BMA Exercises AML Powers

by Amanda Banks, Tax-News.com, London

08 September 2010

The Bermuda Monetary Authority has drawn attention to enforcement action taken against First Bermuda Group, a Bermuda-based asset management company for a number of failings related to compliance with recently enacted anti-money laundering legislation. First Bermuda has been fined USD100,000.

The BMA said that an on-site inspection found that the company’s internal controls in relation to anti-money laundering fell well below the standards set by the regulations. This is the first such action the Authority has taken using its powers under the Proceeds of Crime Regulations (Supervision and Enforcement) Act 2008, which include the ability to impose financial penalties on non-compliant firms.

The Authority had given due notice that it would take enforcement action where it found evidence of serious breaches. In its Statement of Principles dated March 2009, which sets out the Authority’s approach to the use of enforcement powers, it is stated that the Authority would not hesitate to exercise its enforcement powers in circumstances where the alleged breaches were sufficiently serious.

In its statement on the enforcement action, the BMA underscored that "the enforcement action taken in the case of FBG relates to weaknesses in internal controls only. No evidence of actual money laundering has been uncovered and the security of customers’ deposits is not threatened by the issues in internal controls identified. The institution is meeting its regulatory capital and liquidity requirements and the compliance failings that led to this action by the Authority should not raise concerns about the safety of depositors’ money."

"The decision to take enforcement action and the size of the penalty applied to FBG reflect the serious nature of the internal control failings, which occurred throughout a period of some 16 months after the Regulations became effective in January 2009. In setting the amount of the penalty, however, the Authority took into account the early admissions of the company and the work it has done since to remedy the deficiencies," the BMA informed.

Commenting, Jeremy Cox, Chief Executive Officer of the BMA, said: "In taking this action, we are demonstrating that we are prepared to use all the supervisory tools at our disposal to ensure high standards are maintained in the Bermuda market and that individual firms are fully compliant with their regulatory obligations."

"Having the ability to make our enforcement actions public supports this goal, and the Authority intends as a matter of policy to make full use of this power,” he added. “We wish to make it clear to the market, and companies should take note, that the Authority will not hesitate to take similar action against any firm where we find that essential anti-money laundering controls are lacking or are being implemented ineffectively. It is in all our interests that Bermuda’s regulatory standards are not compromised in any way."

"In the Authority's view, the compliance failings in FBG's case were comprehensive and serious and warranted the use of immediate enforcement action,” Cox stated. “In setting the amount of the financial penalty, however, the Authority took into account the steps FBG has taken since the commencement of the enforcement action to address the issues in its anti-money laundering controls. The company has strengthened its management team and, working in full co-operation with the Authority, has established both a comprehensive action plan and additional resources to resolve the matters that led to the enforcement action and enable it to operate in compliance with the Regulations."

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