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Anti-Money Laundering and Prevention of Terrorist Financing Regulations

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1
THE PROCEEDS OF CRIME ORDINANCE 2007
THE ANTI-MONEY LAUNDERING AND PREVENTION OF TERRORIST FINANCING REGULATIONS 2010
Arrangement of Regulations
REGULATION
PART I
PRELIMINARY PROVISIONS AND INTERPRETATION
1. Citation
2. Interpretation
3. Meaning of “beneficial owner”
4. Meaning of “occasional transaction”
5. Meaning of “customer due diligence measures” an d
“ongoing monitoring”
6. Meaning of “politically exposed person”
7. Meaning of “shell bank” and “correspondent bank ing”
8. Meaning of “foreign regulated person”
9. Scope of Regulations
10. Application of Regulations outside the Islands

PART II
CUSTOMER DUE DILIGENCE
11. Application of customer due diligence measures and
ongoing monitoring
12. Requirement to cease transaction or terminate relationship
13. Enhanced customer due diligence and ongoing mo nitoring
14. Reliance on introducers and intermediaries
15. Simplified due diligence requirements
16. Shell banks and anonymous accounts

PART III
POLICIES , S YSTEMS AND CONTROLS , R ECORD KEEPING AND
TRAINING
17. Policies, systems and controls to prevent and detect money
laundering and terrorist financing
18. Records required to be kept 19. Period for which records must be kept
20. Training

PART IV

2
COMPLIANCE AND DISCLOSURES
21. Money laundering compliance officer
22. Money laundering reporting officer

PART V
NON -R EGULATED FINANCIAL BUSINESSES
23. Designated supervisory authority
24. Register of non-regulated financial businesses
25. Application to register
26. Registration
27. Refusal of application
28. Disciplinary action
PART VI
M ISCELLANEOUS
29. Directions where FATF counter-measures apply
30. Customer information
31. Prescribed amounts
32. Revocation

3
THE PROCEEDS OF CRIME ORDINANCE 2007
THE ANTI-MONEY LAUNDERING AND PREVENTION OF TERRORIST FINANCING REGULATIONS 2010
(Legal Notice 14 of 2010)
MADE by the Governor under section 149(2) of the Proceed s of
Crime Ordinance.
PART I
PRELIMINARY PROVISIONS AND INTERPRETATION
1 . These Regulations may be cited as the Anti-Money
Laundering and Prevention of Terrorist Financing Re gulations,
2010.
2. (1) In these Regulations—
“bank” means a person that carries on banking busin ess within the
meaning of the Banking Ordinance, whether or not th at
business is carried on in, or from within, the Isla nds;
“beneficial owner” has the meaning specified in reg ulation 3;
“branch” includes a representative or contact offic e;
“business relationship” means a business, professio nal or
commercial relationship between a financial busines s and a
customer which is expected by the financial busines s, at the
time when contact is established, to have an elemen t of
duration;
“cash” means – (a) notes and coins,
(b) postal orders, or
(c) travellers’ cheques,
in any currency;
“Code” means an Anti-Money Laundering and Preventio n of
Terrorist Financing Code issued under section 111 o f the
Ordinance and, in relation to a financial business, means a
Code that applies to the financial business;
“Commission” means the Financial Services Commissio n
established under the Financial Services Commission
Ordinance 2001 and continued under the Financial Se rvices
Commission Ordinance 2007;
“correspondent banking relationship” has the meanin g specified in
regulation 7(1);
Citation
Interpretation

4
“customer due diligence measures” has the meaning s pecified in
regulation 5;
“enhanced customer due diligence measures” has the meaning
specified in regulation 13(1);
“enhanced ongoing monitoring” has the meaning spec ified in
regulation 13(1);
“FATF” means the international body known as the Fi nancial
Action Task Force on Money Laundering;
“FATF Recommendations” means— (a) the Forty Recommendations, and
(b) the Nine Special Recommendations,
issued by the FATF, incorporating the amendments m ade on
22 October 2004 and such other amendments as may fr om
time-to-time be made;
“financial business” has the meaning specified in S chedule 2;
“foreign regulated person” has the meaning specifie d in regulation
8;
“foreign regulatory authority”, means an authority in a jurisdiction
outside the Islands which exercises in that jurisdi ction
supervisory functions substantially corresponding t o those of
the Commission or the supervisory authority for non –
regulated financial businesses, with respect to enf orcing
compliance with the Ordinance, these Regulations an d the
Codes;
“high value dealer” means a person who, by way of b usiness,
trades in goods, precious metals or precious stones , when he
receives, in respect of any transaction, whether th e transaction
is executed in a single operation or in several lin ked
operations, a payment or payments in cash of—
(a) in the case of precious metals or precious ston es, at
least $15,000, or the equivalent in another currenc y;
(b) in the case of any other goods, at least $50,00 0, or
the equivalent in another currency;
“identification information” has, in relation to a financial business,
the meaning specified in the relevant Code;
“independent legal professional” means a firm or so le practitioner
who, by way of business, provides legal or notarial services to
other persons, when preparing for or carrying out t ransactions
for a customer in relation to—
(a) the buying and selling of real estate and business
entities;
(b) the managing of client money;
(c) the opening or management of bank, savings or
securities accounts;

5
(d) the organisation of contributions necessary for the
creation, operation or management of companies; or
(e) the creation, operation or management of trusts,
companies or similar structures, excluding any
activity that requires a licence under the Trustees
Licensing Ordinance or the Company Management
(Licensing) Ordinance;
“intermediary” means a person who has or seeks to e stablish a
business relationship or to carry out an occasional transaction
on behalf of his customer with a financial business , so that the
intermediary becomes a customer of the financial bu siness;
“introducer” means a person who has a business rela tionship with
a customer and who introduces that customer to a fi nancial
business with the intention that the customer will form a
business relationship or conduct an occasional tran saction
with the financial business so that the introducer’ s customer
also becomes a customer of the financial business;
“money laundering compliance officer” means the per son
appointed by a financial business as its compliance officer
under regulation 21;
“money laundering disclosure” means a disclosure un der section
117, 118 or 119 of the Ordinance;
“Money Laundering Reporting Officer” or “MLRO” mean s the
person appointed by a financial business under regu lation 22;
“NRFB Register” means the register of non-regulated financial
businesses established and kept under regulation 24 ;
“occasional transaction” has the meaning specified in regulation 4;
“ongoing monitoring” has the meaning specified in r egulation
5(5);
“Ordinance” means the Proceeds of Crime Ordinance, 2007;
“politically exposed person” has the meaning specif ied in
regulation 6;
“recognised exchange” has the meaning specified in sub-regulation
(4);
“regulated business” means a business for which a r egulatory
licence is required;
“regulated person” means a person who holds a regul atory licence;
“regulatory licence” means a licence specified in S chedule 1;
“relevant business” means a business which, if carr ied on by a
person, would result in that person being a financi al business;
“Reporting Authority” means the Reporting Authority established
under the Ordinance;
“shell bank” has the meaning specified in regulatio n 7(3);

6
“sole trader” means an individual carrying on a rel evant business
who does not in the course of doing so—
(a) employ any other person; or
(b) act in association with any other person;
“supervisory authority” means— (a) in the case of a regulated financial business, the
Commission; and
(b) in the case of a non-regulated financial busine ss, the
NRFB Supervisor;
“Terrorism (UN) Order” means the Terrorism (United Nations
Measures) (Overseas Territories) Order 2001;
“terrorist financing disclosure” means a disclosure under—
(a) article 10 or Part 1 of Schedule 1 of the Anti- terrorist Financing Order;
(b) article 8 of the Terrorism (UN) Order 2001; or
(c) article 10 of the Al-Qa’ida and Taliban (United
Nations Measures) (Overseas Territories) Order 2002; and
“third party” means a person for whom a customer is acting.
(2) Words and expressions defined in the Ordinance have
the same meaning in these Regulations.
(3) In these Regulations, unless the context other wise
requires, “customer” includes a prospective custome r.
(4) Subject to sub-regulation (5), “recognised exc hange”
means—
(a) an exchange that is a member of the World Federation of Exchanges; or
(b) such other exchange as may be recognised by the
Commission by notice published in the Gazette.
(5) An exchange is not a recognised exchange withi n the
meaning of sub-regulation (4) if it is situated in a country specified
by the Commission, by notice published in the Gazette, as a
country that does not implement, or does not effect ively apply, the
FATF Recommendations
3. (1) Subject to sub-regulation (3), each of the fol lowing is a
beneficial owner of a legal person, a partnership o r an
arrangement—
(a) an individual who is an ultimate beneficial own er of
the legal person, partnership or arrangement,
whether or not the individual is the only beneficia l
owner; and
(b) an individual who exercises ultimate control ov er
the management of the legal person, partnership or

Meaning of
“beneficial
owner”

7
arrangement, whether alone or jointly with any
other person or persons.
(2) For the purposes of sub-regulation (1), it is immaterial
whether an individual’s ultimate ownership or contr ol of a legal
person, partnership or arrangement is direct or ind irect.
(3) An individual is deemed not be the beneficial owner of
a body corporate, the securities of which are liste d on a recognised
exchange.
(4) In this regulation, an “arrangement” includes a trust.
4. ( 1) A transaction is an occasional transaction if th e
transaction is carried out otherwise than as part o f a business
relationship, and is carried out as—
(a) a single transaction that amounts to the sum specified in sub-regulation (2), or more; or
(b) two or more linked transactions that, in total amount
to the sum specified in sub-regulation (2), or more ,
where—
(i) it appears at the outset to any person handlin g
any of the transactions that the transactions are
linked; or
(ii) at any later stage it comes to the attention of
any person handling any of those transactions
that the transactions are linked.
(2) The amount specified for the purposes of sub-r egulation
(1) is—
(a) in the case of a transaction, or linked transac tions,
carried in the course of a money services business,
$1,000; or
(b) in the case of any other transaction, or linked
transactions, $15,000.
5. (1) “Customer due diligence measures” are measures for—
(a) identifying a customer;
(b) determining whether the customer is acting for a
third party and, if so, identifying the third party ;
(c) verifying the identity of the customer and any third
party for whom the customer is acting;
(d) identifying the identity of each beneficial own er of
the customer and third party, where either the
customer or third party, or both, are not individua ls;
(e) taking reasonable measures, on a risk-sensitive
basis, to verify the identity of each beneficial ow ner
of the customer and third party so that the financi al
business is satisfied that it knows who each
beneficial owner is including, in the case of a leg al
Meaning of
“occasional
transaction”
Meaning of
“customer due
diligence
measures” and
“ongoing
monitoring”

8
person, partnership, trust or similar arrangement,
taking reasonable measures to understand the
ownership and control structure of the legal person ,
partnership, trust or similar arrangement; and
(f) obtaining information on the purpose and intend ed
nature of the business relationship or occasional
transaction.
(2) Customer due diligence measures include— (a) where the customer is not an individual, measur es
for verifying that any person purporting to act on
behalf of the customer is authorised to do so, identifying that person and verifying the identity of
that person; and
(b) where the financial business carries on insuran ce
business, measures for identifying each beneficiary
under any long term or investment linked policy
issued or to be issued by the financial business an d
verifying the identity of each beneficiary.
(3) Customer due diligence measures do not fall wi thin this
regulation unless they provide for verifying the id entity of persons
whose identity is required to be verified, on the b asis of
documents, data or information obtained from a reli able and
independent source.
(4) Where customer due diligence measures are requ ired by
this regulation to include measures for identifying and verifying
the identity of the beneficial owners of a person, those measures
are not required to provide for the identification and verification of
any individual who holds shares in a company that i s listed on a
recognised exchange.
(5) “Ongoing monitoring” of a business relationsh ip
means—
(a) scrutinising transactions undertaken throughout th e
course of the relationship, including where
necessary the source of funds, to ensure that the
transactions are consistent with the financial
business’s knowledge of the customer and his
business and risk profile; and
(b) keeping the documents, data or information
obtained for the purpose of applying customer due
diligence measures up-to-date and relevant by
undertaking reviews of existing records.
6. (1) “Politically exposed person” means a person who is—
(a) an individual who is, or has been, entrusted with a
prominent public function by—
(i) a country, including the Islands; or
(ii) an international body or organization;
Meaning of
“politically
exposed person”

9
(b) an immediate family member of a person referred to
in paragraph (a); or
(c) a known close associate of a person referred to in
paragraph (a).
(2) Without limiting sub-regulation (1)(a), the fo llowing are
politically exposed persons within the meaning of t hat sub-
regulation—
(a) heads of state, heads of government and senior
politicians;
(b) senior government or judicial officials;
(c) high-ranking officers in the armed forces;
(d) members of courts of auditors or of the boards of
central banks;
(e) ambassadors and chargés d’affaires;
(f) senior executives of state-owned corporations; and
(g) important political party officials.
(3) Without limiting sub-regulation (1)(b), the fo llowing
are immediate family members of a person specified in sub-
regulation (1)(a)—
(a) a spouse;
(b) a partner, that is an individual considered by his or
her national law as equivalent to a spouse;
(c) children and their spouses or partners, as defined in
paragraph (b);
(d) parents;
(e) grandparents and grandchildren; and
(f) siblings.
(4) Without limiting sub-regulation (1)(c), the fo llowing are
close associates of a person specified in sub-regul ation (1)(a)—
(a) any person known to maintain a close business
relationship with that person or to be in a positio n
to conduct substantial financial transactions on
behalf of the person;
(b) any person who is known to have joint beneficial
ownership of a legal entity or legal arrangement, o r
any other close business relations, with that perso n;
and
(c) any person who has sole beneficial ownership of a
legal entity or legal arrangement which is known to
have been set up for the benefit of that person.
(5) For the purposes of deciding whether a person is a close
associate of a person referred to in sub-regulation (1)(a), a

10
financial business need only have regard to informa tion which is in
that person’s possession or is publicly known.
7. (1) “Correspondent banking” means the provision of
banking services by one bank, (the “correspondent b ank”) to
another bank (the “respondent bank”).
(2) Without limiting sub-regulation (1), banking s ervices
includes—
(a) cash management, including establishing interest-
bearing accounts in different currencies;
(b) international wire transfers of funds;
(c) cheque clearing;
(d) payable-through accounts; and
(e) foreign exchange services.
(3) A “shell bank” is a bank that— (a) is incorporated and licensed in a country in which it
has no physical presence involving meaningful
decision-making and management; and
(b) is not subject to supervision by the Commission or a
foreign regulatory authority, by reason of its
membership of, or affiliation to, a group that is
subject to effective consolidated supervision.
8. (1) “Foreign regulated person” means a person—
(a) that is incorporated in, or if it is not a corpora te
body, has its principal place of business in, a
jurisdiction outside the Islands (its “home
jurisdiction”);
(b) that carries on business outside the Islands that, if
carried on in the Islands, would require a regulato ry
licence;
(c) that, in respect of the business referred to in
paragraph (b)—
(i) is subject to legal requirements in its home jurisdiction for the prevention of money laundering and terrorist financing that are
consistent with the requirements of the FATF
Recommendations, for the time being issued,
for that business; and
(ii) is subject to effective supervision for compliance with those legal requirements by a
foreign regulatory authority.
(2) For the purposes of the definition of “foreign regulated
person”, the Code may specify jurisdictions that ma y be regarded
as having legal requirements for the prevention of money
Meaning of
“shell bank” and
“correspondent
banking”
Meaning of
“foreign
regulated
person”

11
laundering that are consistent with the requirement s of the FATF
Recommendations.
9. These Regulations apply to all financial businesses.
10. (1) Subject to sub-regulations (2), (3) and (4), a relevant
financial business that has a branch located in, or a subsidiary
incorporated in, a country outside the Islands shal l, to the extent
that the laws of that country permit—
(a) comply with these Regulations and the Code in
respect of any business carried on through the
branch; and
(b) ensure that these Regulations and the Code are
complied with by the subsidiary with respect to any
business that it carries on.
(2) A relevant financial business shall have parti cular
regard to ensure that sub-regulation (1) is complie d with where the
country in which its branch or subsidiary is situat ed does not
apply, or insufficiently applies, the FATF Recommen dations.
(3) If the country in which a branch or subsidiary of a
financial business is situated has more stringent s tandards with
respect to the prevention of money laundering and t errorist
financing than are provided for in these Regulation s and the Code,
the relevant financial business shall ensure that t he more stringent
requirements are complied with by its branch or sub sidiary.
(4) Where the laws of a country outside the Island s do not
permit a branch or subsidiary of a financial busine ss to comply
with sub-regulation (1), the relevant financial bus iness shall—
(a) notify the Commission in writing; and
(b) to the extent that the laws of the foreign country
permit, apply alternative measures to ensure compliance with the FATF Recommendations and
to deal effectively with the risk of money
laundering and terrorist financing.
(5) For the purposes of this regulation, “relevant financial
business” means a financial business—
(a) that is a regulated financial business; and
(b) that is—
(i) a company incorporated in the Islands;
(ii) a partnership based in the Islands;
(iii) an individual resident in the Islands; or
(iv) any other person having its principal or head office in the Islands.

Scope of Regulations
Application of
Regulations
outside the
Islands

12
PART II
CUSTOMER DUE DILIGENCE
11. (1) Subject to sub-regulations (5) and (6), a finan cial
business shall apply customer due diligence measure s—
(a) before the financial business establishes a busine ss
relationship or carries out an occasional transacti on;
(b) where the financial business—
(i) suspects money laundering or terrorist financing; or
(ii) doubts the veracity or adequacy of documents,
data or information previously obtained under
its customer due diligence measures or when
conducting ongoing monitoring; and
(c) at other appropriate times to existing customers a s
determined on a risk-sensitive basis.
(2) Without limiting sub-regulation (1)(b)(ii) and (1)(c), a
financial business shall obtain identification info rmation when
there is a change in the—
(a) identification information of a customer;
(b) beneficial ownership of a customer; or
(c) third parties, or the beneficial ownership of thir d
parties.
(3) A financial business shall conduct ongoing mon itoring
of a business relationship.
(4) In applying customer due diligence measures an d
conducting ongoing monitoring, a financial business shall—
(a) assess the risk that any business relationship or
occasional transaction involves, or will involve,
money laundering or terrorist financing, depending
upon the type of customer, business relationship,
product or transaction;
(b) be able to demonstrate to the supervisory
authority—
(i) that the extent of the customer due diligence measures applied in any case is appropriate
having regard to the circumstances of the case,
including the risks of money laundering and
terrorist financing; and
(ii) that it has obtained appropriate information to
carry out the risk assessment required under
paragraph (a).
Application of
customer due
diligence
measures and
ongoing
monitoring

13
(5) A financial business may complete the verifica tion of
the identity of a customer, third party or benefici al owner after the
establishment of a business relationship if—
(a) it is necessary not to interrupt the normal condu ct
of business;
(b) there is little risk of money laundering or terror ist
financing occurring as a result; and
(c) verification of identity is completed as soon as
reasonably practicable after the contact with the
customer is first established.
(6) The verification of the identity of a bank acc ount holder
may take place after the bank account has been open ed provided
that there are adequate safeguards in place to ensu re that, before
verification has been completed—
(a) the account is not closed; and
(b) transactions are not carried out by or on behalf o f
the account holder, including any payment from the
account to the account holder.
(7) A financial business that contravenes this reg ulation is
guilty of an offence and is liable on summary convi ction, to a fine
not exceeding $50,000.
12. (1) If a financial business is unable to apply cus tomer due
diligence measures before the establishment of a bu siness
relationship or before the carrying out of an occas ional transaction
in accordance with these Regulations, the financial business shall
not establish the business relationship or carry ou t the occasional
transaction.
(2) If regulation 11(5) or (6) apply and a financi al business
is unable to complete the verification of the ident ity of a customer,
third party or beneficial owner after the establish ment of a
business relationship, the financial business shall terminate the
business relationship with the customer.
(3) If a financial business is unable to undertake
ongoing monitoring with respect to a business relat ionship, the
financial business shall terminate the business rel ationship.
(4) If sub-regulation (1), (2) or (3) applies with respect to a
financial business, the financial business shall co nsider whether he
is required to make a money laundering disclosure o r a terrorist
financing disclosure.
(5) Sub-regulations (1), (2) and (3) do not apply where the
financial business is a lawyer and is in the course of ascertaining
the legal position for that person’s client or perf orming the task of
defending or representing the client in, or concern ing, legal
proceedings, including advice on the institution or avoidance of
proceedings.
Requirement to
cease transaction
or terminate
relation ship

14
(6) If the financial business has made a money lau ndering
or terrorist financing disclosure, sub-regulations (1), (2) and (3) do
not apply to the extent that the financial business is acting—
(a) in the case of a money laundering disclosure, with
the consent or deemed consent of the Reporting
Authority; or
(b) in the case of a terrorist financing disclosure ma de
under the Anti-terrorist Financing Order, with the
consent of a constable, where such consent may
lawfully be given.
(7) A financial business who contravenes this regu lation is
guilty of an offence and is liable on summary convi ction, to a fine
not exceeding $50,000.
13. (1) For the purposes of these Regulations, “enhanc ed
customer due diligence measures” and “enhanced ongo ing
monitoring” mean customer due diligence measures, o r ongoing
monitoring, that involve specific and adequate meas ures to
compensate for the higher risk of money laundering or terrorist
financing.
(2) A financial business shall, on a risk-sensitiv e basis,
apply enhanced due diligence measures and undertake enhanced
ongoing monitoring—
(a) where the customer has not been physically present
for identification purposes;
(b) where the financial business has, or proposes to
have, a business relationship with, or proposes to
carry out an occasional transaction with, a person
connected with a country that does not apply, or
insufficiently applies, the FATF recommendations;
(c) where the financial business is a bank which holds a
National Banking licence granted under the Banking Ordinance that has or proposes to have a
banking or similar relationship with an institution
whose address for that purpose is outside the
Islands;
(d) where the financial business has or proposes to ha ve
a business relationship with, or to carry out an
occasional transaction with, a politically exposed
person;
(e) where any of the following is a politically expose d
person—
(i) a beneficial owner of the customer;
(ii) a third party for whom a customer is acting;
(iii) a beneficial owner of a third party described in
subparagraph (ii);
Enhanced
customer due
diligence and
ongoing
monitoring

15
(iv) a person acting, or purporting to act, on beha lf
of the customer.
(f) in any other situation which by its nature can
present a higher risk of money laundering or terrorist financing.
(3) A financial business who contravenes this regu lation is
guilty of an offence and is liable on summary convi ction, to a fine
not exceeding $50,000.
14. (1) Subject to this regulation and any requirement s in the
Code, a financial business may rely on an introduce r or an
intermediary to apply customer due diligence measur es with
respect to a customer, third party or beneficial ow ner, if—
(a) the introducer or intermediary is a regulated pers on
or a foreign regulated person; and
(b) the introducer or intermediary consents to being
relied on.
(2) Before relying on an introducer or intermediar y to apply
customer due diligence measures with respect to a c ustomer, third
party or beneficial owner, a financial business sha ll obtain
adequate assurance in writing from the intermediary or introducer
that—
(a) the intermediary or introducer has applied the customer due diligence measures for which the
financial business intends to rely on it;
(b) the intermediary or introducer is required to k eep,
and does keep, a record of the evidence of
identification relating to each of the customers of
the intermediary or introducer;
(c) the intermediary or introducer will, without de lay,
provide the information in that record to the financial business at the financial business’s
request; and
(d)the intermediary or introducer will, without del ay, provide
the information in the record for provision to the Commission,
where requested by the Commission.
(3) Where a financial business relies on an introd ucer or
intermediary to apply customer due diligence measur es, the
financial business remains liable for any failure t o apply those
measures.
(4) This regulation does not prevent a financial b usiness
from applying customer due diligence measures by me ans of an
outsourcing financial business or agent provided th at the financial
business remains liable for any failure to apply su ch measures.
15. (1) A financial business is not required to apply customer
due diligence measures before establishing a busine ss relationship
or carrying out an occasional transaction where—
Reliance on
introducers and
intermediaries
Simplified due
diligence
requirements

16
(a) he has reasonable grounds for believing that the
customer is—
(i) a regulated person;
(ii) a foreign regulated person;
(iii) a public authority in the Islands; or
(iv) a body corporate, the securities of which are listed on a recognised exchange.
(b) in the case of life insurance business, the produc t is
a life insurance contract where the annual premium
is no more than $500 or where a single premium of
no more than $2,000 is paid.
(2) Sub-regulation (1)(a) does not apply with resp ect to any
third party for whom the customer may be acting or with respect to
the beneficial owners of such a third party.
(3) Sub-regulation (1) does not apply if— (a) the financial business suspects money laundering o r
terrorist financing; or
(b) the customer is located, or resides, in a country that
does not apply, or insufficiently applies, the FATF
recommendations.
16. (1) A bank that carries on banking business in or from
within the Islands—
(a) shall not enter into or continue a correspondent
banking relationship with a shell bank; and
(b) shall take appropriate measures to ensure that it
does not enter into, or continue, a correspondent
banking relationship with a bank that is known to
permit its accounts to be used by a shell bank.
(2) A financial business shall not set up or maint ain a
numbered account, an anonymous account or an accoun t in a name
which it knows, or has reasonable grounds to suspec t, is fictitious.
(3) A bank that contravenes sub-regulation (1) or a
financial business that contravenes sub-regulation (2) is guilty of
an offence and is liable on summary conviction, to a fine not
exceeding $100,000.

Shell banks and
anonymous and
numbered
accounts

17
PART III
POLICIES , S YSTEMS AND CONTROLS , R ECORD KEEPING AND
TRAINING
17. (1) Subject to sub-regulation (5), a financial bus iness shall
establish, maintain and implement appropriate risk- sensitive
policies, systems and controls to prevent and detec t money
laundering and terrorist financing, including polic ies, systems and
controls relating to—
(a) customer due diligence measures and ongoing
monitoring;
(b) the reporting of disclosures;
(c) record-keeping;
(d) the screening of employees;
(e) internal controls;
(f) risk assessment and management;
(g) the monitoring and management of compliance
with, and the internal communication of, its
policies, systems and controls to prevent and detec t
money laundering and terrorist financing, including
those specified in paragraphs (a) to (f).
(2) The policies, systems and controls referred to in
paragraph (1) must include policies, systems and co ntrols which
provide for—
(a) the identification and scrutiny of—
(i) complex or unusually large transactions;
(ii) unusual patterns of transactions which have n o
apparent economic or visible lawful purpose;
and
(iii) any other activity which the financial busine ss
regards as particularly likely by its nature to be
related to the risk of money laundering or
terrorist financing;
(b) the taking of additional measures, where
appropriate, to prevent the use for money
laundering or terrorist financing of products and
transactions which are susceptible to anonymity;
(c) determining whether—
(i) a customer, any third party for whom the customer is acting and any beneficial owner of
the customer or third party, is a politically
exposed person;
(ii) a business relationship or transaction, or proposed business relationship or transaction, is
Policies, systems
and controls to
prevent and detect money
laundering and
terrorist
financing

18
with a person connected with a country that
does not apply, or insufficiently applies, the
FATF Recommendations; or
(iii) a business relationship or transaction, or proposed business relationship or transaction, is with a person connected with a country that is
subject to measures for purposes connected
with the prevention and detection of money
laundering or terrorist financing, imposed by
one or more countries or sanctioned by the
European Union or the United Nations.
(3) A financial business with any subsidiary or br anch that
carries on a relevant business shall communicate to that subsidiary
or branch, whether in or outside the Islands, the f inancial
business’s policies and procedures maintained in ac cordance with
this regulation.
(4) A financial business shall maintain adequate p rocedures
for monitoring and testing the effectiveness of—
(a) the policies and procedures maintained under this
regulation; and
(b) the training provided under regulation 20.
(5) A sole trader is not required to maintain poli cies and
procedures relating to internal reporting, screenin g of employees
and the internal communication of such policies and procedures.
(6) For the purposes of this regulation— (a) “scrutiny” includes scrutinising the background an d
purpose of transactions and activities;
(b) “transaction” means any of the following—
(i) an occasional transaction;
(ii) a transactions within an occasional transacti on;
or
(iii) a transaction undertaken within a business relationship.
(7) A financial business who contravenes this regu lation is
guilty of an offence and is liable on summary convi ction, to a fine
not exceeding $50,000.
18. (1) Subject to sub-regulation (4), a financial bus iness shall
keep the records specified in sub-regulation (2) an d such additional
records as may be specified in the Code—
(a) in a form that enables them to be made available o n
a timely basis, when lawfully required, to the
Commission or law enforcement authorities in the
Islands; and
(b) for at least the period specified in regulation 19.
Records required to be kept

19
(2) The records specified for the purposes of sub- regulation
(1) are—
(a) a copy of the evidence of identity obtained pursua nt
to the application of customer due diligence
measures or ongoing monitoring, or information
that enables a copy of such evidence to be obtained ;
(b) the supporting documents, data or information that
have been obtained in respect of a business
relationship or occasional transaction which is the
subject of customer due diligence measures or
ongoing monitoring;
(c) a record containing details relating to each
transaction carried out by the financial business i n
the course of any business relationship or
occasional transaction;
(d) all account files; and
(e) all business correspondence relating to a business
relationship or an occasional transaction.
(3) The record to which sub-regulation (2)(c) refe rs must
include sufficient information to enable the recons truction of
individual transactions.
(4) A financial business who is relied on by anoth er person
in accordance with these regulations shall keep the records
specified in paragraph (2)(a) for the period of fiv e years beginning
on the date on which he is relied on in relation to any business
relationship or occasional transaction.
(5) Where the financial business (the “first perso n”) is an
introducer or intermediary and has given the assura nce that is
required under regulation 14(2) to another financia l business (the
“second person”), the first person shall make avail able to the
second person, at the second person’s request, a co py of the
evidence of identification that the first person is required to keep
under this regulation, such evidence being the evid ence that is
referred to in regulation 14(2).
(6) Sub-regulations (4) and (5) do not apply where a
financial business applies customer due diligence m easures by
means of an outsourcing financial business or agent .
(7) For the purposes of this regulation, a person relies on
another person where he does so in accordance with regulation 14.
(8) A financial business who contravenes this regu lation is
guilty of an offence and is liable on summary convi ction, to a fine
not exceeding $50,000.
19. (1) Subject to sub-regulation (2), the period spec ified for
the purposes of regulation 18 is 5 years beginning on—
(a) in the case of the records specified in regulation
18(2)(a), the date on which—
Period for which
records must be
kept

20
(i) the occasional transaction is completed; or
(ii) the business relationship ends; or
(b) in the case of the records specified in sub-regula tion
18(2)(b)—
(i) where the records relate to a particular transaction, the date on which the transaction is
completed;
(ii) for all other records, the date on which the business relationship ends.
(2) The Commission or the Reporting Authority may, by
written notice, specify a period longer than 5 year s for the
purposes of regulation 18, and such longer period a s is specified in
the notice shall apply instead of the period of 5 y ears specified in
sub-regulation (1).
20. (1) A financial business shall take appropriate me asures for
the purposes of making employees whose duties relat e to the
provision of relevant business aware of—
(a) the anti-money laundering and counter-terrorist
financing policies, procedures, systems and control s
maintained by the financial business in accordance
with these Regulations or the Code;
(b) the law of the Islands relating to money launderin g
and terrorist financing offences; and
(c) these Regulations, the Code and any Guidance
issued by the Commission or a supervisory
authority.
(2) A financial business shall provide employees s pecified
in sub-regulation (1) with training in the recognit ion and handling
of—
(a) transactions carried out by or on behalf of any
person who is or appears to be engaged in money laundering or terrorist financing; and
(b) other conduct that indicates that a person is or
appears to be engaged in money laundering or
terrorist financing.
(3) For the purposes of sub-regulation (2), traini ng shall
include the provision of information on current mon ey laundering
techniques, methods, trends and typologies.
(4) A financial business that contravenes this reg ulation is
guilty of an offence and is liable on summary convi ction, to a fine
not exceeding $50,000.

Training

21
PART IV
COMPLIANCE AND DISCLOSURES
21. (1) Subject to sub-regulation (8), a financial bus iness, other
than a sole trader, shall appoint an individual app roved by the
relevant supervisory authority as its money launder ing compliance
officer in respect of the relevant business being c arried on by the
financial business.
(2) A sole trader is the money laundering complian ce
officer in respect of his or her relevant business.
(3) A financial business shall ensure that— (a) the individual appointed as money laundering
compliance officer under this regulation is of an
appropriate level of seniority; and
(b) the compliance officer has timely access to all
records that are necessary or expedient for the
purpose of performing his or her functions as money laundering compliance officer.
(4) The principle function of the money laundering
compliance officer is to oversee and monitor the fi nancial
business’s compliance with the Ordinance, all legis lation in force
concerning terrorist financing, these Regulations a nd the Code.
(5) When an individual has ceased to be the money
laundering compliance officer of a financial busine ss, the financial
business shall as soon as practicable appoint anoth er individual
approved by the relevant supervisory authority as i ts money
laundering compliance officer.
(6) A financial business shall give the Commission written
notice within 7 days after the date—
(a) of the appointment of a money laundering
compliance officer; or
(b) that an individual ceases, for whatever reason, to be
its money laundering compliance officer.
(7) The money laundering compliance officer of a f inancial
business may also be appointed to be its money laun dering
reporting officer.
(8) The Codes may modify the requirements of this
regulation in relation to particular types or categ ory of financial
business.
(9) A financial business that contravenes this reg ulation is
guilty of an offence and is liable on summary convi ction, to a fine
not exceeding $25,000.

Money
laundering
compliance
officer

22
22. (1) Subject to sub-regulation (6), a financial bus iness, other
than a sole trader, shall appoint an individual as its money
laundering reporting officer to—
(a) receive and consider internal money laundering and
terrorist financing disclosures;
(b) considering whether a suspicious activity report
should be made to the Reporting Authority; and
(c) where he considers a suspicious activity report
should be made, submitting the report.
(2) A financial business shall ensure that— (a) the individual appointed as money laundering
reporting officer under this regulation is of an
appropriate level of seniority; and
(b) the money laundering reporting officer has timely
access to all records that are necessary or expedie nt
for the purpose of performing his or her functions.
(3) When an individual has ceased to be the money
laundering reporting officer of a financial busines s, the financial
business shall forthwith appoint another individual approved by
the relevant supervisory authority as its money lau ndering
reporting officer.
(4) A financial business shall give the Commission written
notice within 7 days after the date—
(a) of the appointment of a money laundering reporting
officer; or
(b) that an individual ceases, for whatever reason, to be
its money laundering reporting officer.
(5) The money laundering reporting officer of a fi nancial
business may also be appointed to be its money laun dering
compliance officer.
(6) The Codes may modify the requirements of this
regulation in relation to particular types or categ ory of financial
business.
(7) A financial business that contravenes this reg ulation is
guilty of an offence and is liable on summary convi ction, to a fine
not exceeding $25,000.

PART V
NON -R EGULATED FINANCIAL BUSINESSES
23. The Commission is designated as the sole superviso ry
authority for financial business who are not regula ted persons for
the purposes of section 148F (2) of the Ordinance.
Money
laundering
reporting officer
Designated
supervisory
authority

23
24. (1) The NRFB Supervisor must establish and keep a
register of non-regulated financial businesses.
(2) The NRFB Register shall contain the following
information in respect of each non-regulated financ ial business
that has been registered in accordance with regulat ion 26—
(a) the name, address in the Islands and contact de tails
of the non-regulated financial business;
(b) the relevant business for which the non-regulat ed
financial business is registered;
(c) the date of registration and, if applicable, d e-
registration of the non-regulated financial busines s;
(d) such other information as the NRFB Supervisor considers appropriate.
(3) The NRFB Register and the information containe d in
any document filed with the NRFB Supervisor may be kept in such
manner as the NRFB Supervisor considers appropriate , including
either wholly or partly, by means of a device or fa cility that—
(a) records or stores information magnetically, electronically or by other means; and
(b) permits the information recorded or stored to b e
inspected and reproduced in legible and usable
form.
25. (1) A person may apply to the NRFB Supervisor to b e
registered as a non-regulated financial business in the NRFB
Register.
(2) The application must— (a) be in writing and in the form specified by the NRFB
Supervisor;
(b) be signed by the applicant or by a person actin g on
the applicant’s behalf;
(c) be accompanied by such documents or information
as may be specified on the application form or by
the NRFB Supervisor.
(3) The NRFB Supervisor may require an applicant t o—
(a) provide it with such documents and information, in
addition to those specified in sub-regulation (2), as
it reasonably requires to determine the application
and any such information shall be in such form as
the NRFB Supervisor may require; and
(b) verify any document and information provided in
support of an application in such manner as the
NRFB Supervisor may specify.
(4) If, before the determination by the NRFB Super visor of
an application— Register of non-
regulated
financial
businesses
Application to register

24
(a) there is a material change in any information o r
documentation provided by or on behalf of the
applicant to the NRFB Supervisor in connection
with the application; or
(b) the applicant discovers that any such informati on or
documentation is incomplete, inaccurate or
misleading;
the applicant shall give the NRFB Supervisor as soo n as possible
written particulars of the change or of the incompl ete, inaccurate
or misleading information or documentation.
26. (1) Following the receipt of an application under regulation
25 and any additional documents or information that it has
required under regulation 25(3), the NRFB Superviso r must
either—
(a) register the applicant as a non-regulated finan cial
business in the NRFB Register; or
(b) refuse the application under regulation 27.
(2) If the NRFB Supervisor registers the applicant, it must
provide it with written notice of its registration.
27. (1) The NRFB Supervisor may refuse an application f or
registration if—
(a) the application does not comply with regulation 25;
(b) the applicant fails to provide any information or
documents required by the NRFB Supervisor under
regulation 25(3); or
(c) the NRFB Supervisor is of the opinion that— (i) the applicant does not intend to carry on the relevant business for which it seeks registration;
(ii) the non-regulated financial business, or any of
its directors, senior officers or owners do not
satisfy the NRFB Supervisor’s fit and proper
criteria; or
(iii) it is contrary to the public interest for the non-
regulated financial business to be registered.
(2) If the NRFB Supervisor refuses an application for
registration, it must send the applicant a written notice of refusal,
stating the grounds for its refusal.
28. For the purposes of sections 148M of the Act—
(a) a non-regulated financial business who contrave nes
a provision of these Regulations set out in Columns
1 and 2 of the table in Schedule 3, commits a
disciplinary violation; and
Registration
Refusal of application
Disciplinary action

25
(b) the amount specified in Column 3 of the table i n
Schedule 2 with respect to a disciplinary violation ,
is the maximum administrative penalty that the
NRFB Supervisor may impose on a non-regulated financial business for that disciplinary violation.

PART VI
M ISCELLANEOUS
29. The relevant supervisory authority may direct a fi nancial
business—
(a) not to enter into a business relationship;
(b) not to carry out an occasional transaction;
(c) not to proceed any further with a business
relationship or occasional transaction;
(d) to impose any prohibition, restriction or limitati on
relating to a business relationship or occasional
transaction; or
(e) to apply enhanced customer due diligence measures
to any business relationship or occasional
transaction;
with any person who is situated or incorporated in a country to
which the FATF has decided to apply counter-measure s.
30. (1) For the purposes of section 133 of the Ordinanc e,
“customer information”, in relation to a person (“t he specified
person”) and a regulated person, is information whe ther the
specified person holds, or has held, an account or accounts at the
regulated person, whether solely or jointly with an other, and, if so,
information as to—
(a) the account number or numbers;
(b) the specified person’s full name;
(c) where the specified person is an individual, the
individual’s—
(i) date of birth; and
(ii) most recent address, any previous address, an y
postal address and any previous postal address;
(d) where the specified person is a company—
(i) the country where the company is incorporated or is otherwise constituted, established or
registered;
(ii) the address of the registered office, any previous registered office, any business
Directions where
FATF applies
counter-
measures
Customer information

26
address, any previous business address, any
postal address and any previous postal address;
(e) where the specified person is a partnership or
unincorporated body of persons, the information
specified in paragraph (c) with respect to each
individual authorised to operate the account,
whether solely or jointly;
(f) such evidence of identity with respect to the
specified person as has been obtained by the
regulated person;
(g) the date or dates on which the specified person
began to hold the account or accounts and, if the specified person has ceased to hold the account or
any of the accounts, the date or dates on which the
person did so;
(h) the full name of any person who holds, or has hel d,
an account at the regulated person jointly with the
specified person;
(i) the account number or numbers of any other
account or accounts held at the regulated person to
which the specified person is a signatory and detai ls
of the person holding the other account or accounts ;
(j) the full name and the information contained in
paragraph (c), (d) or (e), as relevant, of any pers on
who is a signatory to an account specified in
paragraph (i).
31. The following amounts are prescribed for the purpo ses of
the Ordinance—
(a) application of section 32(1) of the Ordinance
(minimum amount remaining to be paid under a
confiscation order for discharge), the amount
prescribed is $500;
(b) discharge under section 33 of the Ordinance, the
amount prescribed is $100;
(c) minimum threshold for the purposes of section
94(1) of the Ordinance, the amount prescribed is
$250;
(d) definition of “recoverable cash” under section 106
of the Ordinance, the amount prescribed is $250.
32. The Anti-Money Laundering Regulations, 2007 are
revoked.

Prescribed amounts
Revocation

27
SCHEDULE 1
(Regulation 2)
R
EGULATORY LICENCES
“Regulatory licence” means— (a) a licence issued under the Banking Ordinance;
(b) a licence issued under the Trustees Licensing
Ordinance;
(c) a licence issued under the Company Management
(Licensing) Ordinance;
(d) a licence issued under the Mutual Funds Ordinance;
(e) a licence issued under the Investment Dealers
(Licensing) Ordinance;
(f) a licence issued under the Insurance Ordinance.
(g) a licence issued under the Money Transmitters
Ordinance

Cap.118
Cap. 123
Ord. 1 of 1999
Ord. 13 of 1998
Ord. 12 of 2001
Cap. 121
Ord. 13 of 2007

28
SCHEDULE 2
(Regulation 2)
F
INANCIAL BUSINESS
1. The following are “financial businesses” when acti ng in the
course of a business carried on in, or from within, the Islands—
(a) subject to paragraph 2, a person who carries on an y
kind of regulated business;
(b) a person who carries on money services business as
defined in the Money Transmitters Ordinance;
(c) a person who, by way of business, provides any of
the following services to third parties—
(i) acting as a secretary of a company, a partner of
a partnership, or a similar position in relation to
other legal persons or arranging for another
person to act in one of the foregoing capacities or as the director of a company;
(ii) providing a business, accommodation, correspondence or administrative address for a
company, a partnership or any other legal
person or arrangement;
(iii) acting as, or arranging for another person to act
as, a nominee shareholder for another person;
(d) a person who conducts as a business one or more of
the following activities for, or on behalf of, a
customer—
(i) lending, including consumer credit, mortgage credit, factoring, with or without recourse, and
financing of commercial transactions, including
forfeiting;
(ii) financial leasing;
(iii) issuing and managing means of payment, including credit and debit cards, cheques,
travellers’ cheques, money orders and bankers’
drafts and electronic money;
(iv) financial guarantees or commitments;
(v) participation in securities issues and the provision of financial services related to such issues;
(vi) providing advice on capital structure, industr ial
strategy and related questions and advice and
services relating to mergers and the purchase of
undertakings;
Ord. 13 of 2007

29
(vii) safekeeping and administration of cash;
(viii) investing administering or managing funds or
money;
(ix) money broking.
(e) a person who, as a business, trades for his own
account or for the account of customers in—
(i) money market instruments, including cheques, bills, certificates of deposit and derivatives;
(ii) foreign exchange;
(iii) exchange, interest rate and index instruments ;
(iv) financial futures and options;
(v) commodities futures; or
(vi) shares and other transferable securities;
(f) a person who, by way of business—
(i) provides accountancy or audit services; or
(ii) acts as a real estate agent;
(g) an independent legal professional;
(h) a high value dealer;
(i) a person who operates a casino by way of business,
whenever a transaction involves accepting a total
cash payment of $3,000 or more, or the equivalent
in another currency.
2. A company that carries on insurance business is a financial
business only where it carries on—
(a) long-term insurance business; or
(b) any form of life insurance business or investme nt
related insurance business that may be classified a s
general insurance business.
3. A person who carries on business as an insurance
intermediary is a financial business only where the person acts
with respect to any type of business referred to in paragraph 2(a)
or (b).

30

SCHEDULE 3 (Regulation 28)
D
ISCIPLINARY ACTION , N ON -REGULATED FINANCIAL BUSINESSES

R
EGULATION Brief Description of
Violation
A DMINISTRATIVE
PENALTY ($)
11(1) Failure to apply required
customer due diligence
measures
$5,000
12 Failure to comply with
requirements in sub-
regulation (2) and (3)
concerning business
relationship with the
customers $7,500
13 (1) Failure to apply enhanced
due diligence in respect
of any relevant
requirements in 13(1)(a)
– (f). $5,000
16 (1) and (2) Failure to comply with
the requirements in sub-
regulation (1) and (2) not
to set up or maintain a
numbered account, an
anonymous account or in
a name that is fictitious $7,500
17 Failure to comply with
requirements in sub-
regulations (3) and (4)
concerning the
maintenance of policies
and procedures $2,500 and $250 for every
day the disciplinary
violation continues or
occurs
18 Failure to comply with
the requirements in sub-
regulation (1), (4), and
(5) concerning the
keeping of records $2,500 and $250 for every
day the disciplinary
violation continues or
occurs
20 Failure to comply with
the requirements in sub-
regulations (1) and (2)
concerning the training of
employees $2,500 and $100 for every
day the disciplinary
violation continues or
occurs

31
21 Failure to comply with
the requirements in sub-
regulations (1), (3), (5)
and (6) concerning the
appointment of a money
laundering compliance
officer $2,500 and $100 for every
day the disciplinary
violation continues or
occurs
22 Failure to comply with
the requirements in sub-
regulations (1), (2), (3)
and 4 concerning the
appointment of a money
laundering reporting
officer $2,500 and $100 for every
day the disciplinary
violation continues or
occurs

MADE
this 29
th day of July 2010.

GORDON WETHERELL
GOVERNOR

32
EXPLANATORY NOTE
(This note is not part of the Regulations)
These Regulations revoke and replace the Anti-Money Laundering
Regulations 2007.
Part 1 defines certain terms used in the Regulation s and sets out
the scope of the Regulations.
Part 2 sets out the identification procedure to be established and
maintained by a person carrying on a financial busi ness and sets
out certain exceptions to the identification proced ure.
Part 3 requires a person carrying on a financial bu siness to keep
the necessary records of all transactions for a min imum of 5 years
and provides for the Commission or Reporting Author ity may
specify a longer period than 5 years.
A financial business must take appropriate measures for the
purposes of making employees whose duties relate to the provision
of relevant business aware of—
(a) the anti-money laundering and counter-terrorist
financing policies, procedures, systems and control s
maintained by the financial business in accordance
with these Regulations or the Code;
(b) the law of the Islands relating to money launderin g
and terrorist financing offences; and
(c) these Regulations, the Code and any Guidance
issued by the Commission or a supervisory
authority.
Part 4 requires a financial business to appoint a f it and proper
person as its Money Laundering reporting Officer an d a fit and
proper person as its Money Laundering Compliance Of ficer.
The Regulations also provide penalties for the cont ravention of
any provision of the Regulations.

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