The TCI has undertaken significant legislative changes since 2007 to enhance the territory’s ability to detect and prevent money laundering, terrorist financing and proliferation financing. In 2007 a new Proceeds of Crime Ordinance (POCO) was introduced. The POCO repealed and replaced the Control of Drugs (Trafficking) Ordinance, the Proceeds of Crime Ordinance 1998 and parts of the Criminal Justice (International Cooperation) Ordinance.
There is subsidiary legislation to the POCO; the Anti-Money Laundering and Prevention of Terrorist Financing Regulations 2010 (AML/PTF Regulations), the Anti-Money Laundering and Prevention of Terrorist Financing Code 2011, and the Non-Profit Organisations Regulations 2014. There have been several amendments to each legislation.
The AML/PTF Regulations inter alia sets out the identification and Customer Due Diligence (CDD) measures 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 set out the policies, systems, and controls that financial businesses are required to establish, implement and maintain. It also specifies the records which are required to be kept. Specific requirements have been established for financial businesses 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 are supported by the Anti-Money Laundering and Prevention of Terrorist Financing Code 2011 (the Code) which was issued by the Anti-Money Laundering Committee (AMLC) 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. Guidelines were issued by the AMLC, pursuant to section 111(9) of POCO, to assist financial businesses to comply with the provisions of the POCO and AML/PTF Regulations and the Code. 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, terrorist financing, and in preserving the integrity of the financial services industry.
The TCIFSC has a specific mandate under 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, which 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 which is establishes 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 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 their clients base and business activities. This is an ongoing process which requires regular monitoring. These requirements establish a regime to identify and file Suspicious Activity Reports (SAR’s) with the TCI’s Financial Intelligence Agency (FIA).
Section 109(1) of POCO provides that the Reporting Authority for the TCI is the FIA. As such all SAR’s are to be reported to the FIA. Please click here for more information on the Financial Intelligence Agency as well as AML/CFT typologies.
A person 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.