CFATF Mutual Evaluation Report of Barbados - 2018

Anti-money laundering and counter-terrorist financing measures in Barbados – Mutual Evaluation Report – February 2018 1
Anti-money laundering and counter-
terrorist financing (AML/CFT)
measures in Barbados
Fourth Round Mutual Evaluation
Key findings, ratings and priority actions
February 2018
http://www.fatf-gafi.org/publications/mutualevaluations/documents/mer-barbados-2018.html

Anti-money laundering and counter-terrorist financing measures in Barbados – Mutual Evaluation Report – February 2018
Ratings – Effectiveness (1/3)
2
Immediate outcome of an effective system to combat money
laundering (ML) and terrorist financing (TF)
Extent to
which
Barbados has
achieved this
objective
1. ML and TF risks are understood and, where appropriate,
actions co-ordinated domestically to combat ML and TF
Low
2. International co-operation delivers appropriate information,
financial intelligence, and evidence, and facilitates action
against criminals and their assets
Moderate
3. Supervisors appropriately supervise, monitor and regulate
financial institutions and designated non-financial
businesses and professions (DNFBPs) for compliance with
AML/CFT requirements commensurate with their risks.
Moderate
4. Financial institutions and DNFBPs adequately apply AML/CFT
preventive measures commensurate with their risks, and
report suspicious transactions.
Moderate

Extent to
which
Barbados has
achieved this
objective
5. Legal persons and arrangements are prevented from misuse
for money laundering or terrorist financing, and information
on their beneficial ownership is available to competent
authorities without impediments
Moderate
6. Financial intelligence and all other relevant information are
appropriately used by competent authorities for money
laundering and terrorist financing investigations.
Low
7. Money laundering offences and activities are investigated
and offenders are prosecuted and subject to effective,
proportionate and dissuasive sanctions
Low
8. Proceeds and instrumentalities of crime are confiscated. Low

Extent to
which
Barbados has
achieved this
objective
9. Terrorist financing offences and activities are investigated
and persons who finance terrorism are prosecuted and
subject to effective, proportionate and dissuasive sanctions.
Low
10. Terrorists, terrorist organisations and terrorist financiers are
prevented from raising, moving and using funds, and from
abusing the non-profit sector.
Low
11. Persons and entities involved in the proliferation of weapons
of mass destruction are prevented from raising, moving and
using funds, consistent with the relevant United Nations
Security Council Resolutions.
Low

Ratings – Effectiveness
00
4
7
High
Substantial
Moderate
Low

6
Ratings – technical compliance
(1/5)
AML/CFT POLICIES AND COORDINATION
1. Assessing risks & applying a risk-based approach PartPa Pa Par Partially Compliant
2. National cooperation and coordination LargLarLarLar Largely Compliant
MONEY LAUNDERING AND CONFISCATION
3. Money laundering offence LargLarLarLar Largely Compliant
4. Confiscation and provisional measures PartPa Pa Par Partially Compliant
TERRORIST FINANCING AND FINANCING OF PROLIFERATION
5. Terrorist financing offence LargLarLarLar Largely Compliant
6. Targeted financial sanctions related to terrorism & terrorist financiLargLarLarLar Largely Compliant
7. Targeted financial sanctions related to proliferation NonNo No Non Non Compliant
8. Non-profit organisations NonNo No Non Non Compliant

7
(2/5)
PREVENTIVE MEASURES
9. Financial institution secrecy laws ComCoCoCo Compliant
Customer due diligence and record keeping
10. Customer due diligence LargLarLarLar Largely Compliant
11. Record keeping ComCoCoCo Compliant
Additional measures for specific customers and activities
12. Politically exposed persons LargLarLarLar Largely Compliant
13. Correspondent banking LargLarLarLar Largely Compliant
14. Money or value transfer services LargLarLarLar Largely Compliant
15. New technologies ComCoCoCo Compliant
16. Wire transfers LargLarLarLar Largely Compliant

8
(3/5)
PREVENTIVE MEASURES (continued)
Reliance, Controls and Financial Groups
17. Reliance on third parties LargLarLarLar Largely Compliant
18. Internal controls and foreign branches and subsidiaries LargLarLarLar Largely Compliant
19. Higher-risk countries PartPa Pa Par Partially Compliant
Reporting of suspicious transactions
20. Reporting of suspicious transactions PartPa Pa Par Partially Compliant
21. Tipping-off and confidentiality LargLarLarLar Largely Compliant
Designated non-financial Businesses and Professions (DNFBPs)
22. DNFBPs: Customer due diligence LargLarLarLar Largely Compliant
23. DNFBPs: Other measures PartPa Pa Par Partially Compliant

9
(4/5)
TRANSPARENCY AND BENEFICIAL OWNERSHIP OF LEGAL PERSONS
AND ARRANGEMENTS
24. Transparency and beneficial ownership of legal persons PartPa Pa Par Partially Compliant
25. Transparency and beneficial ownership of legal arrangements LargLarLarLar Largely Compliant
POWERS AND RESPONSIBILITIES OF COMPETENT AUTHORITIES
AND OTHER INSTITUTIONAL MEASURES
Regulation and Supervision
26. Regulation and supervision of financial institutions ComCoCoCo Compliant
27. Powers of supervisors ComCoCoCo Compliant
28. Regulation and supervision of DNFBPs LargLarLarLar Largely Compliant
Operational and Law Enforcement
29. Financial intelligence units PartPa Pa Par Partially Compliant
30. Responsibilities of law enforcement and investigative authoritiesLargLarLarLar Largely Compliant
31. Powers of law enforcement and investigative authorities PartPa Pa Par Partially Compliant
32. Cash couriers PartPa Pa Par Partially Compliant

10
(5/5)
POWERS AND RESPONSIBILITIES OF COMPETENT AUTHORITIES
AND OTHER INSTITUTIONAL MEASURES (continued)
General Requirements
33. Statistics PartPa Pa Par Partially Compliant
34. Guidance and feedback PartPa Pa Par Partially Compliant
Sanctions
35. Sanctions LargLarLarLar Largely Compliant
INTERNATIONAL COOPERATION
36. International instruments PartPa Pa Par Partially Compliant
37. Mutual legal assistance LargLarLarLar Largely Compliant
38. Mutual legal assistance: freezing and confiscation PartPa Pa Par Partially Compliant
39. Extradition LargLarLarLar Largely Compliant
40. Other forms of international cooperation LargLarLarLar Largely Compliant

5
20
13
2
Compliant
Largely compliant
Partially compliant
Non compliant

Key findings
 Barbados submitted a National Risk Assessment (NRA), dated June 30, 2016, in
advance of the onsite examination. Although Barbados has indicated that the
NRA was a presentation of already identified ML/TF risks there remains a
concern that it had been prepared solely for the purposes of the assessment
and accordingly participation in the NRA process was sub optimum and
therefore the scope and depth of analysis did not comprehensively identify the
ML/TF threats and vulnerabilities to which the country was currently exposed.
 Whilst progress has most certainly been made by both the Central Bank of
Barbados (CBB) and the Financial Services Commission (FSC) in developing and
refining their respective financial sector risk assessment frameworks, this has
not been the case in respect of the AMLA and the International Business
Division (IBD).
 The 2016 NRA failed to comprehensively identify national ML/TF threats and
vulnerabilities and critically there was limited analysis of terrorist financing (TF)
risk, transparency of legal persons and arrangements, and the risks associated
with Trust and Corporate Service Providers (TCSPs) and cross border cash
movements.
12

Key findings
13
 Based on the information reviewed, there is some evidence of international
collaboration or co-operation in respect of money laundering (ML) investigations,
and terrorism as well as other forms of international cooperation.
 Basic information for legal persons is captured and is publicly available.
 Beneficial ownership (BO) information of legal persons is obtained and available
at the company’s registered office or at the office of the service provider. There is
no information that the competent authorities have verified and confirmed the
implementation of the maintenance of the BO information by the service
providers.
 The legal provision permits discretion to maintain the records pertaining to BO
information at some other place in Barbados, as designated by the directors of
the company, without a requirement for notification to be given to the competent
authority. This therefore limits the requirement for availability and accessibility to
BO information. There is no information that the authorities have verified and
confirmed the maintenance of BO information
 There is a legal obligation within the Guidelines for Corporate and Trust Service
Providers Act of 2015 (CTSPA) to keep BO information on legal arrangements.
 There is a requirement within the guidelines for trusts as legal arrangements to
keep BO information.

Key findings
 Barbados has conducted an effective risk assessment of the Money Value
Transfer Service (MVTS) sector and has concluded that the risk is low.
MVTS are therefore appropriately registered by the CBB. Barbados has
now advised that MVTS will also be licensed.
 Gaming institutions are not casinos and are not currently regulated and
supervised for AML/CFT purposes. To date a risk assessment of this sector
has not been conducted.
 The supervision of the DNFBP sector appears disjointed and to a certain
extent ad hoc with the FSC providing supervisory capability under
Memoranda of Understanding (MOUs) to both the AMLA and the IBD.
 The FSC has a developing understanding of the ML/TF risks across the
financial sectors and Financial Institutions (FIs) for which it is responsible.
The FSC’s risk assessment process focuses on the largest FIs in each sector.
Whilst this approach has merit, unless validated, it could compromise both
the integrity of the sector risk assessments by failing to adequately identify
the nature and extent of the ML/TF risks across each sector as a whole,
and the integrity of the supervision methodology.
14

Key findings
 Whilst both the CBB and the FSC have developing risk assessment and
supervisory frameworks in place, the Assessors are concerned that there is
an imbalance between offsite and onsite supervision. In this context the
onsite supervision cycle is not currently fully aligned to the risk ratings
allocated to the individual FIs.
 The IBD has not been able to satisfactorily demonstrate to the Assessors
that it has been able to effectively supervise the IBD sector and the
corporate and trust services providers in particular. Whilst an MOU
between the IBD and the AMLA is in place to provide interim supervision
capability, this is not considered to be a sustainable solution.
 It is evident that supervisors generally are not applying the full range of
available sanctions for non-compliance by FIs and DNFBPs with AML/CFT
requirements.
 The FIs under the purview of the CBB have an understanding of their
ML/TF risks and overall the majority have implemented the necessary
mitigating procedures whilst some are in the process of doing so.
 For FIs regulated by FSC, it has been determined that not all Credit Unions
understand their risk and have implemented the necessary preventive
measures.
15

Key findings
 Across the insurance and securities sectors, not all FIs have a good
understanding of the ML/TF risks to which they are exposed and therefore
have not yet implemented appropriate ML/TF risk mitigation controls.
 In respect of DNFBPs (corporate and trust service providers) supervised by
the IBD lacked an understanding of their ML/TF risk exposure and therefore
have not implemented appropriate ML/TF risk mitigation controls.
 It is evident that the legal obligation to report ‘attempted or aborted
transactions’ is not discharged by all reporting entities and therefore all
pertinent information necessary for the FIU to effectively carry out its
function is not received.
 The annual average number of Suspicious Activity Reports (SARs)
submissions across the DNFBP sector is 19 for the period under review.
There are some sectors, for example, gaming arcades, which are not
supervised as DNFBPs and others such as online-gaming and real estate
dealers, where the statistics show, have not reported SARs.
 There is no systematic method of capturing data to show the effectiveness of
the FIU and LEAs. Therefore, the extent to which financial intelligence
disseminated by the FIU is used by LEAs and other competent authorities is
not measured.
16

Key findings
 The categories of statistics captured by the FIU are limited as not all
requests from the FIU to the reporting entities for financial information are
captured as a statistic. Consequently, areas such as outgoing domestic
request for information, status of LEA investigations initiated by financial
intelligence or including FIU intelligence, was not available.
 The FIU’s information technology (IT) system to conduct comprehensive
analysis, including strategic and operational analysis, is inadequate.
Furthermore, there is no evidence that the FIU conducts strategic analysis.
 There is no efficient feedback system from the FIU to the reporting entities
when SARs are submitted, and additionally, there is limited feedback from
LEAs and competent authorities to the FIU on the usefulness of the
financial intelligence the FIU provides.
 ML charges are not pursued as primary offences. Priority is placed on the
prosecution of predicate offences.
 The Royal Barbados Police Force (RBPF) has disclosed that in their pursuit
of ML investigations they are required by the High Court, based on a
practice developed overtime in the jurisdiction, to utilize the office of the
DPP to make an application to obtain production orders.
17

Key findings
 There is no designated asset recovery direction or cash seizure provisions
and the Exchange Control Act has been used as an alternative law to (
recover the proceeds of crime) pursue ML as opposed to the Proceeds of
Crime Act. The authorities have indicated that there is a policy directive to
enact the Proceeds of Crime and Instrumentalities Bill in 2017 which will
repeal the POCA and provide for civil forfeiture.
 Barbados has recorded no investigations, prosecution or convictions for TF.
 Barbados has limited experience on TF. There has been no information
related to the TFS, and Barbados has disclosed that it will not be
implementing TFS of the UN Resolution.
18

Priority Actions for Barbados to
strengthen its AML/CFT System
19
 Barbados should proceed to conduct a more comprehensive assessment of
its AML/CFT risks threats and vulnerabilities. This risk assessment should
be completed by AMLA in conjunction with FIs and DNFBPs, LEA and
competent authorities, with input from the private sector.
 Having conducted a comprehensive review of AML/CFT threats and
vulnerabilities with the participation of all stakeholders Barbados should
ensure that the results are disseminated to stake holders and the
necessary measures, including resources, are put in place to mitigate the
risks identified.
 The ML/TF risks associated with gaming institutions should be assessed
and if merited gaming institutions should be regulated and supervised for
AML/CFT purposes.
 In particular, Barbados should promptly address the specific ML/TF risk
posed by TF, legal persons, legal arrangements, foreign companies, private
companies, public companies, NPOs, and the gaming institutions
(particularly the slots/arcade gaming sector) by formulating and
implementing strategies to mitigate these risks.

 All supervisors should adequately identify and assess the ML/TF risk profiles of
their respective sectors and institutions in similar manner to those best
practices adopted by the CBB.
 Licensing requirements for FIs and DNFBPs in Barbados should universally
require approval (in some form) for changes in BO and changes in key
appointees.
 The FSC and the CBB should review the integrity of their risk assessment and
supervisory methodologies to ensure that there is a proper balance between
onsite and offsite supervision and that onsite supervision cycles are linked to
the risk ratings attached to the FI.
 All supervisors should begin applying the full range of available sanctions for
non-compliance by FIs and DNFBPs in keeping with prevailing AML/CFT
requirements.
 The FSC should take appropriate measures to make sure that all credit unions,
insurers and securities companies understand their ML/TF risks and implement
the corresponding risk mitigation controls. The IBD should increase the
understanding of ML/TF risks by CTSPs. Reporting entities should be made
aware of their legal obligation to also report ‘attempted or aborted
transactions’. 20

 Competent Authorities primarily the FIU and LEAs should ensure that statistics
are kept in a comprehensive and easily retrievable manner. This would enable
the authorities to measure the successes and possible shortcoming in the
AML/CFT regime of the jurisdiction including that of whether financial
intelligence is being effectively utilized by the competent authorities.
 The categories of statistics captured by the FIU should be broadened to include,
areas such as outgoing domestic requests and ‘suspected’ offences observed in
the AML/CFT environment both for information for LEAs and to support LEA
investigations.
 The FIU’s IT system to facilitate the conduct of comprehensive analysis,
including strategic and operational analysis, should be upgraded. Furthermore,
there is a need for the FIU to conduct strategic analysis as this serves as an
important component in the AML/CFT framework of the jurisdiction.
 ML charges should be pursued as primary offences by LEAs and prosecutorial
authorities. Furthermore, the judicial system needs to be assessed and
reviewed to ensure that ML/TF offences and related predicate matters are
sufficiently prioritised.
21

 Barbados should implement a written policy objective that is communicated to
the Prosecutors and LEAs to ensure that confiscation is of paramount
importance to the relevant agencies and that assets derived from criminal
conduct or intended for criminal conduct are confiscated based on this policy
objective.
 The Authorities need to treat, as a priority, the promulgation of the Proceeds
and Instrumentalities of Crime Bill to address deficiencies regarding cash
seizures, confiscation and asset forfeiture.
 Barbados should ensure that LEAs, Prosecutors and Judges receive adequate
and continuous training and development relative to confiscation and the
recovery of criminal proceeds. Furthermore, the related institutions should also
be staffed to effectively deal with confiscation.
 Increased focus should be placed on terrorism, terrorism related activities and
terrorist organisations considering information that based on the geographical
location of the island, it is being used as a transit point for terrorist fighters.
22

 Barbados should implement a written policy objective that is communicated to
the Prosecutors and LEAs to ensure that confiscation is of paramount
importance to the relevant agencies and that assets derived from criminal
conduct or intended for criminal conduct are confiscated based on this policy
objective.
 The Authorities need to treat, as a priority, the promulgation of the Proceeds
and Instrumentalities of Crime Bill to address deficiencies regarding cash
seizures, confiscation and asset forfeiture.
 Barbados should ensure that LEAs, Prosecutors and Judges receive adequate
and continuous training and development relative to confiscation and the
recovery of criminal proceeds. Furthermore, the related institutions should also
be staffed to effectively deal with confiscation.
 Increased focus should be placed on terrorism, terrorism related activities and
terrorist organisations considering information that based on the geographical
location of the island, it is being used as a transit point for terrorist fighters.
23

 The implementation of the UNSCRs on proliferation of WOMD should be
undertaken by the establishment of policies and mechanisms to implement all
UN TFS to combat TF and the financing of proliferation without delay and the
monitor of reporting entities for compliance with the targeted financial
sanctions.
 Amendment to COMPA to include a requirement for the Director to
immediately notify the Registrar of Companies of the relocation of BO
information other than the known registered address.
 Barbados should take measures to assess the risks of ML/TF posed by the
misuse of legal persons and legal arrangements. Barbados should also take
measures to ensure that BO information for legal persons is maintained and
available.
 The non-issuance of the certificate of good standing obfuscates the sanctions
regime for non-compliance with the filing obligations. Barbados should
therefore consider applying the fines which forms part of the sanctioning
regime.
24

 Immediate training should be arranged for the FIU personnel in analysing
complex financial data, strategic analysis and using analytical tools to enhance
the intelligence product.
 The IBD and the AMLA should quickly move to strengthen the AML/CFT
supervisory framework for the DNFBP sector through risk-based assessment,
targeted and prioritised supervisory onsite visits and outreach.
 The operational needs of law enforcement supported by the FIU should be
articulated between the agencies. Barbados should take steps to improve
relations between law enforcement (which should include the Customs and
Excise and BRA, and the FIU) to ensure that there is maximum use of the
financial intelligence products. This can be done through joint and coordinated
meetings.
 The FIU should increase its information sources, such as timely access to
customs declarations, timely access to BO information and SARs from FIs which
includes attempted or aborted transactions, to complement its intelligence
reports.
25

CFATF Mutual Evaluation Report of Barbados - 2018

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