to another, the General Counsel revealed that such activities have occurred before and highlights the need for ongoing due diligence. Noting that the attempted transaction was prevented because the FI flagged the transaction as unusual for the customer being targeted, FIs were urged not treat requests for information as repetitious. She added, "you are not required to produce information for just producing it sake. It is not about collecting information. The ultimate goal is to prevent money laundering and terrorist financing. The goal is to also make sure that predicate offenses, which are like fraud, corruption, and drugs, that the proceeds for those crimes do not find their way into our system.”

One recommendation put forward in the sessions to address the need for the increased use of due diligence measures is the application of more risk-based assessment principles such as Know Your Own Customer (KYOC). However, General Counsel Benskin-Murray warned that FIs should be mindful to protect financial inclusion. General Counsel Benskin-Murray went on further to say that “increasing the convenience to customers first, through financial education and communication” assist customers to understand and helps FIs in the long run. She further noted that voluntary compliance with the measures is encouraged when customers understand the reasons for the process and adequate training of frontline staff in FIs will greatly assist in streamlining this process based on the risk profile of the customer.

The Jamaica Financial Investigations Division (FID) forfeits Money from Man suspected of Terrorist Activities

The Financial Investigations Division (FID) of the Ministry of Finance and the Public Service in Jamaica has forfeited Jamaican $524,000 and £1,850 from Abdullah el-Faisal in the St Catherine Parish Court on August 7th, 2020. The money was seized by the Jamaican Constabulary Force (JCF) in 2017 under the Proceeds of Crime Act (POCA). Mr. el-Faisal was the subject of an extradition warrant from the U.S. Government, which alleges his involvement in terrorism offences. The money was found at his home following his arrest.

Following investigations by the FID on the origin and intended use of the money, an application for its forfeiture was made to the Court. The Court ordered that the money be forfeited to the State. The Ministry of Finance and Public Service noted that this decision follows shortly after a Court of Appeal judgement which upheld the application for Mr. el-Faisal to be extradited to the U.S. to stand trial.

The Chief Technical Director of the FID, Selvin Hay, stated that “This forfeiture highlights the commitment of FID and its partners, in this instance the Jamaica Constabulary Force, to robustly apply the Proceeds of Crime legislation where appropriate in conjunction with any investigation being conducted. The majority of criminal and civil investigations being conducted across Jamaica inevitably involve profit, and this profit can and will be taken from those persons who are concerned in any way.”

He further noted that there are a large number of offences committed under POCA, which includes not only the initial commission of a crime, but knowingly assisting either before, during or after the fact.

Joint Media Release from Trinidad and Tobago Regulators on the marketing of Pyramid Schemes in Trinidad and Tobago

Trinidad and Tobago Regulators, the Securities and Exchange Commission, the Financial Intelligence Unit and the Central Bank have jointly issued a Media Release cautioning the public to be aware of "Pyramid Schemes" currently being marketed in Trinidad and Tobago.

Steps being undertaken to amend the Digital Asset Business Act 2018 in Bermuda

An enhancement of the digital asset regulatory framework in Bermuda is being sought through a Consultation Paper that outlines the proposed changes to the country’s current Digital Asset Business Act, 2018. The amendments put forward in the Consultation Paper seeks to give “greater clarity to certain sections and to make other changes that are intended to facilitate the development of the FinTech sector in Bermuda and a more effective administration of the Act”.

 The Consultation Paper notes that the primary intended amendments to the Digital Asset Business Amendment Act, 2020 (Bill) will: 1) amend some definitions to clarify the Bermuda Monetary Authority’s (BMA’s) intent in certain sections; 2) insert a requirement to notify the BMA of changes to exemption conditions; 3) extend the Authority’s ability to modify applicable fees and 4) establish a new testing licence to be called a Class T licence, which will facilitate the testing and piloting of a business model, product or service within the FinTech regulatory framework.

The consultation period for the submission of views on the proposals set out in the paper and Bill will conclude on September 7th, 2020 at which time further steps would be taken. The Consultation Paper for the Digital Asset Business Amendment Act, 2020 can be found here.

Increase in Cyber-crime Reports in The Bahamas

The Royal Bahamas Police Force has reported a 36 percent increase in hacking and extortion in The Bahamas. Between January 1st and June 30th, 2020, there were 118 cyber-crime incidents reported to authorities, compared to the 87 matters reported during the same period in 2019.

The rise in cyber-crime activity is not exclusive to The Bahamas, but a regional and global challenge during the ongoing COVID-19 pandemic. During the Virtual Security Conference held by CARICOM IMPACS from July 27th to 31st, several representatives expressed concerns about the vulnerability of the region, and particularly its members in relation to cyber-crimes.  Concerns about the need to increase the legal and cyber-security frameworks were also raised. The UN Resident Coordinator for Trinidad and Tobago, Suriname, Aruba, Curacao and Sint Marteen, Marina Walter, expressed concern about the lack of comprehensive cyber-security policies among member states relating to “the high number of unsecured servers.”

She further stated that based on reports from member states that have come in since the COVID-19 lockdown period, “there is an increase in attempted COVID-19-stimulus fraud schemes, a rise in hate speech on social media, phishing attacks and the dissemination of obscenities.”  Ms. Walter further noted that in the new normal, countries in the region are likely to digitize their economies, therefore raising the risk levels related to cyber-crime. Consequently, this is an area for all partners to engage more forcefully, identifying appropriate support for countries to tighten frameworks that allow for the better control for cyber-crime.

Police Action in The Bahamas

Commissioner of the Royal Bahamas Police Force, Mr. Paul Rolle stated that the organization will increase money laundering prosecutions and convictions; disrupt the benefits of criminal enterprises; increase confiscations of the proceeds of crime; and reduce financial and commercial crimes. The Commissioner said that Bahamian authorities will partner with the Asset Recovery Inter-Agency Network for the Caribbean (ARIN-CARIB), which shares intelligence to seize assets and counteract crime across international borders. He stated that “we will strengthen the Financial Crime Investigations Branch. The Financial Crime Unit and the Anti-Corruption Unit will continue to conduct financial crime investigations, money laundering, terrorist financing investigations, and parallel investigations into proceeds of crime.”

The Commissioner committed to strengthening the capacity of the Financial Crime Investigations Branch by providing standardized financial investigation training. He also pledged to increase the complement of investigators within the Financial Crime Unit, inclusive of the forensic accountants and analysts.