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CBOB cites pre-visit deficiencies

In its quarterly letter on regulatory and supervisory developments, The Central Bank of The Bahamas noted that, although most supervisory financial institutions (SFIs) have demonstrated the ability to provide pre-visit information necessary to support the new process of onsite examinations, deficiencies that need improvement remain.

The new onsite examinations are a part of government’s commitment to international finance monitoring bodies like the International Monetary Fund (IMF), Inter-American Development Bank (IDB) and the European Union (EU) to improve compliance with global anti-money laundering and combating the financing of terrorism (AML/CTF) and tax transparency standards.

“During the second quarter of 2018, the Central Bank has made steady progress on the AML/CFT supervision front. We have also proactively engaged with industry on matters of financial soundness and compliance,” Inspector of Banks and Trust Companies Charles Littrell said in the letter.

“As a result of revisions to our examination process, which took effect from 1 January, pre-examination records and information are required to ensure a more targeted, efficient onsite visit.

“The new process is resulting in reports of examination (RoEs) reliably delivered within 20 business days of the examination closing meeting, which is a better outcome for all concerned. We are finding that pre-visit meetings with external auditors are also a useful innovation.”

However, CBOB said that cooperation from CFIs is still needed in rare instances and pointed to three deficiencies commonly observed during onsite examination visits in recent months.

Those deficiencies included incompletely developed and documented institutional analysis of money laundering/ terrorist financing (ML/TF) risk, an analysis which SFIs are required to complete; insufficient independence of the compliance function, where SFIs’ compliance officers and money laundering reporting officers are required to maintain transparent reporting lines and to enjoy unfettered discretion to report non-compliance and suspicious transactions to the board and the Financial Intelligence Unit; and the absence of active engagement by independent non-executive directors (INEDs), which should be appointed by an SFI to assist in setting strategic direction for firms.

In these instances, CBOB has pledged to likely engage CFIs more proactively on the point of proper documentation over the next year; and to strengthen and clarify its requirements for independent compliance functions in a soon-to-be-released update to the guidelines for supervised financial institutions on the prevention of money laundering, combatting the financing of terrorism and proliferation financing.

Earlier this year, CBOB released draft guidance notes on financial crime risk management and proliferation financing for industry feedback.

Business Reporter at The Nassau Guardian
Paige joined The Nassau Guardian in 2010 as a television news reporter and anchor. She has covered countless political and social events that have impacted the lives of Bahamians and changed the trajectory of The Bahamas.
Paige started working as a business reporter in August 2016.
Education: Palm Beach Atlantic University in 2006 with a BA in Radio and Television News
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