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CARIBBEAN FINANCIALACTION TASK FORCE

Fifth Follow-Up Report

BarbadosMay 2, 2011

© 2011 CFATF. All rights reserved.No reproduction or translation of this publication may be made without prior written permission.Requests for permission to further disseminate reproduce or translate all or part of this publicationshould be obtained from the CFATF Secretariat at CFATF@cfatf.org

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BARBADOS – FIFTH FOLLOW-UP REPORT

I. Introduction

1. This report is the fifth follow-up report by Barbados to the Caribbean Financial ActionTask Force (CFATF) Plenary on the action taken to implement the recommended action listed inthe third mutual evaluation report (MER) of Barbados which was adopted in May 2008. Barbadoshas submitted four previous follow-up reports in May and October 2009 and May and November2010, respectively. In accordance with present procedures the following is a report on measurestaken by Barbados to deal with the recommended actions in those Financial Action Task Force(FATF) Recommendations rated partially compliant (PC) or non compliant (NC). Details on theactions are outlined in Annex 1 of this report

2. Barbados received ratings of PC or NC on nine (9) of the sixteen (16) Core and KeyRecommendations and largely compliant (LC) or compliant (C) on the remaining seven (7) Coreand Key Recommendations as follows:

Table 1: Ratings of Core and Key Recommendations

Rec. 1 3 4 5 10 13 23 26 35 36 40 I II III IV VRating LC PC PC PC NC LC PC LC LC PC LC PC C PC LC PC

3. With regard to the other non-core or key Recommendations, Barbados was rated partiallycompliant or non-compliant on eighteen (18), as indicated below.

Table 2: Non Core and Key Recommendations rated Partially Compliant and Non-Compliant

Partially Compliant (PC) Non-Compliant (NC)R. 6 (Politically exposed persons) R. 12 (DNFBP – R.5,6,8-11)R. 8 (New technologies & non face-to-facebusiness)

R. 16 (DNFBP – R.13-15 & 21)

R. 9 (Third parties and introducers) R. 21 (Special attention for higher riskcountries)

R. 11 (Unusual transactions) R. 24 (DNFBP – regulation, supervision andmonitoring)

R. 14 ( Protection & no tipping off) SR. VI (AML requirements for money valuetransfer services

R. 15 (Internal controls, compliance & audit)R. 22 (Foreign branches & subsidiaries)R. 25 (Guidelines & Feedback)R. 30 (Resources, integrity and training)R. 33 (Legal persons – beneficial owners)R. 34 (Legal arrangements – beneficialowners)

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R. 38 ( MLA on confiscation and freezing)SR. VII (Wire transfer rules)

4. The following table is intended to provide insight into the size and risk of the mainfinancial sectors in Barbados.

Table 3: Size and integration of the jurisdiction’s financial sectorAs at Dec 31, 2009-Barbados

Banks(Commercial)

US$000’s

Please note allfigures areprovisional

Other CreditInstitutions*

(DepositTaking)

US$000’s

Securities Insurance TOTAL

Number ofinstitutions

Total # 6 45 1 28 80

Assets US$ 5,583,288 656,773,234 391,156,557.45* 787,891.231.86+ 7,419,109,023.31

Total: US$ 4,391,824 580,658,854 585,050,678

Deposits % Non-resident

% of deposits

13.45%

N/A N/A

% Foreign-owned:

100% of assets 80.7 % ofassets

% of assets % of assets % of assets

InternationalLinks

#Subsidiaries abroad

3 0

*Relates to Mutual Funds+Represents 2008 figures

II. Summary of progress made by Barbados

5. Since the MER, the authorities in Barbados began to assess the various means to achievecompliance. Some measures included legislative amendments to specific laws and proposals fornew legislation. A new Money Laundering and Financing of Terrorism (MLFT) Bill, a Corporateand Trust Service Providers Bill, the Transnational Organized Crime (Prevention and Control)Bill and the Prevention of Corruption Bill were finalized and approved by Cabinet. The newMLFT Bill amends the relevant sections of the Securities Act (SA), the Mutual Assistance inCriminal Matters Act (MACMA), the Insurance Act, the Exempt Insurance Act, the CooperativeSocieties Act(CSA), the Proceeds of Crime Act, the International Business Companies Act, theDrugs (Prevention and Control) Act, the Charities Act, the International Trusts Act, the Societieswith Restricted Liability Act and the Mutual Funds Act. These pieces of legislation were due tobe placed in Parliament for debate in June 2010. Most of the examiners’ recommendations setout under Rs.3,4,5,6,8,9,11,12,14,15,16,21,22,23,24,34,36,38,SR.I,SR.III and SR.IV were

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addressed by these statutes. A general framework for the regulation of stand-alone money valuetransfer providers was being considered in the proposed Financial Services Commission Bill.The Commission was due to be established by July 2010

6. In the last Follow-Up Report for November 2010 the authorities advised that debate onthe legislative package which had been due in June 2010 was postponed to the next Parliamentarysession beginning in October 2010. As such, there had been no substantive change in thesituation reported in May 2010 with implementation of the majority of the examiners’recommendations awaiting enactment of relevant legislation. As a result of the above, it wasrecommended and agreed by the November 2010 Plenary that Barbados be placed on enhancedfollow-up and a letter by the CFATF Chairman be sent to the Attorney General in Barbados toencourage Barbados’ progress in relation to the enactment of relevant legislation. Therecommended letter was sent on November 11, 2010 to the Attorney General of Barbados.

7. Summary of progress since the last follow-up report: The authorities have advised thatdebate on the legislative package has been ongoing during the present Parliamentary session andhas resulted in the enactment of the International Corporate and Trust Service Providers Act(ICTSPA), the Transnational Organized Crime (Prevention and Control) Act (TOCPCA), theCompanies (Amendment) Act (CAA) and the Financial Services Commission Act (FSCA). Thenew MLFT Bill and the Prevention of Corruption Bill are still being debated. As a result of thepassage of the FSCA, the Financial Services Commission (FSC) came into effect on April 1,2011. Based on the aforementioned, this report will focus on the outstanding Recommendationsto which new developments as reported in the updated matrix have occurred since the FourthFollow-Up Report.

Key Recommendations

Recommendation 23

8. The last Follow-Up Report noted that the examiners’ recommendations for the Registrarof Cooperatives to have the power to approve senior management of their licensees and theSecurities Commission to approve ownership of significant or controlling interests of theirregistrants and use fit and proper criteria in approving directors, management and significantownership, had been included in amendments to the new MLFT Bill which amends the SA andthe CSA . As already noted the new MLFT Bill is still to enacted, therefore leaving theexaminers’ recommendations above outstanding.

9. The recommendation for a general framework for the regulation of stand-alone moneyvalue transfer providers as indicated in the previous Follow-Up Report was being considered inthe new FSC Bill. While the FSCA has been enacted, a copy has not been forwarded forverification. The authorities advise that the recommendation is under consideration for the newFSC which came into effect on April 1, 2011. Given the above, this Recommendations remainsoutstanding.

Recommendation 36

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10. There have been no new developments since the previous Follow-Up Report with regardto the proposed amendments that were made to MACMA to incorporate provisions to address theexaminers’ recommendations for the revision of the definition of “serious offence”, the inclusionof instrumentalities in restraint, forfeiture and confiscation provisions, the extension of theapplication of monitoring orders and other powers under the Proceeds of Crime Act (POCA) toMACMA,. With regard to the recommendation to increase the capacity for information exchangeby seeking bilateral agreements, it was noted in the previous Follow-Up Report that the FIU wasin the process of negotiating several memoranda of understanding(MOUs) and had signed anMOU with the Netherlands Antilles. At present, the FIU has advised that it is continuing tonegotiate several MOUs and has signed MOUs with St. Vincent and the Grenadines andBermuda. Except for the last measure above, this Recommendation remains outstanding.

Special Recommendation I

11. The examiners’ recommendation require the authorities to fully implement:

a) the Palermo Convention by specifically legislating for human trafficking andupdating the corruption/bribery laws

b) UN Resolution S/RES/1373(2001) by explicitly legislating a mechanism tofreeze assets of UN designated entities.

12. In the last Follow-Up Report the authorities advised that the examiners’recommendations had been incorporated in the new MLFT Bill which amended the POCA in theFourth Schedule, the Transnational Organised Crime (Prevention and Control) Bill and thePrevention of Corruption Bill which had been approved by Cabinet and were due for enactment.

13. As already noted the TOCPCA has been enacted. Section 8 of TOCPCA criminalizes arange of offences as human trafficking , including the organizing and facilitating of the entry orexit from Barbados of a person for the purpose of exploitation such as the provision of sexualservices, forced labour, slavery, servitude or similar service or removal of any human organs orhuman tissue etc. Section 9 of TOCPCA criminalises the offence of smuggling of persons.

14. Under section 13 of the TOCPCA a person guilty of the offence of trafficking in personsand the victim is a child, is liable on conviction on indictment to imprisonment for life. When thevictim is not a child, that person is liable on conviction on indictment to a fine of BDS$1,500,000or to imprisonment for 15 years or to both. A person guilty of the offence of smuggling ofpersons into Barbados without complying with the requirements for legal entry is liable onconviction on indictment to a fine of BDS$1,500,000 or to imprisonment for 15 years. A personguilty of the offence of smuggling of persons which endanger or is likely to endanger the lives ofthe persons concerned is liable on conviction on indictment to a fine of BDS$2,000,000 or toimprisonment for 25 years or to both.

15. The above penalties are in accordance with the requirements of article 2 of the PalermoConvention for serious offences. Additionally, the penalties meet Barbados’s threshold fordetermining predicate offences for money laundering which is all offences punishable by death orat least 12 months imprisonment.

16. The recommendations with regard to the updating of the corruption/ bribery laws andimplementing UN Resolution S/RES/1373(2001) remain outstanding.

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Other Recommendations

Recommendation 12

17. The examiners’ recommended action was for the authorities to enact measures to applythe requirements of Recommendations 5, 6, 8 to 11 and 17 to DNFBPs not licensed by theCentral Bank. The situation as noted in the previous Follow-Up Report that the new MLFT Billwould extend the application of AML/CFT obligations to non-financial business entities andprofessionals remains unchanged awaiting the enactment of the law.

18. The enactment of the ICTSPA provides a framework for the establishment of aregistration and licensing regime for international service providers pursuant to Part II of the Act.International service providers are defined as persons engaging in the business of internationalcorporate service or international trust service. Section 5 of the ICTSPA stipulates the functionsof the Director of International Business to include administration of the Act and monitoring andexamination of the businesses of international service providers to determine compliance with theAct. Section 25 of the ICTSPA sets out enforcement powers that the Director of InternationalBusiness can apply for a variety of situations including breaches of the ICTSPA.

19. There is no specific provision in the ICTSPA for international service providers tocomply with the AML/CFT obligations of the MLFTA or for the Director of InternationalBusiness to ensure compliance of the licensees under the Act with the MLFTA. This inconjunction with the fact as noted above that the new MLFT Bill extending the application ofAML/CFT obligations to non-financial business entities and professionals has not been passed,effectively means that this Recommendation remains outstanding.

Recommendation 16

20. The examiners’ recommendation was for the authorities to take measures to ensure thatthe requirements of Recommendations 13 to 15, 17 and 21 are applied to DNFBPs not licensedby the Central Bank. The analysis and conclusion as stated under Recommendation 12 is alsoapplicable to Recommendation 16 As such, pending the enactment of the new MLFT BIll thisRecommendation remains outstanding.

Recommendation 24

21. The examiners’ recommendation required the authorities to take measures to ensure thatthe requirements of Recommendations 24 and 25 should apply to DNFBPs not licensed by theCentral Bank. As noted in the last Follow-Up Report the amended MLFTA extends theapplication of AML/CFT obligations to non-financial business entities and professionals. Withregard to the authorities’ assertion that the enactment of the ICTSPA establishes a registrationsand licensing regime for international service providers, the analysis and conclusion as statedunder Recommendation 12 is also applicable to Recommendation 24. As such, pending theenactment of the proposed laws this Recommendation remains outstanding

Recommendation 30

22. As noted in the last follow-up report the Office of the Attorney General approved thecreation of six additional posts at the FIU. These included a Deputy Director, 2 additionalanalysts, an information technology specialist, an institutional examiner and a clerk/typist. Theseposts, once filled, were expected to greatly enhance the FIU’s capacity to execute its mandate.

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The FIU upgraded its IT system through the acquisition of a more robust database system andincreased protection through the installation of additional firewalls and research tools. The RoyalBarbados Police Force had recruited an additional 47 persons bringing the total number ofpersons recruited since 2006 to approximately 200. With regard to supervisory resources, atpresent the FSCA has been enacted and the FSC came into effect on April 1, 2011. No copy ofthe FSCA or information as to the functions, powers and resources of the FSC has been provided.Until such information is provided, this Recommendation remains partially outstanding.

Recommendation 34

23. In the previous Follow-Up Report it was noted that the examiners’ recommendation forthe authorities to implement measures for monitoring and ensuring compliance of internationaltrusts with AML/CFT requirements had been incorporated into the International Corporate andTrust Service Providers Bill which was due to be enacted shortly. Additionally, supervision wasto be strengthened with the establishment of the FSC which would be responsible for ensuringcompliance of international trusts with AML/CFT requirements.

24. At present, the enactment of the ICTSPA provides a framework for the establishment of aregistration and licensing regime for international service providers pursuant to Part II of the Act.International service providers are defined as persons engaging in the business of internationalcorporate service or international trust service. Section 5 of the ICTSPA stipulates the functionsof the Director of International Business to include administration of the Act and monitoring andexamination of the businesses of international service providers to determine compliance with theAct. Section 25 of the ICTSPA sets out enforcement powers that the Director of InternationalBusiness can apply for a variety of situations including breaches of the ICTSPA.

25. There is no specific provision in the ICTSPA for international service providers tocomply with the AML/CFT obligations of the MLFTA or for the Director of InternationalBusiness to ensure compliance of the licensees under the Act with the MLFTA. Additionally, thenew MLFT Bill extending the application of AML/CFT obligations to non-financial businessentities and professionals i.e. international service providers has still to be enacted.

26. With regard to the establishment of the FSC, the FSCA has been enacted but a copy hasnot been forwarded so it is not possible to verify if the FSC is responsible for ensuringcompliance of international trusts with AML/CFT requirements. Given the above thisRecommendation remains outstanding.

Special Recommendation VI

27. The authorities advised in the previous Follow-Up Report that a general framework forthe regulation of stand-alone money value transfer providers was being considered in the FSCA.While the FSCA has been enacted, a copy has not been forwarded for verification. Theauthorities advise that the recommendation is under consideration for the new FSC which cameinto effect on April 1, 2011. Given the above, this Recommendation remains outstanding.

Special recommendation VII

28. As reported in the last Follow-Up Report the recommendation that stand-alone moneyremitters be monitored for compliance with the requirements of SR VII was to be incorporatedinto the general regulatory framework being considered in the FSCA. While the FSCA has beenenacted, a copy has not been forwarded for verification. The authorities advise that the

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recommendation is under consideration for the new FSC which came into effect on April 1,2011.Given the above, this Recommendation remains outstanding

Conclusion

29. While the enactment of the ICTSPA, the TOCPCA, the CAA and the FSCA do haveprovisions which address some of the examiners’ recommended measures under theRecommendations reviewed above, full implementation requires the enactment of the new MLFTBill. Additionally a copy of the FSCA and information on the operations of the FSC need to besubmitted in order to assess implementation. At present, only Recs. 30, 33 and SR I haveimproved levels of compliance since the last Follow-Up Report. Since the majority ofrecommendations are still awaiting the enactment of the new legislation, it is recommended thatBarbados remain on enhanced follow-up and report back to the Plenary in November 2011.

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Forty Recommendations Rating Summary of factors underlyingrating1

Recommended Actions Undertaken Actions

Legal systems

1.ML offence LC The crimes of human trafficking,

corruption and bribery provisionsfalling within the designatedcategories of offences have not beenadequately addressed in legislation.

Extraterritoriality of predicate offencesis not clearly defined.

The authorities should review theadequacy of the legislative coverage ofhuman trafficking, corruption and briberyto ensure coverage of all designatedcategories of offences. .

The different mens rea elements ofmoney laundering offences under theMLFTA and section 19 of DAPCAshould be harmonized.

The language of section 4 of the MLFTAshould be reviewed with a view toremoving the current limitation whichrequires that there be an intention for theextraterritorial act to be also committed inBarbados

Section 8 of the Transnational OrganisedCrime (Prevention and Control) Actcreates the offence of trafficking inpersons. Section 9 creates the offenceof smuggling of persons. TheTransnational Organised Crime(Prevention and Control) Act waspassed in Parliament as No. 3 of 2011.

Part Vl of the Prevention of CorruptionBill 2010 provides for the offences ofbribery, solicitation and related offences.

An amendment to the DAPCA has beenprovided for in the MLFTA 2010 in the FourthSchedule of the latter Act. . In section 19, deletesubsection (1) andsubstitute the following:"(1) Subject to subsection (2), if a person entersinto or is otherwise concerned in anarrangement whereby (a) the retention or controlby or on behalf of another "X", of X's benefitsof drug trafficking is facilitated (whether byconcealment, removal from the jurisdiction,transfer to nominees orotherwise);

or (b) X's benefits of drug

1 These factors are only required to be set out when the rating is less than Compliant.

Matrix with Ratings and Follow Up Action Plan 3rd Round Mutual EvaluationBarbados

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trafficking are used to secure that funds areplaced at X's disposal or are used for X's benefitto acquire property by way of investment,.Either(i) knowing or having reasonablegrounds to suspect that X is aperson who carries on or has carriedon drug trafficking;(ii) being an individual, failing withoutreasonable excuse to take reasonable steps toascertain whether X is a person who carrieson or has carried on drug trafficking; or(iii) being a financial institution or anon-financial business entity orprofessional within the meaning ofthe Money Laundering and Financing ofTerrorism (Prevention and Control) Act, 2010,failing to take reasonable steps toimplement or apply procedures tocontrol or combat money laundering,the person is guilty of an indictable offenceunder this Act."

Section 7 of the MLFTA 2010 states “any actdone by a person outside of Barbados, whichwould be an offence if done within Barbados, isan offence for the purposes of this Act.”

2.ML offence – mentalelement and corporateliability

LC Ineffective use of ML provisions. The defect has been remedied in the MLFTA2010.

3. Confiscation andprovisional measures

PC Forfeiture/restraint orders only limitedto proceeds of money laundering,predicate offence of drug-trafficking,terrorist acts and financing ofterrorism.

The authorities should consider reviewingthe forfeiture/confiscation regime toensure that all serious offences arecovered; the various statutes arerationalized as far as possible to providegreater certainty in application. Specific

This has been achieved by the passageof the MLFTA 2010 and theamendments to the POCA as stated inthe Fourth Schedule of the MLFTA2010. The forfeiture regime is nowdealt with under the POCA.

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No specific provision for forfeiture ofinstrumentalities under the MLFTA.

No provision for ex parte applicationfor freezing or seizing property subjectto confiscation under the MLFTA

No provision for production/inspectionorders under MLFTA.

Lack of integrated approach toforfeiture/restraint detracts fromeffectiveness.

attention should be given to adjusting theMLFTA forfeiture scheme so as toincorporate appropriate balancing featuresin keeping with recent case law. Furtherthere should be greater particularity onvarious aspects of any approach,including factors to be taken into accountby the court before issuing orders;coverage of instrumentalities; bona fidethird party rights; variation/discharge oforders.

The coverage of instrumentalities underPOCA should be extended to ensureproperty intended for use in thecommission of the offence is caught.

The definition of “scheduled offence”under POCA should be extended toincorporate the serious offencescontemplated by the FATF’s “designatedcategories of offences”

A specific provision should be enacted forthe forfeiture of instrumentalities inMLFTA

Appropriate powers of production andinspection should be introduced in theMLFTA. For those offences underDAPCA falling outside the scope of thePOCA “scheduled offences”, similarpowers should also be incorporated.

The definitions of “financial institutions”under POCA and the MLFTA should beharmonized.

The Fourth Schedule of the MLFTA 2010refers to the amendments to the POCA.Section 2 (b) of POCA has been amendedto read “The principal objects of this Actare to provide for the forfeiture of propertyincluding instrumentalities, used in orintended to be used in, or in connectionwith, or for the purpose of facilitating, thecommission of scheduled offences.”

Additionally, the Fourth Schedule of theMLFTA 2010 amends the definition of“tainted property” in the POCA to includeinstrumentalities, used in or intended to beused, or in connection with, or for thepurpose of facilitating the commission ofschedules offences”.

The Fourth Schedule of the MLFTA 2010amends the definition of “scheduledoffence” under POCA to include theFATF” designated categories of offences”.This list includes statutory offences &common law offences.

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Section 60 of POCA should be amendedto enable governmentdepartments/entities, on appropriategrounds, to lodge objections to thedisclosure of information. The schemeunder section 57 in respect of theCommissioner of Inland Revenue mayprovide a useful precedent.

Section 6A (4) of the MLFTA should beamended to enable GovernmentDepartments to object to the release ofinformation to the FIU Director onappropriate grounds. Section 57 ofPOCA as a guide requires the FIUDirector to access data from Governmentdepartments only on the authority of acourt order, as under sections 55 and 60of POCA in relation to the DPP.

The standard of proof under sections 9and 17 of POCA (abscondence) should beadjusted to explicitly require the civilstandard.

The civil forfeiture scheme under section47 of the DAPCA should be amplified toaddress such matters as the procedures tobe followed and standard of proof.

With respect to the powers of production &inspection, this is now dealt with under thePOCA and its amendments as stated in theFourth Schedule of the MLFTA. Asmentioned above, the scheduled offencesunder the POCA have been widened.

The definition of “financial institutions” inthe POCA and MLFTA has beenharmonized. The Fourth Schedule of theMLFTA 2010 reflects that the currentsections 53 & 54 of POCA have beendeleted and section 54 of the latter Act nowstates that with respect to section 48 to 52,the definition of financial institution underPOCA now has the meaning given to it asunder the MLFTA.

The Fourth Schedule of the MLFTA 2010has amended section 60 of POCA to insertsection 60 (2) to read, “ Section 57 shall,with such modifications and adaptations asthe circumstances may require, apply inrespect of an order made under subsection(1).”

Section 49 of the MLFTA 2010 makesprovision for the objection to disclosure ofinformation to the FIU on specific grounds.

With respect the standard of proof, theFourth Schedule of the MLFTA 2010amends Section 17 of the POCA, toread,”(3) any question of fact to be decidedby the Court in proceedings pursuant tosection 9 and this section shall be decidedon a balance of probabilities.”

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Section 47 DAPCA has been deleted. Thisis stated in the Fourth Schedule of MLFTA.As already stated, the standard of proof isdealt with in the new section 17(3) ofPOCA.

The procedures to be followed are those inPOCA- sections 10-17. The new POCAschedule refers to drug and drug-traffickingoffences. This is laid out in the FourthSchedule.

Preventive measures4. Secrecy laws consistentwith the Recommendations

PC The CBB cannot share informationwith other domestic financial sectorsupervisory agencies.

Under the CSA, the Registrar ofCooperatives can only shareinformation pursuant to a court order;

The MLFTA should be amended tospecify the reason for inspections by theAMLA i.e. review of compliance withMLFTA and AML/CFT guidelinesgenerally

The FIA should be amended to allow theCBB to share information with domesticregulators

The CSA should be amended to permitthe Registrar of Cooperative Societies toshare information with domestic andforeign regulators without having toobtain a Court Order

An explicit legal provision allowing theSupervisor of Insurance to shareinformation with other regulators shouldbe enacted.

Section 31 of the MLFTA, 2010specifies that inspections to beconducted are to determine whether afinancial institution is in compliancewith the Act.

Section 44 (2) of the FinancialInstitutions Act CAP344A has beenamended to allow the Central Bank,without the permission of a licensee, toshare information with any othersupervisory or regulatory authority offinancial institutions in Barbados.

The Fourth Schedule of the MLFTA,2010 amends section 71 of the CSA, byinserting a new subsection (3A)permitting the Registrar to shareinformation with the AMLA and otherdomestic and foreign supervisory orregulatory authorities without a courtorder.

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The Ministry of Economic Affairs andDevelopment does not have theauthority to compel information fromlicensees or to disclose information todomestic or foreign counterparts.

The Ministry of Economic Affairs andDevelopment should be authorized toaccess information from its licensees andbe able to share information appropriatelywith other competent authorities.

The Fourth Schedule of the MLFTA,2010 amends section 54 of the IA byinserting a new provision (2A),permitting the Supervisor to shareinformation with the AMLA and otherdomestic and foreign supervisory orregulatory authorities. Section 35 of theEIA is similarly amended.

The Fourth Schedule of the MLFTA,2010 amends section 24 of IBC Act byinserting Section 24A, requiring alicensee to deliver any books, records,documents that are required to be kept,to the Minister at such time asrequired; and provide the Minister withsuch information as the Minister mayrequire for the proper administrationand enforcement of the Act.

Sections 25(3) of the IBC Act; section49(3) of the SRL Act; and section 28 ofthe ITA were also amended to permitthe disclosure of information.

In addition, the Fourth Schedule of theMLFTA, 2010 amends section 8 of theSA by adding subsection (2A) topermit the Commission to shareinformation with the AMLA and otherdomestic and foreign supervisory orregulatory authorities.

Section 50(3) of the Mutual Funds ActCap.320B is also similarly amended.

5.Customer due diligence PC There are no legislative requirementsfor financial institutions to

Financial institutions should be The MLFTA 2010 defines “businesstransaction to include a business

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undertake CDD measures foroccasional transactions that arewire transfers in thecircumstances covered by theInterpretative Note to SR VII, orwhere there is a suspicion ofmoney laundering or terroristfinancing, or where the financialinstitution has doubts about theveracity or adequacy ofpreviously obtained CDD;

verify that any person purportingto act on behalf of the customeris so authorized and identify andverify the identity of that person;

determine who are the naturalpersons that ultimately own orcontrol the customer;

conduct on-going due diligenceon business relationships;

verify individual customeridentity using reliable,independent source documents,data or information(identification data);

No express prohibition againstreduced CDD measures where there isa risk of ML and FT

legislatively required to;

o undertake CDD measures foroccasional transactions that are wiretransfers in the circumstancescovered by the Interpretative Note toSR VII, or where there is a suspicionof money laundering or terroristfinancing, or where the financialinstitution has doubts about theveracity or adequacy of previouslyobtained CDD;

o verify that any person purporting toact on behalf of the customer is soauthorized and identify and verify theidentity of that person;

o determine who are the naturalpersons that ultimately own orcontrol the customer;

o conduct on-going due diligence onbusiness relationships;

o verify individual customer identityusing reliable, independent sourcedocuments, data or information(identification data);

arrangement and an occasionaltransaction. An occasional transactionis defined as a financial or otherrelevant transaction other than oneconducted or to be conducted in thecourse of an existing businessarrangement and includes a wiretransfer.

Section 15 (1)(b) of the MLFTA, 2010requires a financial institution to verifythe identity of a customer by means ofreliable documents data or informationfrom an independent source where

(i) the customer requests the institutionto enter into a business arrangement orconduct an occasional transaction withthe customer;(ii) doubt exists about the veracity oradequacy of customer identificationdata previously obtained in respect ofthe customer; or(iii) there is a suspicion of moneylaundering or financing of terrorism inconnection with the customer.

Section 15 states at subsection:(2) A financial institution shall take reasonablemeasures to establish whether a customer isacting on behalf of another person.

(3) Where it appears to a financial institutionthat a customer is acting on behalf of anotherperson, the institution shall take reasonablemeasures to

(a) establish the true identity not only

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The following requirements are onlyenforceable on the licensees of theCBB and the Supervisor of Insurance; Scrutiny of transactions and

updating of data or documentscollected under the CDD process

Measures for high and low riskcategories of customers

Timing of verification andfailure to complete CDD andapplication of CDDrequirements to existingcustomers.

Simplified CDD measures should not beacceptable whenever there is a suspicionof ML or TF.

The enforceability of the followingrequirements should be extended from thelicensees of the CBB and the Supervisorof insurance to all other financialinstitution;

Scrutiny of transactions and updatingof data or documents collected underthe CDD process

Measures for high and low riskcategories of customers

Timing of verification and failure tocomplete CDD and application ofCDD requirements to existingcustomers.

of the customer but also of the personon whose behalf or for whose ultimatebenefit the customer may be acting;

(b) verify the identity of both thecustomer and the person on whosebehalf or for whose ultimate benefit thecustomer may be acting by means ofreliable documents, data or informationfrom an independent source; and

(c) establish whether the customer isauthorised to act on behalf of theperson in the capacity and in theproposed business arrangement oroccasional transaction, in which he actsor seeks to act.

Section 16 of the MLFTA, 2010 states:“A financial institution shall exerciseongoing due diligence with respect toevery business arrangement and closelyexamine the transactions conducted inthe course of such an arrangement todetermine whether the transactions areconsistent with its knowledge of therelevant customer, his commercialactivities, if any and risk profile and,where required, the source of hisfunds.”

Section 17(2) of the MLFTA, 2010states:“Where a suspicion of moneylaundering or financing ofterrorism exists in connection with acustomer, a financial institution shall

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not reduce or simplify its proceduresfor identification and verification of theidentity of the customer nor itsprocedures for ongoing due diligencein respect of the customer pursuant tosections 15 and 16, respectively.”

Section 17 (1) of the MLFTA, 2010states:“The Authority may, subject tosubsection (2), issue in accordancewith section 26, guidelines as to thecircumstances in which procedures foridentification and verification of theidentity of customers or for ongoingdue diligence pursuant to sections 15and 16, respectively(a) may be reduced or simplified by afinancial institution; and(b) shall be enhanced.

Section 5 of the SA is amended togrant the Commission powers toconduct inspections and examinationsof registrants under that Act to includeself-regulatory organisations, securitiescompanies, brokers, dealers, traders,underwriters, issuers and investmentadvisers as may be necessary for givingeffect to that Act.

Section 54 of the SA has beenamended to provide the Commissionwith powers of enforcement regardingmarket actors for reasons includingfailure to comply with a condition of

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registration, or engaging in an unsoundfinancial practice.

Section 133 of the SA has beenamended to allow the Commission to,by instrument in writing, appoint aperson to conduct such investigationsas may be necessary for the properadministration of this Act and inparticular to determine the validity ofany allegation that

(a) a person has contravened,is contravening or is about tocontravene this Act; or(b) any of the circumstancesset out in section 54 exist inrespect of a registrant.”

Section 135 of the SA is amended toprovide that “where an examinationreveals that any of the circumstancesset out in section 54 exists in respect ofa registrant, the Commission may,where it considers it appropriate to doso, order the registrant, within suchperiod as the Commission may specify,to take such remedial measures oraction as the Commission directs."

Section 37 of the MLFTA, 2010 statesat subsections:

(2)“Without prejudice to the powers andfunctions of a regulatory authority under anyother law, for the purpose of discharging itsresponsibility under subsection (1) in respect ofpersons that the regulatory authority regulates,sections 29, 31 and 33 to 36 apply to the

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regulatory authority, with such modificationsand adaptations as may be necessary, asthose sections apply to the Authority.

(3) Where a person is regulated by more thanone regulatory authority, the regulatoryauthorities shall consult and identify fromamong them, the regulatory authority to assumethe primary responsibility under subsection (1).

(4) For the avoidance of doubt, notwithstanding(a) any other enactment and inparticular, any primary enablingenactment; and(b) any power or function of aregulatory authority under any primaryenabling enactment,

where it is suspected that a financial institutionis contravening or has contravened this Act, anyaction to be taken by a regulatory authority inrespect of the financial institution shall be sotaken under this Act.

Revisions to the regulatory Guidelines are in theprocess of being finalized.

6.Politically exposed persons PC Requirements for politically exposedpersons are only enforceable on thelicensees of the CBB and theSupervisor of Insurance.

The authorities should make therequirements for politically exposedpersons as stated in the CBB andSupervisor of Insurance’s AML/CFTGuidelines enforceable on all financialinstitutions.

Revisions to the regulatory Guidelines are in theprocess of being finalized.

7.Correspondent banking LC No specific requirement for financialinstitutions to ascertain whether a

Financial institutions in gatheringinformation about the quality of a

Revisions to the regulatory Guidelines are in theprocess of being finalized.

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respondent institution has been subjectto a money laundering or terroristfinancing investigation or regulatoryaction.

respondent’s supervision should ascertainwhether it has been subject to a moneylaundering or terrorist financinginvestigation or regulatory action.

8.New technologies & nonface-to-face business

PC The requirements for non-face to facecustomers are only enforceable on thelicensees of the CBB and theSupervisor of Insurance.

The authorities should make therequirements for non-face to facecustomers in the AML/CFT Guidelinesenforceable on all financial institutions.

See actions undertaken regarding enforcementas listed at Recommendation 5.

Revisions to the regulatory Guidelines are in theprocess of being finalized.

9.Third parties andintroducers

PC Requirements for third parties andintroduced business are onlyenforceable on the licensees of theCBB and the Supervisor of Insurance.

No requirement for financialinstitutions to satisfy themselves thatthe third party is regulated andsupervised in accordance withRecommendations 23, 24 and 29.

No indication of authoritiesdetermining in which countries thirdparties that satisfy the conditions ofbeing regulated and supervised andcomply with CDD requirements canbe based.

The authorities should consider makingthe requirements for third party andintroduced business as stipulated in theCBB AML/CFT Guidelines enforceableon all other financial institutions.

Financial institutions should be requiredto satisfy themselves that the third party isregulated and supervised in accordancewith Recommendation 23, 24 and 29.

Authorities should consider advisingfinancial institutions about countries fromwhich third parties that meet theconditions of being regulated andsupervised and comply with CDDrequirements can be based.

See actions undertaken regardingenforcement as listed at Recommendation 5.

Revisions to the regulatory Guidelines are in theprocess of being finalized.:

10.Record keeping NC Only records of business transactionsexceeding $10 000 are legislativelyrequired to be retained for five yearsafter termination of a transaction;

The MLFTA should be amended torequire the retention of all necessaryrecords on all transactions for a period offive years after termination of thetransaction;

Section 18 of the MLFTA, 2010requires financial institutions toestablish and maintain businesstransaction records of all businesstransactions for at least 5 years fromtermination of the businessarrangement or the transaction, where

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No requirement in law or regulationsfor account files and businesscorrespondence to be retained for atleast five years after the termination ofthe business relationship;

No direct legal requirement forfinancial institutions to ensure thatrecords available on a timely basis todomestic competent authorities.

Financial institutions should belegislatively required to maintain recordsof account files and businesscorrespondence for at least five yearsfollowing the termination of an account orbusiness relationship or longer ifrequested by a competent authority.

Financial institutions should belegislatively required to ensure that allcustomer and transaction records andinformation are available on a timelybasis.

the transaction is an occasionaltransaction; or such longer period asthe Authority may, in any specific case,direct.

Section 2 of the MLFTA, 2010 defines“ business transaction record” toinclude inter alia account files andbusiness correspondence files inrespect of the transaction.

Section 30 of the MLFTA, 2010 statesthat the FIU Director may:

(b) instruct financial institutions to takesuch steps within such time as may beappropriate to facilitate any investigation bythe Director;

(c) require from a financial institution theproduction of any information, exceptinformation subject to legal professionalprivilege, that the Director considersrelevant to fulfil its functions;

Further, subsection 4 states “For the avoidanceof doubt, a financial institution shall, withinsuch time as may be specified by the Director,or in the absence of a specified time, within areasonable time, comply with any instructionissued or request made to the institution by theDirector under this section.

11.Unusual transactions PC Monitoring requirements specified inthe AML/CFT guidelines are onlyenforceable on the licensees of theCentral Bank and the Supervisor ofInsurance

The requirements in the AML/CFTGuidelines should be enforceable on allfinancial institutions;

See actions undertaken regardingenforcement as listed at Recommendation 5.

Further, section 18(4) of the MLFTA, 2010states “Where a financial institution does not

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The retention of the written findings ofinternal examinations of transactionsis limited to transactions exceedingBD$10,000.

The AML/CFT guidelines shouldspecifically require the retention of thefindings of the internal examinations ofall transactions for at least five years

maintain business transaction records asrequired under subsections (1), (2) or (3) asthe case may be, the directors of theinstitution are guilty of an offence and areliable on conviction on indictment to a fineof $100 000.

Revisions to the regulatory Guidelines are in theprocess of being finalized.

12.DNFBP – R.5, 6, 8-11 NC The requirements of Rec. 5, 6, 8 to 11,and 17 are not adequately enforced onDNFBPs not licensed by the CBB.

It is recommended that the authoritiesenact measures to apply the requirementsof Recommendations 5, 6, 8 to 11, and 17to DNFBPs not licensed by the CBB.

Section 4 of the MLFTA, 2010 explicitly statesthat the Act applies to non-financial businessentities and professions as set out in the ThirdSchedule. Part IV establishes duties of financialinstitutions and non-financial business entitiesand professionals as it relates to the specifiedRecommendations.

Additionally, the International Corporate andTrust Service Providers Act, 2011 (ICTSPA)establishes a regime for registration andlicensing of international service providers. TheICTSPA was passed as No. 5 of 2011.Among the objectives stated at Section 4(c) areto provide for the establishment of proceduresand policies to be followed by internationalservice providers to enable international serviceproviders to

(i) know and be able to identify theirclients; and

(ii) exercise due diligence in theprovision of international services;their clients;

Section 21 of the ICTSPA states “Aninternational service provider shall comply withthe Code of Practice set out in the Second

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Schedule. The Code includes mandatoryprovisions relating inter alia to customer duediligence.

Part IV of the ICTSPA, 2011 grants the Directora range of powers of enforcement, includingpecuniary penalties, suspension and revocationof a license.

Further, as explained in the comments atRecommendations 5, the Director ofInternational Business is among the regulatoryauthorities in the Second Schedule of theMLFTA, 2010 and therefore can exercisepowers by virtue of 35(1) of the MLFTA, 2010.

There is also a reference in the Code of Practicefor International Service Providers in theSecond Schedule of the ICTSPA. The Coderefers to the fact that the international serviceprovider shall know and be able to identify &verify its clients. The ICTSPA was passed asNo. 5 of 2011.

13.Suspicious transactionreporting

LC No requirement in law or regulationsto report attempted or abortedsuspicious transactions.

Human trafficking, corruption andbribery are not adequately addressedin legislation as predicate offences.

The MLFTA should be amended to require thereporting of attempted or aborted transactionssuspected of being involved in ML or FT.

The MLFTA, 2010 defines “transaction” toinclude an attempted or aborted transaction.

A "business arrangement"(a) means an arrangement, between 2 or moreparties, the purpose of which is to facilitate afinancial or other relevanttransaction between the parties; and(b) includes(i) any related transaction between any of theparties and another person;(ii) the making of a gift; and(iii) the opening of an account;

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"business transaction" includes a businessarrangement and an occasionaltransaction;

Section 23 (1)(a) states “ A financial institutionshall monitor and report to the Director

(a) any business transaction where theidentity of the person involved, thetransaction or any other circumstanceconcerning the transaction gives theinstitution or any officer or employeeof the institution reasonable grounds tosuspect that the transaction

(i) involves proceeds of crime;(ii) involves the financing ofterrorism; or(iii) is of a suspicious or anunusual nature;”

See response at Recommendation 1 dealing withhuman trafficking, corruption and bribery.

14.Protection & no tipping-off

PC MLFTA establishes inconsistentmandatory and voluntary reportingprovisions; immunity provision underMLFTA is not referable to mandatoryreporting provisions.

Section 22A(5) of the MLFTA should beamended to remove the reference tovoluntary reporting by financialinstitutions, and section 22A(6) should berevised to make it clear that immunityagainst liability applies to the financialinstitutions reporting under sections8(1)(b) and (h) of the Act.

Section 48(5) of the MLFTA, 2010 has beenamended to establish mandatory reportingrequirements on financial institutions to giveinformation to the FIU; and provide forimmunity for financial institutions that sharesaid information with the FIU and reportsuspicious and unusual activity to the FIU, asper Section 23(2).

15.Internal controls,compliance & audit

PC The legislative provisions for internalcontrols, compliance and audit do notinclude the imposition of penalties andsanctions for failure to comply with

All legislative requirements for internalcontrols, compliance and audit shouldinclude the imposition of penalties andsanctions for failure to comply.

With respect to internal policies, auditand compliance requirements, Section19 (2) states that “Where a financialinstitution contravenes subsection (1),

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the provisions.

No enforceable requirement for thedesignation of an AML/CFTcompliance office at managementlevel or development of policies andprocedures for record retention.

Requirements for an independent auditfunction, training in new techniquesand trends in ML and FT, andscreening procedures for newemployees are only enforceable on thelicensees of the CBB and theSupervisor of Insurance.

All financial institutions should berequired to designate an AML/CFTcompliance officer at management leveland develop policies and procedures forrecord retention.

Requirements for an independent auditfunction, training in new techniques andtrends in ML and FT, and screeningprocedures for new employees should beextended from the licensees of the CBBand the Supervisor of Insurance to allfinancial institutions.

the Authority may impose on theinstitution a pecuniary penalty inaccordance with section 36”, whichdeals with pecuniary penalties.

Section 19(1) places a requirement on afinancial institution to develop andimplement internal policies, proceduresand controls to combat moneylaundering and financing of terrorism.Policies and procedures relate to allaspects of the AML/CFT program,including record retention.

Powers of onsite inspection todetermine compliance with theMLFTA are found at section 31.

See actions undertaken regardingenforcement as listed atRecommendation 5.

Revisions to the regulatory Guidelinesare in the process of being finalized.

16.DNFBP – R.13-15 & 21 NC The requirements ofRecommendations 13 to 15, 17 and 21are not adequately applied to DNFBPSnot licensed by the CBB.

The authorities should take measures toensure that the requirements ofRecommendations 13 to 15, 17 and 21 areapplied to DNFBPS not licensed by theCBB.

Section 4 of the MLFTA, 2010 explicitlystates that the Act applies to non-financialbusiness entities and professions as set out inthe Third Schedule. Part lV establishes dutiesof financial institutions and non-financialbusiness entities and professionals as itrelates to Recommendations 13, 14, 15 and17.

Also, see response to Recommendation 12,regarding international corporate and trustservice providers. The ICTSPA was passed as

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No. 5 of 2011.

17.Sanctions LC The Securities Commission and theRegistrar of Co-operative Societieshave no administrative power toinstitute sanctions for AML/CFTbreaches.

The Securities Commission and theRegistrar of Co-operative Societieshave no general powers of sanctions toeffectively address breaches bylicensees.

The Securities Commission and theRegistrar of Co-operative Societiesshould be given the administrative powerto institute sanctions for AML/CFTbreaches.

All regulators except for the CBB and theSupervisor of Insurance should havegeneral powers of sanctions to effectivelyaddress breaches by licensees

Section 37 of the MLFTA, 2010 statesat subsections:

(2)“Without prejudice to the powers andfunctions of a regulatory authority under anyother law, for the purpose of discharging itsresponsibility under subsection (1) in respect ofpersons that the regulatory authority regulates,sections 29, 31 and 33 to 36 apply to theregulatory authority, with such modificationsand adaptations as may be necessary, asthose sections apply to the Authority.

(3) Where a person is regulated by more thanone regulatory authority, the regulatoryauthorities shall consult and identify fromamong them, the regulatory authority to assumethe primary responsibility under subsection (1).

(4) For the avoidance of doubt, notwithstanding(a) any other enactment and inparticular, any primary enablingenactment; and(b) any power or function of aregulatory authority under any primaryenabling enactment,

where it is suspected that a financial institutionis contravening or has contravened this Act, anyaction to be taken by a regulatory authority inrespect of the financial institution shall be sotaken under this Act.

Section 5 of the SA is amended togrant the Commission powers toconduct inspections and examinations

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of registrants under that Act to includeself-regulatory organisations, securitiescompanies, brokers, dealers, traders,underwriters, issuers and investmentadvisers as may be necessary for givingeffect to that Act.

Section 53(4) states “In addition to thereasons set out in section 54, theCommission may suspend or revokethe registration of a securities companywhere the Commission is satisfied that

(a) the company has defaultedin any obligation undertakenin its capacity as a securitiescompany; or(b) a receiving order has beenmade against the company."

Section 54 of the SA has beenamended to provide the Commissionwith powers of enforcement regardingmarket actors for reasons includingfailure to comply with a condition ofregistration, or engaging in an unsoundfinancial practice.

Section 133 of the SA has beenamended to allow the Commission to,by instrument in writing, appoint aperson to conduct such investigationsas may be necessary for the properadministration of this Act and inparticular to determine the validity ofany allegation that

(a) a person has contravened,is contravening or is about to

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contravene this Act; or(b) any of the circumstancesset out in section 54 exist inrespect of a registrant.”

Section 135 of the SA is amended toprovide that “where an examinationreveals that any of the circumstancesset out in section 54 exists in respect ofa registrant, the Commission may,where it considers it appropriate to doso, order the registrant, within suchperiod as the Commission may specify,to take such remedial measures oraction as the Commission directs."

Section 138 (2A) reads“Notwithstanding subsection (1)(a) a person who contravenes this Actor any rule solely by reason of hisfailure to file a document or instrumentwith the Commission within the timeprescribed shall be liable to a penaltyof $1 000 for every month or partthereof that the document or instrumentremains outstanding after theexpiration of the time prescribed; and(b) the Commission may, withoutconducting a hearing, make an orderimposing a penalty pursuant toparagraph (a) for the period beginningon the day following the expiration ofthe prescribed period and ending on theday that the document or instrument isfiled."

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Section 192B of the CSA was amendedto make provision for makingdirectives and issuing cease and desistorders, where (a) after an examinationof an credit union or the receipt of anyother information, the Registrar is ofthe opinion that the funds of the creditunion are not being properly managedor protected and (b) the Registrar hasreason to believe that a credit union islikely to take any action that wouldaffect the financial soundness of thecredit union.

Section 266 of the CSA makesprovision for suspension andcancellation of registration. Subsection(e) includes failure to comply with anydirection given by the Registrar undersection 192B, as a reason forsuspension of registration.

The Act also makes provision for theappointment of a receiver-manager(section 136) or an Advisor (section192B).

Part IV of the ICTSPA, 2011 grants the Directora range of powers of sanction, includingpecuniary penalties, suspension and revocationof a license. The ICTSPA was passed as No. 5of 2011.

NC Financial institutions are not requiredto give special attention to business

The AML/CFT guidelines should providespecific guidance with regard to requiringspecial attention to business relationships

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relationships and transactions withpersons from or in countries which donot or insufficiently apply the FATFRecommendations.

No effective measures in place toensure that financial institutions areadvised of concerns about weaknessesin the AML/CFT systems of othercountries.

Written findings of internalexaminations of transactions is limitedto transactions exceeding BD$10,000.

No countermeasures issued fortransactions and business relationshipswith countries that do not apply orinsufficiently apply the FATFRecommendations.

and transactions with persons from or incountries which do not or insufficientlyapply the FATF Recommendations;

Written findings of all transactions withno apparent economic or lawful purposefrom countries that do not orinsufficiently apply the FATFRecommendations should be available forcompetent authorities;

Authorities should put in place measuresto ensure that financial institutions areadvised of concerns about weaknesses inthe AML/CFT systems of other countries;

Authorities should consider issuinginstructions regarding countermeasuresfor transactions and business relationshipswith countries that do not apply orinsufficiently apply the FATFRecommendations.

Section 18 of the MLFTA 2010 onthe duty to keep records wasamended. See details at comments toRecommendation 10.

22.Foreign branches &subsidiaries

PC The requirement for financial

institutions to ensure that their foreignbranches and subsidiaries observeAML/CFT measures consistent withthe requirements of Barbados is onlyenforceable on the licensees of theCBB and the Supervisor of Insurance.

No requirement for financial

The requirement for financial institutionsto ensure that their foreign branches andsubsidiaries observe AML/CFT measuresconsistent with the requirements ofBarbados and the FATF should beextended from the licensees of the CBBand the Supervisor of Insurance to allfinancial institutions.

Financial institutions should be required

Refer to earlier comments regardingRecommendations 5 and 17 onenhanced enforcement powers ofregulators.

Revisions to the regulatory Guidelinesare in the process of being finalized.

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institutions to pay particular attentionthat their foreign branches andsubsidiaries in countries which do notor insufficiently apply the FATFRecommendations observe AML/CFTmeasures consistent with requirementsin Barbados and the FATFRecommendations

No requirement for branches andsubsidiaries in host countries to applythe higher standard where theminimum AML/CFT requirements ofthe home and host countries differ tothe extent that host country laws andregulations permit.

The requirement for financialinstitutions to inform their homecountry supervisor when a foreignbranch or subsidiary is unable toobserve appropriate AML/CFTmeasures because this is prohibited bylocal laws, regulations or othermeasures is only enforceable on thelicensees of the CBB and theSupervisor of Insurance.

to pay particular attention that theirforeign branches and subsidiaries incountries which do not or insufficientlyapply the FATF Recommendationsobserve AML/CFT measures consistentwith requirements in Barbados and theFATF Recommendations.

Branches and subsidiaries in hostcountries should apply the higherstandard where the minimum AML/CFTrequirements of the home and hostcountries differ to the extent that hostcountry laws and regulations permit.

The requirement for financial institutionsto inform their home country supervisorwhen a foreign branch or subsidiary isunable to observe appropriate AML/CFTmeasures because this is prohibited bylocal laws, regulations or other measuresshould be extended from the licensees ofthe CBB and the Supervisor of Insuranceto all financial institutions.

23.Regulation, supervisionand monitoring

PC The Securities Commission has nopower of approval over ownership ofsignificant or controlling interests ofits registrants.

The Registrar of Co-operatives has nopower of approval over seniormanagement of its licensees.

The Securities Commission is notrequired to use fit and proper criteria

The Securities Commission should havepower to approve ownership ofsignificant or controlling interests of theirregistrants.

The Registrar of Co-operatives shouldhave power to approve seniormanagement of their licensees.

The Securities Commission should berequired to use fit and proper criteria in

The Fourth Schedule of the MLFTA2010 amends section 126 (1) bymaking provision for “prescribing theformat and content of filings andapplications and the filing of copies ofdocuments filed with any governmentagency, including with respect toelectronic filing of matters;”

Section 54 makes the followinggrounds for suspension and revocation

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in approving directors, seniormanagement and ownership ofsignificant or controlling interests oftheir licensees.

Stand alone MVT service providersare not subject to effective systems formonitoring and ensuring compliancewith national AML/CFT requirements..

approving directors, senior managementand ownership of significant orcontrolling interests of their licensees.

There is need for the development andimplementation of a framework forregulating and supervising MVT servicesthat are not licensees of the Central Bank.

of registration –(k) the market actor is otherwise financiallyunsound;(l) the market actor has been convicted of anoffence involving fraud or dishonesty;(m) the market actor has been guilty of anyother type of misconduct;

It is also now an offence to knowinglyor recklessly make:“(i) a misrepresentation in any filing,application, notification, or otherdocument required to be filed,delivered or notified to theCommission under this Act;or(ii) any other misrepresentation incontravention of this Act or anyregulation;"

Revision to 142(1) of the SA.

The Fourth Schedule of the MLFTA2010 amends section 7 of theCooperatives Act to make it acondition of a license that the directorsand other officers of the society are fitand proper to hold their respectiveoffice.

Further, the Fourth schedule of theMLFTA 2010 amends section 4 of theEIA and section 12(1) of the IA toinsert a similar provision relating tofitness and propriety.

Further, section 7. (1) of the ICTSPA,2011 states: “A person may, in the

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prescribed form, apply to the Directorfor a licence to provide(a) an international corporate service;or(b) an international trust service.

(2) An applicant shall submit with theapplication such information and documents asthe Director may require to determinewhether a license should be issued to theapplicant.(3) Where the Director is satisfied that anapplicant

(a) is a fit and proper person to providean international service;(b) has the financial standing necessaryto operate the business;..”

A general framework for regulation of MVTs isbeing considered under the new FinancialServices Commission. The Financial ServicesCommission Act was passed as No. 21 of 2010and the Commission came into effect on April1, 2011.

24. DNFBP - regulation,supervision and monitoring

NC No measures to monitor and ensurecompliance of DNFBPs withAML/CFT requirements except thoselicensed by the CBB.

It is recommended that the authoritiestake measures to ensure that therequirements of Recommendations 24 and25 should apply to DNFBPs not licensedby the CBB.

Section 4 of the MLFTA, 2010 explicitly statesthat the Act applies to non-financial businessentities and professions as set out in the ThirdSchedule. Part lV establishes duties of financialinstitutions and non-financial business entitiesand professionals as it relates toRecommendations 24 and 25.

Additionally, the ICTSPA, 2011 establishes aregime for registration and licensing ofinternational service providers. The ICTSPA

35

was passed as No. 5 of 2011.Among the objectives stated at Section 4(c) areto provide for the establishment of proceduresand policies to be followed by internationalservice providers to enable international serviceproviders to

(iii) know and be able to identify andverify their clients; and

(iv) exercise due diligence in theprovision of international services;their clients;

Section 21 of the ICTSPA states “Aninternational service provider shall comply withthe Code of Practice set out in the SecondSchedule. The Code includes mandatoryprovisions relating inter alia to customer duediligence.

Part IV of the ICTSPA, 2011 grants the Directora range of powers of sanction, includingpecuniary penalties, suspension and revocationof a license.

25. Guidelines & Feedback PC The FIU does not provide feedback onSTRs to financial institutions.

No specific guidelines have beenissued for DNFBPS to implement andcomply with AML/CFT requirementsexcept those regulated by the CBB.

The FIU should provide feedback tofinancial institutions with regard tosuspicious transaction reports.

The FIU currently provides specific feedback tofinancial institutions with respect to ongoingSTRs. This is done in a manner that will notcompromise the investigation process. Asmatters are completed or closed, the financialinstitutions will be given a short summary ofbasic findings.

Institutional and othermeasures26.The FIU LC No annual report released by the FIU The FIU should publicly release all The outstanding annual reports have been

36

since the 2000/2001 report. There wasno information on typologies andtrends with regard to SUTRs in thereport.

outstanding annual reports and include insuch reports, statistics, typologies andtrends as well as information regarding itsactivities.

The FIU should seek to enhance the levelof AML/CTF awareness within the localfinancial services sector with a view toproviding more detailed guidance toreporting institutions as to their reportingobligations under Section 8 (b) of theMLFTA. This would seek to addressconcerns of possible under-reporting byfinancial institutions.

The FIU should seek to follow through onits plans to further upgrade its ITcapabilities. This would diminish itsreliance on manual processes and theolder and less reliable electronic storagesystems (Microsoft access) currentlybeing utilized to handle and storeinformation.

While the FIU was able to produceadequate statistics relating to SUTRs, itshould seek to broaden these statistics soas to include prescribed predicateoffences linked to SUTRs filed byreporting institutions

completed and sent to Parliament.

The FIU provides more detailed guidance tofinancial institutions via discussions andmeetings with compliance officers as well asdetailed training for the staff. This trainingincludes the analysis of key factors that willtrigger the reporting obligation.

The FIU has upgraded its IT system through theacquisition of additional research tools and amore robust database system. Security has beenincreased with the installation of additionalfirewalls.

29.Supervisors LC The Securities Commission does nothave the authority to conductinspections of financial institutions,including on-site inspections to ensure

The Securities Commission should havethe authority to conduct inspections offinancial institutions, including on-siteinspections to ensure compliance.

Section 5 of the SA is amended togrant the Commission powers toconduct inspections and examinations

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compliance. of registrants under that Act to includeself-regulatory organisations, securitiescompanies, brokers, dealers, traders,underwriters, issuers and investmentadvisers as may be necessary for givingeffect to that Act.

As mentioned previously, amendments atsections 133 and 135 also speak to theCommission’s powers in this regard.

30.Resources, integrity andtraining

PC The FIU lacks sufficient resources(human and technological) to allow itto properly carry out all its functionsin its mandate.

Law enforcement and prosecutorialauthorities are inadequately resourced.

The Registrar of Co-operativeSocieties has inadequate number ofstaff

Authorities should consider giving theFIU greater access or control of itsfinances so as to enhance its currentstructure. This would allow the FIU tomaintain and where possible increase itscurrent level of staffing and furtherdevelop its IT capabilities so as toconduct more detailed analysis andinvestigation of SUTRs.

The FIU has upgraded its IT systemthrough the acquisition of a morerobust database system and increasedprotection through the installation ofadditional firewalls and research tools.

Between 2006 until present, the RoyalBarbados Police Force has recruitedapproximately 200 additional persons.

Staffing is being strengthened with theestablishment of the Financial ServicesCommission, under whose umbrella will sit theregulation and supervision of cooperatives. TheFinancial Services Commission Act was passedas No. 21 of 2010 and the Commission cameinto effect on April 1, 2011.

32.Statistics LC No statistics on the following; Cross-border declaration reports Spontaneous referrals made by the

FIU to foreign authorities

Insufficient details on mutual legal

The competent authorities should seek tobroaden the type of statistical datamaintained in relation to the cross-borderdeclaration system. Apart from assistingthe authorities in measuring theeffectiveness of the cross-borderdeclaration system, it will also assist in

The Customs Department now maintainsstatistics with respect to cross-borderdeclarations.

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assistance requests. identifying existing weaknesses thusallowing the competent authorities toenhance the system where necessary so asto facilitate and ensure strictercompliance.

The authorities should maintain statisticson spontaneous referrals made by the FIUto foreign authorities.

The FIU now maintains statistics onspontaneous referrals of information to foreignauthorities.

33.Legal persons – beneficialowners

PC There is no legislative requirement forlegal persons to disclose beneficialownership information.

The authorities should considerimproving the present system for accessto beneficial ownership by establishing acomplementing national registry.

The authorities should enact legislativerequirements for legal persons to disclosebeneficial ownership information.

As recommended, Barbados has carefullyconsidered the recommendation and will not bepursuing this action at present.

34.Legal arrangements –beneficial owners

PC International trusts supervised by theMinistry of Economic Affairs anddevelopment, lawyers and accountantsare not subject to measures formonitoring and ensuring compliancewith AML/CFT requirements i.e.retention of beneficial ownership andcontrol information.

It is recommended that the authoritiesshould implement measures formonitoring and ensuring compliance ofinternational trusts supervised by theMinistry of Economic Affairs andDevelopment, lawyers and accountantswith AML/CFT requirements i.e.retention of beneficial ownership andcontrol information.

See previous comments regarding theInternational Corporate and Trust ServiceProviders Act, 2011. The ICTSPA was passedas No. 5 of 2011.

Supervision will be strengthened with theestablishment of the Financial ServicesCommission,. The Financial ServicesCommission Act was passed as No. 21 of 2010and the Commission came into effect on April1, 2011.

International Co-operation35.Conventions LC All designated categories of offences

are not adequately addressed in the The authorities should fully implement;

(i) the Palermo Convention byThe Transnational Organised Crime (Preventionand Control) Act was passed in Parliament as

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range of predicate offences Instrumentalities intended for use in

the commission of an offence are notsubject to restraint/forfeituremeasures.

The custodial definition of seriouscrime under the restraint/forfeitureregime is narrower than the PalermoConvention

specifically legislating for humantrafficking and updating thecorruption/bribery laws; (ii) UNResolutions S/RES/1373(2001) byexplicitly legislating a mechanism tofreeze assets of UN designated entities.

No. 3 of 2011

The Prevention of Corruption Bill has beendiscussed and approved by Cabinet.

36.Mutual legal assistance(MLA)

PC Range of mutual legal assistance doesnot include the instrumentalities ofML and FT.

Compulsory evidence gathering andforfeiture powers under POCA are notavailable to the Central Authority.

The custodial element of serious crimeunder the restraint/forfeiture regime isnarrower than the PalermoConvention.

No mechanism to deal with dualjurisdictional conflict.

Not possible to assess effectiveness ofmutual legal assistance measures dueto limited number of MLAT’s.

The definition of “serious offences” underMACMA should be revised to make itapplicable to offences attracting at least a4-year custodial penalty, in accordancewith the Palermo Convention.

The MACMA provisions dealing withrestraint, forfeiture and confiscationshould be amended to ensureinstrumentalities of, or intended for usein, the relevant offences are covered.

The range of evidence-gathering powersavailable for the satisfaction of mutualassistance requests should be reviewed.In particular, monitoring order and otherpowers under POCA should be examinedwith a view to extending their applicationto serious offences committed locally orabroad.

The authorities should consider devisingand applying mechanisms for dealingwith dual jurisdictional conflict.

The authorities should consider increasingtheir capacity for information exchange

The Fourth Schedule of the MLFTA amendssection 2 of the MACMA to reduce thedefinition of “serious offences” to 4 years. Thenew Section 2(6) also refers to instrumentalities.

MACMA has also been amended to includesection 16A and section 27A relating toassistance in obtaining a forfeiture orconfiscation order.

The new Section 31A of the MACMA statesthat sections 42-46 (production and inspectionorders); section 47(search warrants) and Section48-9 (monitoring orders) of the POCA apply toMACMA.

The FIU is in the process of negotiating severalMOUs and has signed MOUs with St. Vincent

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under section 6C of the MLFTA byseeking to negotiate bilateral agreementsor MOU’s with foreign states.

The authorities should considernegotiating with the UK Government foranother MLAT covering areas outsidedrugs dealing; and generally seekopportunities to progressively concludeMLAT’s with a broader range ofcountries.

and the Grenadines and Bermuda.

38.MLA on confiscation andfreezing

PC No provision for foreign states torequest local authority to apply forforfeiture/confiscation orders or viceversa except in limited circumstancesunder section 16 of the ATA.

No provision for the freezing, seizureor confiscation of instrumentalities ofML and FT.

No arrangements for co-coordinatingseizure and confiscation actions withother countries.

No evidence of consideration ofestablishing an asset forfeiture fund

MACMA should be amended to enableBarbados or foreign states to seekreciprocal assistance in obtainingforfeiture/confiscation orders in thejurisdiction of the other country, wherethe suspect has been convicted of aserious offence in the requesting state. Inparticular, where Barbados’s assistance isbeing sought, the forfeiture/confiscationpowers under POCA should be madeavailable.

The establishment of a dedicatedforfeiture fund whose proceeds should beearmarked for law enforcement or otherdeserving purposes should be considered.

Extension of the existing statutorycoverage of asset sharing with othercountries so that the facility is available incases of all serious crimes should beconsidered.

MACMA has also been amended to includesection 16A and section 27A relating toassistance in obtaining a forfeiture orconfiscation order. The new Section 31A of theMACMA states that sections 42-46 (productionand inspection orders); section 47 (searchwarrants) and Section 48-9 (monitoring orders)of the POCA apply to MACMA.

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40.Other forms of co-operation

LC The Ministry of Economic Affairs andDevelopment cannot share informationwith foreign counterparts

The Registrar of Co-operativeSocieties can only share informationby Court Order.

The Ministry of Economic Affairs andDevelopment should be authorized toshare information with foreigncounterparts.

The Registrar of Co-operative Societiesshould be empowered to shareinformation with foreign counterpartswithout a Court Order

The Fourth Schedule of the MLFTA 2010amends section 25(3) of the IBC Act to permitthe disclosure of information under the MLFTA2010.

The Fourth Schedule of the MLFTA 2010amends section 71 of the CSA by makingprovision for the sharing of information withforeign counterparts. See comments atRecommendation 5.

Nine SpecialRecommendations

Summary of factors underlying rating

SR.I Implement UNinstruments

PC No requirement to freeze terroristfunds or other assets of personsdesignated by the UN Al-Qaida andTaliban Sanctions Committee.

Overlap between ATA and POCArespecting freezing/forfeiture andambiguous aspects to ATA forfeiturepower, both detracting fromeffectiveness

The authorities should fully implement;(i) the Palermo Convention byspecifically legislating for humantrafficking and updating thecorruption/bribery laws; (ii) UNResolutions S/RES/1373(2001) byexplicitly legislating a mechanism tofreeze assets of UN designated entities.

As mentioned at Recommendations 1 and 3, TheTransnational Organised Crime (Prevention andControl) Act was passed in Parliament as No. 3of 2011. The Prevention of Corruption Bill hasbeen discussed and approved by Cabinet. TheATA Cap. 158 is absolute in that it does notprovide any restriction whatsoever relating tothe freezing of assets.

SR.III Freeze and confiscateterrorist assets

PC No requirement to freeze terroristfunds or other assets of personsdesignated by the UN Al-Qaida andTaliban Sanctions Committee.

Divergent policy re forfeiture/restraintunder ATA and POCA.

The authorities incorporate intolegislation requirements, a specialmechanism to enable thefreezing/restraint of assets owned orcontrolled by persons/entities designatedby the UN Sanctions Committee, inkeeping with UN Security CouncilResolution 1267 of 1999. Therequirements should also confer power toauthorise the release of funds required to

The POCA schedule has been amended toinclude sections 3 to 6 of the ATA. The MLFTA2010 refers to both ML & TF.

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be frozen, for the purpose of meetingbasic expenses associated with, e.g., theaccused’s reasonable subsistence ordefence of criminal proceedings. The2002 Commonwealth Model LegislativeProvisions on the “specified (listed)entity” regime provide a useful guide.

The authorities should critically reviewthe freezing/restraint and forfeitureregimes under the ATA and POCA, witha view to amending the legislation toprovide for a uniform approach to thesemeasures.

The authorities should review the groundsneeded to support an application for afreezing order under section 8(1) of theATA, so as to ensure consistency betweenlocal cases and those arising from mutuallegal assistance requests.

Expand the scope of the MLFTA toincorporate FT in sections 9-11.

The equivalent sections 9-11 in the previous Actare section 20-21 and 39 of the MLFTA 2010.

SR.IV Suspicioustransaction reporting

LC No requirement in law or regulationsto report attempted or abortedsuspicious transactions.

The MLFTA should be amended torequire the reporting of attempted oraborted transactions suspected of beinginvolved in ML or FT.

Refer to previous comments relating toRecommendation 13.

SR.V International co-operation

PC Factors in Recs. 36 and 38 are alsoapplicable.

The definition of “serious offences” underMACMA should be revised to make itapplicable to offences attracting at least a4-year custodial penalty, in accordancewith the Palermo Convention.

This has been dealt with in Recommendation 36and 38.

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The MACMA provisions dealing withrestraint, forfeiture and confiscationshould be amended to ensureinstrumentalities of, or intended for usein, the relevant offences are covered.

The range of evidence-gathering powersavailable for the satisfaction of mutualassistance requests should be reviewed.In particular, monitoring order and otherpowers under POCA should be examinedwith a view to extending their applicationto serious offences committed locally orabroad.

The authorities should consider devisingand applying mechanisms for dealingwith dual jurisdictional conflict.

The authorities should consider increasingtheir capacity for information exchangeunder section 6C of the MLFTA byseeking to negotiate bilateral agreementsor MOU’s with foreign states.

The authorities should considernegotiating with the UK Government foranother MLAT covering areas outsidedrugs dealing; and generally seekopportunities to progressively concludeMLAT’s with a broader range ofcountries.

MACMA should be amended to enableBarbados or foreign states to seekreciprocal assistance in obtainingforfeiture/confiscation orders in the

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jurisdiction of the other country, wherethe suspect has been convicted of aserious offence in the requesting state. Inparticular, where Barbados’s assistance isbeing sought, the forfeiture/confiscationpowers under POCA should be madeavailable.

The establishment of a dedicatedforfeiture fund whose proceeds should beearmarked for law enforcement or otherdeserving purposes should be considered.

Extension of the existing statutorycoverage of asset sharing with othercountries so that the facility is available incases of all serious crimes should beconsidered.

SR VI AML requirementsfor money/valuetransfer services

NC Stand alone MVT providers are notregulated or supervised for compliancewith AML/CFT requirements

No requirement for MVT serviceoperators to maintain a current list ofagents.

It is recommended that the authoritiesproceed in developing a framework forthe regulation and supervision of MVTservices not provided by licensees of theCBB.

A general framework for regulation of stand-alone MVTs is being considered under the newFinancial Services Commission. ,. TheFinancial Services Commission Act was passedas No. 21 of 2010 and the Commission cameinto effect on April 1, 2011.

SR VII Wire transfer rules PC Stand-alone money-remitters are notsubject to any regulatory oversightexcept for exchange control purposes.

Stand-alone money remitters should bemonitored for compliance with therequirements of SR VII.

A general framework for regulation of stand-alone MVTs is being considered under the newFinancial Services Commission. ,. TheFinancial Services Commission Act was passedas No. 21 of 2010 and the Commission cameinto effect on April 1, 2011

SR.VIII Non-profitorganisations

LC Sanctions for breaches of CharitiesAct are not dissuasive.

The authorities should carefully considerthe FATF’s 2002 Best Practices Paper on

The Fourth Schedule of the MLFTA amends theSection 41(1) Charities Act as follows:

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Special Recommendation VIII, whichadvocates a number of measures fortightening the regime for NPO’s,including the incorporation ofmechanisms to verify the actual allocationof charitable funds to the intendedbeneficiaries.

Revise the sanctions for breaches of theAct to make them appropriatelydissuasive in effect.

"(6A) Where there is a change in thecomposition of trustees of a charityregistered under this section, thetrustees shall, within 15 days of thedate of the change, file with theRegistrar a notice containingparticulars of the change.

(6B) Where charity trustees fail to complywith subsection (6A), the Registrar mayimpose on the charity trustees a penalty of$100.(6C) Where a penalty imposed pursuant tosubsection (6B) is not paid, the Registrarmay recover the amount as a debt due to theCrown in civil proceedings before theMagistrate's Court for District "A".

Delete section 6 and substitute thefollowing:

6. (1) A charity trustee of a charity who withoutreasonable excuse fails to register the charity inaccordance with section 5 is guilty of an offenceand is liable on summary conviction to a fine of$ 5 000 or to imprisonment for 6 months or toboth and to an additional fine of $500 foreveryday or part thereof that the offencecontinues after a conviction is first obtained.

(2) Without prejudice to subsection (1), where acharity trustee of a charity fails to register thecharity in accordance with section 5, thecharity trustee shall not be entitled to claim anytax exemptions under any enactment in respectof the charity for the income year during whichthe charity remained unregistered."

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In section 8, delete the words "IncomeTax Commissioner" and substitute thewords "Commissioner of Inland Revenue".

In section 19(4), delete the words "$250"and "$25"and substitute the words "$5 000"and "$500", respectively.

In section 38(4),(a) delete the word "$500" and substitutethe word "$5 000";(b) delete the word "3" and substitute theword "6"; and(c) delete the word "$50" and substitutethe word "$500".

In section 41(1), delete the word "15" andsubstitute the word "12".

In section 42, delete subsection (6) andsubstitute the following:

"(6) Any person who fails to(a) transmit to the Registrar any statement ofaccount required by subsection (1);(b) afford an auditor any facility to whichhe is entitled under subsection (4); or(c) make full disclosure to the Registrar of allmaterial facts required to be disclosed under thisAct or knowingly makes a false statement of amaterial fact or makes a statement containinginformation that is misleading in light of thecircumstances in which it was made, is guilty ofan offence and is liable on summary convictionto a fine of $5000 or to imprisonment for 6months or to both and to a further fine of $500for every day or part thereof that the offencecontinues after a conviction is first obtained.".

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In section 47(2), insert after the word"received", the words "and penaltiesimposed and collected".

The Companies (Amendment) Act waspassed as No. 8 of 2011 and furtherstrengthens the regulation of NPOs.

SR.IX Cross BorderDeclaration & Disclosure

LC Suspicion of money laundering or

terrorist financing or making a falsedeclaration do not provide basis forstopping and seizure of currency andnegotiable instruments.

Effectiveness of system to detectcross-border transfer of currency andnegotiable instruments cannot beevaluated due to lack of statistics.

Suspicion of money laundering orterrorist financing or making a falsedeclaration should provide grounds forstopping and seizure of currency andnegotiable instruments.

The competent authorities shouldconsider including penalties for themaking of false declarations inaccordance with the relevant section ofthe Customs Act on the PassengerEmbarkation/Disembarkation card.

The Customs Department currently maintainsstatistics with respect to cross-borderdeclarations.