Proceeds of Crime

PROCEEDS OF CRIME (MONEY LAUNDERING) REGULATIONS
1998


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BR 9/1998

PROCEEDS OF CRIME ACT 1997

1997 : 34

PROCEEDS OF CRIME (MONEY LAUNDERING) REGULATIONS
1998


ARRANGEMENT OF REGULATIONS

1 Citation and
commencement

2 Interpretation
3 Voluntary regulated

institutions
4 Identification procedures

5 Record-keeping
procedures

6 Reporting procedures
7 Training procedures
8 Offences
9 Transitional provision



In exercise of the powers conferred upon the Minister of Finance
by section 49 of the Proceeds of Crime Act 1997, the following
regulations are hereby made:⎯

Citation and commencement
1 These Regulations may be cited as the Proceeds of Crime (Money
Laundering) Regulations 1998 and shall come into force on 30th January
1998.


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1998NINSTITUTIOS) REGULATIONS 1997


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Interpretation
2 (1) For the purpose of these Regulations, "money laundering",
and other expressions used in the Proceeds of Crime Act 1997, shall
have the meaning given by that Act.

(2) In these Regulations⎯

(a) "regulated institution" means⎯

(i) a bank licensed under the Banks Act 1969;

(ii) a deposit company licensed under the Deposit
Companies Act 1974;

(iii) a trust company licensed under the Trust
Companies Act 1991, and any other person to
the extent that he is carrying on trust business
(as defined in that Act) in or from within
Bermuda;

(iv) a company or society registered under the
Insurance Act 1978 to the extent that it is
carrying out long-term insurance (but not
reinsurance) business within the meaning of
that Act, other than life insurance or disability
insurance;

(v) a credit union registered under the Credit
Unions Act 1982;

(vi) a person processing subscriptions or
redemptions related to a collective investment
scheme (as defined in section 1(2)(a) of the
Bermuda Monetary Authority Act 1969);

(vii) a trading member of the Bermuda Stock
Exchange resident or, in relation to a body
corporate, with a place of business, in Bermuda;

(viii) a trading member or futures commission
merchant of the Bermuda Commodities
Exchange, or a member of the Bermuda
Commodities Exchange Clearing House, resident
or, in relation to a body corporate, with a place
of business, in Bermuda;

(ix) a person authorised by the Bermuda Monetary
Authority to offer currency exchange services;

(x) a voluntary regulated institution;


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(b) "voluntary regulated institution" means a person or
entity whose application to be a voluntary regulated
institution has been approved under regulation 3;

(c) "foreign regulated institution" means a person or entity
subject to regulation in any other jurisdiction which is at
least equivalent to these Regulations;

(d) "employee", in relation to a regulated institution,
includes an officer or director of the institution and any
person appointed to manage its business.

Voluntary regulated institutions
3 (1) Any person or entity who does not fall within the definition
of regulated institution in regulation 2(2)(a) by virtue of paragraphs (i) to
(ix) may apply in writing to the Minister to become a voluntary regulated
institution for the purposes of these Regulations.

(2) Before granting or refusing such an application, the
Minister shall consult the National Anti-Money Laundering Committee
and shall consider the ability of the applicant to comply with these
Regulations.

(3) In any case where the Minister⎯

(a) receives written notice from a voluntary regulated
institution that it no longer wishes to be regulated and,
having consulted the National Anti-Money Laundering
Committee, he is satisfied that it is appropriate that it
should no longer be a voluntary regulated institution; or

(b) having consulted the National Anti-Money Laundering
Committee, no longer considers that a voluntary
regulated institution is able to comply with these
Regulations,

he shall notify the institution that from the date of the notice it shall
cease to be a voluntary regulated institution but must continue to keep,
in accordance with regulation 5, all records relating to its business
before that date.

(4) The Minister shall from time to time issue a list of voluntary
regulated institutions.

Identification procedures
4 (1) A regulated institution shall establish and maintain
identification procedures which require⎯


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1998NINSTITUTIOS) REGULATIONS 1997


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(a) that any applicant for business of a type mentioned in
paragraph (2) shall produce satisfactory evidence of his
identity as soon as practicable after first making contact
with the regulated institution; and

(b) that where such satisfactory evidence is not obtained the
business in question shall not proceed any further or, in
relation to business mentioned in paragraph (2)(d), shall
only proceed in accordance with any directions that may
be given for the purpose by a police officer.

(2) This regulation applies to the following types of business⎯

(a) the forming of a business relationship;

(b) a one-off transaction where payment is to be made by or
to the applicant of $10,000 or more;

(c) two or more one-off transactions which⎯

(i) appear to any person handling the transaction
on behalf of the regulated institution to be
linked, and

(ii) in respect of which the total amount payable by
or to the applicant is $10,000 or more;

(d) where in respect of any one-off transaction any person
handling the transaction on behalf of the regulated
institution knows or suspects⎯

(i) that the applicant is engaged in money
laundering; or

(ii) that the transaction is carried out on behalf of
another person engaged in money laundering.

(3) Where an applicant for business is introduced to a
regulated institution by another regulated institution or foreign regulated
institution, a written assurance from the introducing institution to the
effect that evidence of the identity of the applicant has been obtained and
recorded under procedures maintained by the introducing institution
shall be satisfactory evidence of identity for the purposes of paragraph
(1).

(4) A regulated institution shall establish and maintain
identification procedures which require that, in any case where an
applicant for business appears to be acting otherwise than as principal,
reasonable measures shall be taken for the purpose of establishing the
identity of the person on whose behalf the applicant for business is
acting.


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1998


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(5) Where the applicant for business in a case mentioned in
paragraph (4) is another regulated institution or a foreign regulated
institution, it shall be reasonable for the regulated institution to accept a
written assurance from the applicant for business to the effect that
evidence of the identity of the principal has been obtained and recorded
under procedures maintained by the applicant for business.

(6) In this regulation⎯

"$10,000" means $10,000 or any foreign currency equivalent;

"applicant for business" means any person, seeking to form a
business relationship, or carry out a one-off transaction, with
a regulated institution;

"business relationship" means any arrangement between any
person and a regulated institution, the purpose of which is to
facilitate the carrying out of financial and other related
transactions on a regular basis;

"established business relationship" means a business
relationship in relation to which the regulated institution has
obtained satisfactory evidence of identity of the applicant for
business as required by this regulation;

"one-off transaction" means a transaction carried out other than
in the course of an established business relationship.

(7) For the purposes of this regulation, the question as to what
constitutes⎯

(a) satisfactory evidence of identity, or

(b) reasonable measures for establishing the identity of a
principal,

may be determined in accordance with any relevant guidance issued by
the National Anti-Money Laundering Committee.

Record-keeping procedures
5 (1) Where a regulated institution obtains evidence of a person's
identity as required by regulation 4 it shall keep for the minimum
retention period⎯

(a) a copy of that evidence; or

(b) a record indicating the nature of that evidence and
providing such information as would enable a copy of it
to be obtained.


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(2) A regulated institution shall also keep for the minimum
retention period such records or copies of records containing such
details relating to its business as may be necessary to assist an
investigation into suspected money laundering.

(3) A regulated institution shall keep all such records or copies
in such a way as to allow for their retrieval in legible form within a
reasonable period of time.

(4) For the purposes of this regulation, the minimum retention
period in relation to a record held by a regulated institution is—

(a) if the record relates to the opening of an account with
the institution, the period of five years after the day on
which the account is closed;

(b) if the record relates to the renting by a person of a
deposit box held by the institution, the period of five
years after the day on which the deposit box ceases to be
used by the person; or

(c) in any other case, the period of five years after the day
on which the transaction recorded takes place;

but in any case where a police officer has notified a regulated institution
in writing that particular records are or may be relevant to an
investigation which is being carried out, records shall be retained
pending the outcome of the investigation.

(6) For the purposes of this regulation, the question as to what
records may be necessary to assist an investigation into suspected
money laundering may be determined in accordance with any relevant
guidance issued by the National Anti-Money Laundering Committee.

Internal reporting procedures
6 (1) A regulated institution shall institute and maintain internal
reporting procedures which include provision⎯

(a) identifying a person ("the reporting officer") to whom a
report is to be made of any information or other matter
which comes to the attention of an employee and which
in the opinion of that employee gives rise to a knowledge
or suspicion that another person is engaged in money
laundering;

(b) requiring that any such report be considered by the
reporting officer in the light of all other relevant
information for the purpose of determining whether or
not the information or other matter contained in the
report does give rise to such a knowledge or suspicion;


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1998


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(c) allowing the reporting officer to have access to any other
information which may be of assistance to him in
considering the report; and

(d) requiring the reporting officer to disclose to a police
officer the information or other matter contained in a
report, where the reporting officer knows or suspects
that a person is engaged in money laundering.

Training procedures
7 (1) A regulated institution shall take appropriate measures
from time to time for the purpose of making all relevant employees aware
⎯

(a) of the Proceeds of Crime Act 1997, these Regulations
and any other statutory provision relating to money
laundering; and

(b) of the procedures maintained by the institution in
compliance with the duties imposed under these
Regulations.

(2) A regulated institution shall provide all relevant employees
from time to time with appropriate training in the recognition and
handling of transactions carried out by or on behalf of any person who
is, or appears to be, engaged in money laundering.

(3) Training under this regulation shall in addition be given to
all new relevant employees as soon as practicable after their
appointment.

(4) For the purposes of this regulation, an employee is a
relevant employee if, at any time in the course of his duties, he has, or
may have, access to any information which may be relevant in
determining whether any person is engaged in money laundering.

Offences
8 (1) A person who carries on business without complying with
the requirements of these Regulations shall be guilty of an offence and
liable⎯

(a) on summary conviction to a fine of $10,000;

(b) on conviction on indictment⎯

(i) for a first offence, to a fine of $50,000;

(ii) for a second or subsequent offence, to a fine of
$100,000.


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(2) In determining whether a person has complied with the
requirements of these Regulations, the trial court may take account of
any relevant guidance issued by the National Anti-Money Laundering
Committee.

(3) In proceedings for an offence under these Regulations it
shall be a defence to prove that a person took all reasonable steps and
exercised due diligence to comply with the requirements of these
Regulations.

(4) Section 56 of the Proceeds of Crime Act 1997 (offences by
bodies corporate) shall apply in relation to offences under these
Regulations as it applies to offences under that Act.

Transitional provision
9 (1) In this regulation, "pre-existing business relationship"
means a business relationship (as defined in regulation 4) formed by a
regulated institution before the date on which these Regulations come
into effect.

(2) For the purposes of regulation 4, any pre-existing business
relationship shall be treated as an established business relationship.

(3) Nothing in these Regulations shall require a regulated
institution to maintain procedures which require evidence to be obtained
in respect of any pre-existing business relationship as to the identity of
the person with whom that relationship has been formed.

(4) Where an application under regulation 3 is granted,
paragraph (1) shall apply to the voluntary regulated institution in
question with the substitution for the words "before the date on which
these Regulations come into effect" of the words "before the date on
which its application under regulation 3 is granted."