BMA: Fine Reflected ‘Serious Nature of Breaches’

November 28, 2010

The Bermuda Monetary Authority [BMA] says while no evidence of money laundering was discovered during its recent investigation of the First Bermuda Group, the $100,000 fine levied against the firm in September reflected the “serious nature” of its breaches of Bermuda’s tough new Proceeds of Crimes Regulations.

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In its latest regulatory update, the BMA said the authority would continue to use all regulatory tools at its disposal to ensure companies in the financial services sector remain compliant with Bermuda’s anti-money laundering and anti-terrorist regime. ”

The Authority has fined deposit-taking firm First Bermuda Group [FBG] $100,000 for a number of compliance failings related to the Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing) Regulations 2008 (the Regulations),” said the BMA report. “An on-site inspection by the Authority found that the company’s internal controls in relation to anti-money laundering fell well below the standards set by the Regulations. No evidence of actual money laundering was uncovered and the security of customers’ deposits are not threatened by the internal controls issues identified.

“The decision to take enforcement action and the size of the penalty applied to FBG reflects the serious nature of the internal control failings, which occurred throughout a period of some 16 months after the Regulations became effective in January 2009. In setting the amount of the penalty, however, the Authority took into account the early admissions of the company and the work it has done since to remedy the deficiencies. This is the first such action the Authority has taken using its wider powers under the Proceeds of Crime Regulations (Supervision and Enforcement) Act 2008,which include the ability to impose financial penalties on non-compliant firms.”

When the BMA fined the investment company in August, FBG chairman Eugene Bean said: ”FBG is committed to working with our regulators to ensure a financial environment of the highest standard. FBG wishes to thank the BMA for allowing us to reach a quick settlement and conclusion to these unfortunate events. The Bermuda Monetary Authority has recognised the extent and significance of the remedial efforts initiated by FBG and that there was no evidence of money laundering attached to any account. As stated by the BMA, FBG deposits remain safe. We believe we now adhere to the very highest principles of Anti-Money Laundering and Anti-Terrorist Financing regulations. The specific regulations of which we were in breach related to current customer contact and photo ID details, ongoing monitoring of customer relationships, the effective implementation of our Policies and Procedures Manual and staff training on Anti-Money Laundering and Anti-Terrorist Financing regulations.”

At the time, BMA chief executive officer Jeremy Cox said  “the Authority intends as a matter of policy to make full use of this power. We wish to make it clear to the market, and companies should take note, that the Authority will not hesitate to take similar action against any firm where we find that essential anti-money laundering controls are lacking or are being implemented ineffectively. It is in all our interests that Bermuda’s regulatory standards are not compromised in any way.”

Mr. Cox further stated that: “In setting the amount of the financial penalty, however, the Authority took into account the steps FBG has taken since the commencement of the enforcement action to address the issues in its anti-money laundering controls. The company has strengthened its management team and, working in full co-operation with the authority, has established both a comprehensive action plan and additional resources to resolve the matters that led to the enforcement action and enable it to operate in compliance with the regulations.”

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