2014 Proposed Amendments to Bermuda’s AML/ATF Legislation – Expansion of the Definition of Politically Exposed Persons

About Cynthia WilliamsCynthia Williams

Cynthia’s experience includes corporate administration, incorporations and management experience within Bermuda. She has been employed by Quorum Limited since 1999.

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Changes in Bermuda’s Anti-Money Laundering and Terrorist Financing (“AML/ATF”) Legislation will be addressed in Parliament in order to bring the technical components into compliance with the 2012 Revised Financial Action Task Force (“FATF”) 40 recommendations (the “Recommendations”).

The Recommendations, recommendation 12 in particular, include the requirement to identify domestic politically exposed persons as well as the directors and the officers of international organizations. It is proposed that Bermuda expand of the definition of a Politically Exposed Person (“PEP”) to include domestic PEP’s and the directors and officers of international organizations. It is further proposed that enhanced due diligence be carried out on those individuals that fall under the expanded definition of a PEP.

Persons that hold a prominent public function in Bermuda, their family and their associates are to be considered Domestic PEP’s. As a result of the extended scope of PEP’s and the different steps to be taken for enhanced due diligence a new section of the regulations will be proposed. It is expected that at a minimum, members of the legislature, judges and senior public servants, including permanent secretaries are to be considered domestic PEP’s. Further consideration might be given to members of statutory bodies such as the West End Development Corporation, the Bermuda Housing Corporation, the Bermuda Business Development Authority and the Bermuda Tourism Authority.

With regard to relevant international organizations the persons who must be included are members of senior management, such as, directors, deputy directors and officers.

Those engaged in life insurance business should note the proposed expansion of the definition of PEP’s will also be applicable to life insurance policies. In relation to life insurance policies, reasonable measures must be taken by the insurer to determine if the beneficiaries and/or the beneficial owner of the beneficiary are high risk or politically exposed persons. This should occur, at the latest, at the time of the payout.

The revised Recommendations require that a sanction be imposed on any company (and it’s officers) that do not comply with AML/ATF requirements. It is proposed that the Bermuda Companies Act 1981 (the “Companies Act”) and other related legislation provide for the liability and sanctions for any entity that is found to have failed to comply with the AML/Counter Financing of Terrorism (“CFT”) requirements. It is proposed that the Companies Act be amended to provide clarity on how the investigation would proceed and be handled should the Registrar of Companies uncover potential money laundering/terrorist financing offences.

In 2016, Bermuda will be evaluated as part of the Caribbean Financial Action Task Force (the “CFATF”). It is suggested that by implementing the proposed legislative changes in 2015 there would be a year of implementation to demonstrate effectiveness prior to the 2016 CFATF assessment.

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