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AML/CFT Legislative Framework

The TCI has undertaken significant legislative changes since 2007 to enhance the territory’s ability to detect and prevent money laundering and terrorist financing related crimes. In 2007 a new Proceeds of Crime Ordinance (POCO) was introduced. The POCO repealed and replaced the provisions of the Control of Drugs (Trafficking) Ordinance, the Proceeds of Crime Ordinance 1998 and parts of the Criminal Justice ( International Cooperation) Ordinance.

The POCO updates the law relating to confiscation orders in relation to persons who benefit from criminal conduct, restraint orders to prohibit dealing with property, money laundering offences, court orders to assist in investigations relating to money laundering or a person’s benefit from criminal conduct and cooperation with overseas authorities. The POCO also introduced new provisions allowing for the recovery of property which is, or represents, property obtained through unlawful conduct. The POCO came into force on 8 October, 2007. There has also been further updates to the POCO by the Proceeds of Crime (Amendment) Ordinance 2010, the Proceeds of Crime (Amendment) Ordinance 2011, and the Proceeds of Crime (Amendment) (No. 2) Ordinance 2011.

Subsidiary legislation to the POCO has also been made. The Proceeds of Crime (Money Laundering) Regulations 2000 were replaced with the Anti-Money Laundering Regulations which were introduced in 2007. However, these regulations were revoked and replaced by the Anti-Money Laundering and Prevention of Terrorist Financing Regulations 2010 (AML/PTF Regulations). The new regulations were further amended by the Anti-Money Laundering and Prevention of Terrorist Financing (Amendment) Regulations 2011.

The AML/PTF Regulations inter alia sets out the identification and Customer Due Diligence (CDD) procedures that are to be followed by financial businesses (regulated and non-regulated) including enhanced due diligence measures, provisions relating to dealing with politically exposed persons (PEP’s) and ongoing monitoring. The regulations sets out the policies, systems and controls that financial business is required to establish, implement and maintain. It also specifies the records which are required to be kept. Specific requirements have been established for the financial business to appoint a Money Launder Reporting Officer and Money Laundering Compliance Officer. The supervision of Non-Regulated Financial Businesses (NRFB) is a new feature included in the POCO and the AML/PTF Regulations.

The POCO and AML/PTF Regulations is supported by the Anti-Money Laundering and Prevention of Terrorist Financing Code 2011 (the Code) which has been issued by the Money Laundering Reporting Authority (MLRA) pursuant to section 111(1) of POCO. The Code is considered as law and has the same legal force as if the provisions of the Code had been contained in the POCO or the AML/PTF Regulations. In order to assist financial businesses to comply with the provisions of the POCO and AML/PTF Regulations and the Code, guidelines has been issued by the MLRA pursuant to section 111(9) of POCO. Although the guidance is provided with the Code it is not a part of the Code.

Given that the focus of AML/CFT initiatives is generally on the financial services industry, the Turks and Caicos Islands Financial Services Commission (TCIFSC) plays a pivotal role in the Turks and Caicos Islands’ fight against money laundering and terrorist financing and preserving the integrity of our financial services industry.

The TCIFSC has been given a specific mandate in section 4(1)(d) of the Financial Services Commission Ordinance 2007 (FSCO) to monitor compliance by licencees with all laws, codes and guidance relating to money laundering or the financing of terrorism. This mandate is further reinforced in the Proceeds of Crime Ordinance 2007 where its states in section 148F(1) that the TCIFSC is the supervisory authority for regulated financial business. Additionally, in accordance with section 148F(2), the Governor through regulation 23 of the Anti-Money Laundering and Prevention of Terrorist Financing Regulations 2010 has prescribed the TCIFSC as the supervisory authority for all non-regulated financial business. Section 148F(3) further provides that the function of the supervisory authority is to monitor compliance by financial businesses with AML/CFT obligations and take appropriate enforcement action against financial businesses for which it is responsible for breaches of their AML/CFT obligations. This is supplemented by additional enforcement powers in the AML/PTF Regulations and the Code.

The POCO covers a number of areas including:

  • Criminalizing of money laundering;

  • The confiscation of the proceeds of criminal conduct;

  • Civil recovery of property which represents, or is obtained through, unlawful criminal conduct;

  • The Reporting Authority and establishes it as the TCI’s Financial Intelligence Unit (FIU);

  • Reporting by financial businesses of knowledge or suspicion of money laundering and terrorist financing to the FIU;

  • Empowering the Supreme Court to make various orders to assist the police in money laundering investigations; and

  • AML/CFT Supervision of financial business and enforcement of obligations.

The POCO does not provide for the combating of terrorist financing. However, this is covered principally by The Terrorism (United Nations Measures) (Overseas Territories) Order 2001 and supplemented by The Anti-terrorism (Financial and Other Measures) (Overseas Territories) Order 2002, and The Terrorist Asset-Freezing Etc. Act 2010 (Overseas Territories) Order 2011.

The United Kingdom Government has also extended various orders to the Turks and Caicos Islands relating to the imposition of sanctions and other measures against named subjects. See our UN, EU and other Sanctions page.

The POCO, AML/PTF Regulations and the Code together establishes a risk-based approach to the prevention and detection of money laundering and terrorist financing. In its application to financial businesses it calls for such businesses to undertake and document a risk assessment of its clients base and business activities. This is a continuing process which requiring ongoing and regular monitoring. These requirements establish a regime to identify and disclose Suspicious Activity Reports (SAR’s) to the TCI’s Financial Intelligence Unit (FIU).

It is currently provided in section 109(1) of POCO that the Reporting Authority is the FIU for the TCI. However, it is important to note that section 109(5) provides that the Head of the Financial Crimes Unit of the Royal Turks and Caicos Islands Police Force is responsible for the functions of the FIU. As such all SAR’s are to be reporting the Head of Financial Crimes Unit. Please click here for more information on the Financial Intelligence Unit as well as AML/CFT typologies.

Persons must file a SAR where there is knowledge or suspicion of money laundering or terrorist financing. Under the POCO it is an offence to fail to report such knowledge or suspicion to the FIU. The POCO also provides safeguards and protection from civil liability that may otherwise result from making such a disclosure.

The Reporting Authority is established in section 108 of POCO. The functions of the Reporting Authority are in section 109. Members of the Reporting Authority include the Attorney General as Chairman, the Collector of Customs, the Managing Director of the Financial Services Commission, the Commissioner of Police, the Head of Financial Crime and such other persons as the reporting Authority shall agree, to assist the reporting Authority in the performance of its functions.