• IBU Legal Team

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IBU Regulatory Update

• Kevin Hunte,
• Robert Folkes,
• Sangene Watkins
• Shelley Blades

Lunch Break
ES Requirements Regulators Panel Discussion

• Kevin Hunt, Director, IBU,
• Kester Guy, CEO, FSC
• Graeme Stoute, Legal Officer BRA
• Jamar Arthur-Selman GM, Centralis & 1st
• VP BIBA (Moderator)

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Stakeholders in the industry have however been cautioned against complacency in their approach to manoeuvring the vital, but ever changing industry.

During an International Business Update Workshop on Friday hosted by the Institute of Chartered Accountants, Toppin, Minister of International Business, pointed to a number of measures taken by Government which resulted in the country’s removal from the EU’s Blacklist of non-cooperative tax jurisdictions in May this year.

He however stressed the improvement of business operations through innovation and technology that would be necessary to reinvigorate and diversify Barbados’ offerings in the industry.

This, he told the conference, would work hand-in-hand with Government’s promotion of transparency, compliance and effective enforcement of regulations for banks, insurance companies, intellectual property and distribution centres.

“We must also be in a position to enable the conduct and exchange of information in cases of non-compliance and high-risk cases. As you would be aware, the Barbados Companies (Economic Substance) Act 2018-41 was introduced and became effective on January 1, 2019,” said Toppin.

“It prescribes that companies involved in geographically mobile activities such as the banking business, insurance, fund management, finance and leasing, headquarters, shipping, holding companies, intellectual property and distribution and service centres, must have their business activities controlled, directed and managed from Barbados. They must also have an adequate number of employees, expenditure and physical assets relating to that activity and its core income generating activities have to be conducted in Barbados.”

Toppin predicted the new environment would eventually become a “catalyst” for the injection of tremendous investment in citizen development as well as the sector’s infrastructure.

“The obligation to implement substance in this jurisdiction represents opportunities for all of us, whether in relation to joint ventures or start-ups, the placement of technical and vocational students or university students.  It also presents opportunities for Barbados to offer non-traditional services to the world as we seek to become truly a global business hub,” he said.

Executive Director of the Institute of Chartered Accountants, Kathy-Ann Hewitt meanwhile commended Government for its improvements in the international business sector.

She however also cautioned against complacency in a sector where the goalpost is constantly shifting and encouraged stakeholders and regulators to continuously reinvent the industry’s products and structures.

“Not only are there changes in the legal and regulatory requirements of the countries from whom we want to attract business, but there is also competition for this business from many other jurisdictions,” she told the conference.

“In order therefore, for Barbados to retain existing, and continue to attract new business in this sector… we must continually monitor trends and look for new ways to expand our knowledge and stay ahead of the curve.”

INCREASED MONEY LAUNDERING/TERRORIST FINANCING (ML/TF) RISK

Internationally, the national responses to COVID-19 emergency has led, unintentionally, to new opportunities for criminals and terrorists to generate and launder illicit proceeds heightening ML/TF risks. As such, the FATF has identified the following emerging issues.
These include: Increased Fraud, Cyber Crime, Impact on Other Predicate Crime, Changing Financial Behaviours, Misdirection of Government Funds or International Financial Assistance and Increased Risks of Corruption, Increased Financial Volatility, Change in Criminal Environment and Terrorist Financing.
Potential ML/TF risks emerging from threats and vulnerabilities were identified as:

• Increased misuse of online financial services and/or virtual assets to move and conceal illicit funds;

• Exploitation of temporary changes to internal controls caused by remote working situations to bypass customer due diligence measures;
• Misuse of natural and legal persons to obtain and subsequently launder stimulus funds, taking advantage of legitimate businesses, or to hide funds via insolvency schemes; and
• Increased use of the unregulated financial sector, creating additional opportunities for criminals to launder illicit funds;
• Misuse and misappropriation of domestic and international financial aid and emergency funding;
• Criminals and terrorists exploiting COVID-19 and the associated economic downturn to move into new cash-intensive and high-liquidity lines of business, including for the laundering of proceeds, to fund their operations, as well as fraudulently claiming to be charities to raise funds online.

AML/CFT CONTROLS AND RESPONSES

Financial Institutions and Designated Non-Financial Business Entities and Professionals (“collectively referred to as “Entities”) are reminded of the requirement to comply with the Money Laundering and Financing of Terrorism (Prevention and Control) Act (“MLFTA”), as amended, and the relevant AML/CFT Guidelines (“Guidelines”).
VERIFICATION OF CUSTOMER IDENTITY
Having regard to the foregoing, the Competent Authorities encourage the use of responsible electronic and digital customer on-boarding measures, while ensuring that risk-based controls are in place to mitigate ML/TF risk. It is expected that the verification of original documents will be completed as soon as practicable after COVID-19 restrictions are lifted. It is also important for reporting entities to remain alert and vigilant to new and emerging ML/TF risks at this time.
The Competent Authorities recognise the challenges in which COVID-19 may make it difficult for entities to verify the identity of individuals using their normal processes (for example by acquiring certified copies of original documents). However, during this period, entities are expected to continue to comply with their obligations with regards to customer identity verification. It is essential to confirm that customers are who they claim to be and that the information or documentation aligns with the customer’s risk profile.
The Competent Authorities’ Guidelines provide for elements of customer identity verification to be carried out remotely, provided that certain appropriate safeguards are in place. Documents in electronic form are acceptable provided that entities take a risk-based approach and have suitable documented policies and procedures in place to ensure the authenticity of the electronic document(s). Entities should assess the type of electronic file and ensure that it is authentic .
There are a number of ways to verify information (both at the time of establishing the relationship or as a part of ongoing customer due diligence) whilst observing curfew, social distancing or self-isolation.
These measures include the following and are not exhaustive:

• Meeting customers through telephone or secured video conferencing (where this option is used it must be documented for each case) to ask questions about their identification, their reason for requesting the financial service or other questions to ascertain whether customers are who they claim to be and the nature and purpose of the business relationship;
• If an introducer or suitable certifier has met the customer, they must confirm to the financial institution that they have met the customer via video conferencing, including a photograph or scanned copy of the documents;
• Certification of documents through “selfie” documents, photographs or videos: Photographs should clearly show the person’s face and the image on the identity document being held in the same picture to demonstrate this actually belongs to the customer. A clear scanned copy or photograph of the document itself should also be provided.
• Interviewing customers through secured videoconference to compare the physical likeness of a customer with scanned or photographed copies of identification documents;
• Statements and bills received in an e-format. Where statements or bills have been provided to the customer in an e-format, these are acceptable provided that they clearly show the customer’s residential address (not just an email address). These documents should then be verified via one of the methods outlined above.
• Government issued identification received in e-format. Entities may accept recently expired government-issued identification, , in order to verify the identity[1] of an individual until relevant services resume. However, the entity is still required to determine the authenticity of the identification via one of the methods outlined above.
• Requiring that the first deposit to the account, be made by electronic transfer from the customer’s account at their existing bank for source of funds verification.

Entities should consider whether an electronic signature is legally acceptable, including by the counterparty, and consider virtual arrangements for witnessing such signatures where relevant.
Where an entity has adopted a different verification method as indicated above, it should be documented in all cases and the verification completed using normal processes as soon as practicable.
The Competent Authorities expect entities to take a risk-based approach when establishing new relationships and impose restrictions where the associated ML/TF risks may be higher. For example, imposing transaction limitations, i.e.,  number of transfers or withdrawals until verification  is completed using normal practices.
ONGOING DUE DILIGENCE
In respect of ongoing due diligence, based on the current circumstances, there may be legitimate reasons for customers not providing updated information.  As such, the usual processes for dealing with these situations, including exiting the customer relationship, may not be appropriate at this time[2].
Entities may consider applying simplified or reduced due diligence measures where lower risks are identified, including to facilitate relief programmes and to facilitate contactless payment solutions.  Where this approach is taken, entities should ensure that enough information is provided to support effective customer monitoring.
Consideration can also be given to a tiered CDD approach by entities, which may include customers having access to different account functionalities depending on the extent of the identification/verification being conducted, with strict pre-set thresholds defined for various account levels.  In addition, entities may allow limited account services (e.g. caps on daily/monthly withdrawals, deposit limits) based on the level of CDD conducted and the customer risk profile.
Entities should ensure that there are processes and controls to detect and review changes in the risk profile of the customer. Where there are changes, appropriate due diligence measures  should be applied.
NON-PROFIT ORGANISATIONS (“NPOs”)
During this time, NPOs will be engaged in charitable services to ensure social relief is provided for those in need and affected by COVID-19. Financial institutions are reminded that not all NPOs are high risk and some carry little to no risk for terrorist financing. The intent is that NPOs utilize legitimate and transparent channels and that their services benefit those in need. Therefore, a risk-based approach  should continue to be applied to ensure that financial transactions conducted with NPOs are for legitimate activities and therefore continued vigilance is required. At the same time, however, financial institutions should also ensure that such transactions are not unnecessarily delayed, disrupted or discouraged. Financial institutions should also be vigilant to criminals who may seek to profit from the Government’s COVID-19 relief programmes by setting up companies or NPOs to receive social assistance funds, or by taking advantage of legitimate businesses to obtain and subsequently launder economic stimulus funds.
REPORTING OBLIGATIONS
Entities  should continue to effectively manage ML/TF risks, taking into account emerging risks presented by the COVID-19 pandemic. The obligations to report suspicious activities and transactions are laid out Section 23 of the MLFTA and corresponding sections of the Guidelines. Entities  should report suspicious activities and comply with United Nations sanctions obligations as required. Reports are to be filed with the Financial Intelligence Unit (“FIU”) promptly from the date the transaction or circumstances was deemed suspicious.
Given the health risks posed by the transmission of COVID-19, the submission of suspicious transaction/activity reports (STRs) via email is encouraged. In the event, that a regulated entity is unable to submit a STR via email, the Report can be delivered directly to the FIU where on arrival, the relevant delivery protocols will be communicated.
ONGOING MONITORING
Entities should consider the impact of the changing financial environment which may trigger an update to customer risk profiles.  Consequently, entities are reminded to continue monitoring transactions and pay particular attention to unusual or suspicious patterns in customer behaviour and financial flows, identifying risk indicators and implementing processes and controls to prevent the misuse of their institutions.
TRAINING AND AWARENESS
Entities should continue to provide training to staff especially during this period and in light of any emerging ML/TF risk.  Training should be facilitated online or virtually, as far as possible, however should it become necessary for face-to-face training,  entities should observe the established COVID-19 safety protocols.
The Competent Authorities will continue to engage entities from time to time on the application of AML/CFT measures and related matters emanating from the impact of COVID-19 on their operations and, where necessary, provide guidance.  However, entities are encouraged to:

• Advise the Competent Authorities where the COVID-19 restrictions prohibit the implementation of the MLFTA or Guidelines
• Inform the Competent Authorities of any evolving ML/FT risks or threats as a result of COVID-19 adjustments

[1] Note that the first directive came into effect from March 28, 2020 (Refer to the Emergency Management (Covid-19) Curfew Directive, 2020).
[2]  See measures that can be implemented set out in the 2017 FATF Guidance on AML/CFT Measures and Financial Inclusion, with a Supplement on Customer Due Diligence.
CONTACT US
Queries should be sent to:
• Central Bank of Barbados
• Financial Services Commission
• International Business Unit
• Corporate Affairs and Intellectual Property Office
• Financial Intelligence Unit

On 24 March 2020, the Security Council Committee pursuant to resolutions 1267 (1999), 1989 (2011) and 2253 (2015) concerning ISIL (Da’esh), Al‑Qaida and associated individuals, groups, undertakings and entities removed the name below from the ISIL (Da’esh) and Al‑Qaida Sanctions List after concluding its consideration of the de‑listing request for this name submitted through the Office of the Ombudsperson established pursuant to Security Council resolution 1904 (2009), and after considering the Comprehensive Report of the Ombudsperson on this delisting request.
Therefore, the assets freeze, travel ban and arms embargo set out in paragraph 1 of Security Council resolution 2368 (2017), and adopted under Chapter VII of the Charter of the United Nations, no longer apply to the name set out below.
A. Individuals
QDi.206 Name: 1: IBRAHIM 2: MOHAMED KHALIL 3: na 4: na
Name (original script): ابراهيم محمد خليل
Title: na Designation: na DOB: 2 Jul. 1975 POB: Dayr Az-Zawr, Syrian Arab Republic Good quality a.k.a.: a) Khalil Ibrahim Jassem born 2 May 1972 in Baghdad, Iraq b) Khalil Ibrahim Mohammad born 3 Jul. 1975 in Mosul, Iraq c) Khalil Ibrahim Al Zafiri (born 1972) d) Khalil born 2 May 1975 e) Khalil Ibrahim al-Zahiri born 2 Jul. 1975 in Mosul Low quality a.k.a.: na Nationality: Syrian Arab Republic Passport no: Temporary suspension of deportation number T04338017 (issued by Alien’s Office of the City of Mainz, expired on 8 May 2013) National identification no: na
The names of individuals and entities removed from the ISIL (Da’esh) and Al‑Qaida Sanctions List pursuant to a decision by the Committee may be found in the “Press Releases” section on the Committee’s website.  Other information about the ISIL (Da’esh) and Al‑Qaida Sanctions List may also be found on the Committee’s website at the following URL:  www.un.org/securitycouncil/sanctions/1267/aq_sanctions_list/procedures-for-delisting.
The ISIL (Da’esh) and Al‑Qaida Sanctions List is updated regularly on the basis of relevant information provided by Member States and international and regional organizations.  An updated List is accessible on the ISIL (Da’esh) and Al-Qaida Sanctions Committee’s website at the following URL:  www.un.org/securitycouncil/sanctions/1267/aq_sanctions_list.
The Consolidated United Nations Security Council List is also updated following all changes made to the ISIL (Da’esh) and Al‑Qaida Sanctions List.  An updated version of the Consolidated List is accessible via the following URL:  www.un.org/securitycouncil/content/un-sc-consolidated-list.
Other information about the Status of Cases of the Office of the Ombudsperson to the ISIL (Da’esh) and Al Qaida Sanctions Committee may be found on the Ombudsperson’s website at the following URL:  www.un.org/securitycouncil/sc/ombudsperson/status-of-cases.

On 18 February 2020, the Security Council Committee pursuant to resolutions 1267 (1999), 1989 (2011) and 2253 (2015) concerning ISIL (Da’esh), Al-Qaida and associated individuals, groups, undertakings and entities removed the names below from the ISIL (Da’esh) and Al-Qaida Sanctions List after concluding its consideration of the delisting requests for these names submitted through the Office of the Ombudsperson established pursuant to Security Council resolution 1904 (2009), and after considering the Comprehensive Reports of the Ombudsperson on these delisting requests.
Therefore, the assets freeze, travel ban, and arms embargo set out in paragraph 1 of Security Council resolution 2368 (2017), and adopted under Chapter VII of the Charter of the United Nations, no longer apply to the names set out below.
A. Individuals
QDi.063 Name: 1: AL-MOKHTAR 2: BEN MOHAMED 3: BEN AL-MOKHTAR 4: BOUCHOUCHA
Name (original script): المختار بن محمد بن المختار بوشوشة
Title: na Designation: na DOB: 13 Oct. 1969 POB: Tunis, Tunisia Good quality a.k.a.: Bushusha, Mokhtar Low quality a.k.a.: na Nationality: Tunisia Passport no: Tunisian number K754050, issued on 26 May 1999 (expired on 25 May 2004) National identification no: 04756904, issued on 14 Sep. 1984
QDi.176 Name: 1: IMAD 2: BEN BECHIR 3: BEN HAMDA 4: AL-JAMMALI
Name (original script): عماد بن البشير بن حمدا الجمالي
Title: na Designation: na DOB: 25 Jan. 1968 POB: Manzal Tmim, Nabul, Tunisia Good quality a.k.a.: na Low quality a.k.a.: na Nationality: Tunisia Passport no: Tunisian number K693812, issued on 23 Apr. 1999 (expired on 22 Apr. 2004) National identification no: 01846592
The names of individuals and entities removed from the ISIL (Da’esh) and Al-Qaida Sanctions List pursuant to a decision by the Committee may be found in the “Press Releases” section on the Committee’s website.  Other information about the ISIL (Da’esh) and Al-Qaida Sanctions List may also be found on the Committee’s website at the following URL: www.un.org/securitycouncil/sanctions/1267/aq_sanctions_list/procedures-for-delisting.
The ISIL (Da’esh) and Al-Qaida Sanctions List is updated regularly on the basis of relevant information provided by Member States and international and regional organizations.  An updated List is accessible on the ISIL (Da’esh) and Al-Qaida Sanctions Committee’s website at the following URL:  www.un.org/securitycouncil/sanctions/1267/aq_sanctions_list.
The Consolidated United Nations Security Council List is also updated following all changes made to the ISIL (Da’esh) and Al-Qaida Sanctions List.  An updated version of the Consolidated List is accessible via the following URL: www.un.org/securitycouncil/content/un-sc-consolidated-list.
Other information about the Status of Cases of the Office of the Ombudsperson to the ISIL (Da’esh) and Al-Qaida Sanctions Committee may be found on the Ombudsperson’s website at the following URL: www.un.org/securitycouncil/sc/ombudsperson/status-of-cases.

• Cayman Islands;
• Palau;
• Panama;
• Seychelles

These jurisdictions did not implement the tax reforms to which they had committed by the agreed deadline.
Annex II of the conclusions, which covers jurisdictions with pending commitments, reflects the deadline extensions granted to 12 jurisdictions to enable them to pass the necessary reforms to deliver on their commitments. Most of the deadline extensions concern developing countries without a financial centre who have already made meaningful progress in the delivery of their commitments.
16 jurisdictions (Antigua and Barbuda, Armenia, Bahamas, Barbados, Belize, Bermuda, British Virgin Islands, Cabo Verde, Cook Islands, Curaçao, Marshall Islands, Montenegro, Nauru, Niue, Saint Kitts and Nevis, Vietnam) managed to implement all the necessary reforms to comply with EU tax good governance principles ahead of the agreed deadline and are therefore removed from Annex II.

The work on the list of non-cooperative tax jurisdictions is based on a thorough process of assessment, monitoring and dialogue with about 70 third country jurisdictions. Since we started this exercise, 49 countries have implemented the necessary tax reforms to comply with the EU’s criteria. This is an undeniable success. But it is also work in progress and a dynamic process where our methodology and criteria are constantly reviewed.
Zdravko Marić, Croatian Deputy Prime Minister and Minister of finance

The list of non-cooperative tax jurisdictions, which is part of the EU’s external strategy for taxation as defined by the Council, is intended to contribute to ongoing efforts to promote tax good governance worldwide.
It was first established in December 2017 and is based on a continuous and dynamic process of:

• establishing criteria in line with international tax standards;
• screening countries against these criteria;
• engaging with countries which do not comply;
• listing and de-listing countries as they commit or take action to comply;
• monitoring developments to ensure jurisdictions do not backtrack on previous reforms.

The list includes jurisdictions that have either not engaged in a constructive dialogue with the EU on tax governance or failed to deliver on their commitments to implement reforms to comply with the EU’s criteria on time.
Jurisdictions that do not yet comply with all international tax standards but committed to reform are considered cooperative and included in a state of play document (Annex II). The Council’s code of conduct group on business taxation monitors that jurisdictions enact the necessary reforms by the agreed deadlines. Once a jurisdiction meets all its commitments, it is removed from Annex II.
Most commitments taken by third country jurisdictions were with a deadline of end 2019, whilst their enactment in national law was carefully monitored at technical level by the Code of Conduct Group on business taxation until the beginning of this year. The Council adopted the revised EU list of non-cooperative jurisdictions resulting from this exercise and endorsed a revised state of play with respect to pending commitments.
The Council will continue to regularly review and update the list in the coming years, taking into consideration the evolving deadlines for jurisdictions to deliver on their commitments and the evolution of the listing criteria that the EU uses to establish the list.
In parallel, as regards ‘defensive’ measures with regard to the listed jurisdictions, the Council produced a guidance on further coordination of national defensive measures in the tax area towards non-cooperative jurisdictions in December 2019. It invited all member states to apply legislative defensive measure in taxation vis-à-vis the listed jurisdictions as of 1 January 2021, with the aim of encouraging those jurisdictions’ compliance with the Code of Conduct screening criteria on fair taxation and transparency.