VZCZCXRO6113
RR RUEHHT
DE RUEHHT #0006/01 0121946
ZNR UUUUU ZZH
R 121946Z JAN 10
FM AMCONSUL HAMILTON
TO RUEHC/SECSTATE WASHDC 3948
INFO RHMFIUU/DEPT OF JUSTICE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHLO/AMEMBASSY LONDON 0917
RUEHHT/AMCONSUL HAMILTON 2125

UNCLAS SECTION 01 OF 12 HAMILTON 000006 
 
SIPDIS 
 
SENSITIVE 
DEPT FOR  INL; SCT; EEB 
JUSTICE FOR AFMLS, CIA, OPDAT; 
TREASURY FOR FINCEN (BEZEK AND MICHAEL); 
EUR/WE (MARBURG AND ABBASZADEH); 
EUR/PPD (MCMANIS AND PIPKIN); 
LONDON FOR R. HUBER AND M. JOHNSON 
 
E.O. 12958: N/A 
TAGS: KCRM EFIN KTFN SNAR PGOV BD
SUBJECT: BERMUDA: 2009-2010 INTERNATIONAL NARCOTICS CONTROL STRATEGY 
REPORT (INCSR) 
 
REF: 2009 STATE 114960 
 
¶1.      U.S. Consulate General Hamilton provides the following 
answers in response to questions for 
 
the money laundering and financial crimes section of the 
2009-2010 INCSR in REFTEL, referenced in parentheses. 
 
 
 
GENERAL QUESTIONS 
 
 
 
¶2.      (18) Yes.  An overseas territory of the United Kingdom 
(U.K.), Bermuda is considered an 
 
important regional and global financial center.  It is the third 
largest reinsurance center in the world and the second largest 
captive insurance domicile, with firms based in the jurisdiction 
writing significant volumes of business in the U.S. and U.K.  It 
is not considered to be significant in terms of money 
laundering.  Bermuda is not considered a major drug source or 
transshipment country; however, the majority of the money 
laundering that occurs in Bermuda is believed to be related to 
the domestic drug trade. 
 
 
 
¶3.      (19) Money laundering in Bermuda is related primarily to 
proceeds from domestic criminal 
 
activity involving marijuana, cocaine, cocaine freebase and 
heroin.  Amounts seized in 2008 were 241.2 kilos, 4.8 kilos, .22 
kilos and .8 kilos respectively.  The Island is an end-user 
jurisdiction in narcotics trafficking, rather than a 
transshipment point for drugs.  Bermuda's drugs originate in 
South and Central America, using the Caribbean, the U.S. and to 
a lesser extent the U.K. as transshipment points into Bermuda. 
Money laundering proceeds are controlled primarily by gangs, 
which have proliferated in recent years.  Public corruption does 
not contribute to money laundering/terrorist financing. 
 
 
 
¶4.      (20) There is no significant black market for smuggled 
goods in Bermuda. 
 
¶5.      (21) The Bermuda Monetary Authority (BMA) closely 
supervises Bermuda's financial services 
 
sector for prudential and Anti-Money Laundering/Combating 
Financing Terrorism (AML/CFT) purposes, and permits no 
unlicensed or unregistered entities to operate in this sector. 
There have been no cases of terrorist financing in Bermuda, and 
there was no significant increase in financial crimes in 2009. 
In December the Government of Bermuda (GOB) passed the 
Anti-Terrorism (Financial and Other Measures) Amendment Act 
2009, effective January 13, 2010.  In conjunction with that act, 
and in conformance with the U.S. and the U.K., the GOB will 
issue by January 15, 2010 a directive to sanction the Islamic 
Republic of Iran Shipping Lines (IRISL), which has obtained 
insurance through a company legally domiciled in Bermuda - the 
South of England Protection and Indemnity Association (SEPIA). 
The directive to SEPIA to cease doing business with IRISL would 
be effective immediately, with provision for winding up existing 
contracts within seven days.  The GOB responded expeditiously 
and comprehensively to U.S. concerns on this issue. 
 
 
 
There are cases where criminals utilize the formal financial 
sector for money laundering purposes, resulting in criminal 
investigations and pending prosecutions.  There are no free 
trade zones, hawalas or other informal financial sector entities 
in Bermuda in which money laundering/financing terrorism occurs. 
 There are four banks, one deposit company and two money service 
businesses involved in money transmission services, all of which 
the BMA licenses. 
 
 
 
¶6.       (22)  The National Anti-Money Laundering Committee 
 
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(NAMLC) believes that the currency 
 
used in Bermuda for payment to international narcotics 
traffickers is the U.S. dollar and that there have been cases 
where traffickers utilized the formal financial sector for money 
laundering purposes.  The proceeds of narcotics trafficking may 
be destined for the U.S. or may pass through the U.S. for 
transmission to some other country. 
 
 
 
¶7.      (23) No, there are no indications that trade-based money 
laundering occurs in Bermuda. There 
 
are no free-trade zones in Bermuda. 
 
 
 
OFFSHORE FINANCIAL CENTERS 
 
 
 
¶8.      (24)  Within the specific definition of the term 
provided, Bermuda is not considered an offshore 
 
financial center as there is no distinction in how it regulates 
businesses operating in the local economy and those operating 
internationally from within Bermuda. 
 
 
 
¶9.      (25) No, Bermuda does not permit either shell companies 
or offshore banks.  However, a 
 
foreign bank may establish a subsidiary as a Bermuda company 
with its own board of directors, but may not establish a branch. 
 A large international business sector - including exempt 
companies - underpins the Island's economy.  Section 92A of the 
Companies Act requires every company to maintain a register of 
directors and officers that is to be open for inspection by 
members of the public. 
 
 
 
¶10.  (25a)  To post's knowledge, Bermuda performs adequate 
background checks on applicants for 
 
banking and business licenses for all entities. 
 
 
 
¶11.  (25b)  According to the Registrar of Companies, at the end 
of September 2009, there were 
 
13,634 exempted or international companies registered in 
Bermuda, 1,230 exempted partnerships, 536 overseas companies and 
70 overseas partnerships.  In March 2008, there were a total of 
1,315 investment funds in Bermuda:  883 mutual funds, 80 
umbrella funds, and 388 segregated accounts.  There were also 
106 unit trusts and 168 umbrella trusts. 
 
 
 
Exempted companies are exempt from Bermuda laws that apply to 
local entities, including the restriction that at least 60 
percent of local entities must be owned by Bermuda residents. 
Exempt companies are not subject to currency controls or capital 
controls, and they are free from all forms of direct taxation on 
income and capital gains.  Therefore, exempt companies are 
normally prohibited from doing business in the local economy. 
The majority of exempt companies are not required to have a 
physical presence on the Island, but designate local directors 
(generally a local lawyer and secretary) to manage corporate 
affairs in Bermuda.  Directors must be natural persons.  Before 
exempt companies can be established or any shares transferred 
between nonresidents, the owners and controllers must be vetted 
by the BMA, the sole regulatory body for financial services. 
 
 
 
¶12.  (25c)   Anonymous directors and trustees are not allowed. 
 
 
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¶13. (26) Lotteries, casinos, and gambling, including Internet 
gambling, are prohibited business   activities.  However, 
gambling that does not use gaming machines is allowed, including 
bingo, raffles, and Crown and Anchor.  The Prohibition of Gaming 
Machines Act 2001 prohibits the importation of gaming machines 
and their parts and accessories.  Casinos are illegal; a bill to 
allow cruise ship casinos to operate while in port was defeated 
in 2009.  The Lotteries Act 1944 prohibits the import of foreign 
lottery material. 
 
¶14. (27) The BMA regulates Bermuda's entire financial services 
sector.  There are separate regulatory acts which apply to each 
sector (e.g. trusts, deposit taking, investment business etc.), 
but the requirements are the same whether the entity is 
operating solely within the local economy or operating from 
within Bermuda internationally.  All classes of financial 
institutions required to be regulated under the Financial Action 
Task Force (FATF) standards are subject to customer due 
diligence, ongoing monitoring, record keeping and all other 
AML/ATF (Anti-Terrorist Financing) requirements, including the 
filing of Suspicious Activity Reports (SARs) for money 
laundering or terrorist financing. 
 
FREE TRADE ZONES 
 
¶15. (28-30) There are no free trade zones in Bermuda. 
 
 
 
LEGAL FOUNDATION OF AML REGIME 
 
 
 
¶16. (31) Bermuda has a robust legal framework as it relates to 
AML/CFT and is committed to 
 
 keeping up to date with international standards.  There have 
been several waves of related legislation since the inception of 
money laundering regulation in 1997. 
 
 
 
The Proceeds of Crime Act (POCA) 1997, as amended, is the 
foundation of the GOB's AML/ATF regulatory regime applying money 
laundering controls to financial institutions such as banks, 
deposit companies, and trust companies.  Subsequent amendments 
expanded the scope of the legislation to cover the proceeds of 
all indictable offenses and added investment businesses, 
including broker-dealers and investment managers, to the list of 
regulated institutions.  Trust service providers, lawyers and 
corporate service providers are now subject to the same customer 
due diligence, record-keeping and supervision arrangements as 
financial institutions. 
 
With respect to anti-terrorism financing, the GOB enacted the 
Anti-Terrorism (Financial and Other Measures) Act (ATFA) in 2004 
to criminalize terrorist financing and provide the framework to 
ensure implementation of the FATF Special Recommendations on 
terrorist financing.  The Act makes it an offense to raise funds 
for terrorism, creates specific offenses relating to the 
raising, use, or possession of funds for purposes of terrorism, 
imposes a duty to report suspicious activity, and provides for 
the forfeiture of terrorist cash.  The effect is to parallel the 
provisions already in place under the POCA for money laundering 
and the proceeds of other serious crimes.  Financial 
institutions were directed to conduct full reviews of their 
clients against officially published lists of terrorist 
suspects.  There has been no known identified evidence of 
terrorist financing in Bermuda. 
 
 
 
In December 2009, to implement Schedule 7 of the UK Counter 
Terrorism Act 2009, the Bermuda Parliament passed the 
Anti-Terrorism (Financial and Other Measures) Amendment Act 2009 
and the Proceeds of Crime (Anti-Money Laundering and Terrorist 
Financing) Regulations 2009.  The act and regulations are 
expected to be enacted on January 13, 2010 and are a very high 
priority for Bermuda.  The Minister of Justice is empowered, 
under certain strictly defined conditions, to give directions 
 
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relating to enhanced due diligence, enhanced ongoing monitoring, 
systematic reporting and limiting/ceasing business.  The BMA is 
designated as the supervisory and enforcement authority.  Local 
and cross border wire transfers regulations aim to bring Bermuda 
into compliance with FATF recommendations.  The legislation 
requires financial institutions to verify the accuracy of the 
information on the payer/originator before transferring funds, 
require financial institutions to retain for a period of five 
years, complete records on the payor/originator of the fund 
transfer, require financial institutions receiving wire 
transfers to maintain effective procedures to detect whether 
complete information on the payor/originator is received with 
the wire transfer and specify how the receiving institution 
should treat transfers with missing or incomplete information. 
 
In March 2009 Bermuda updated the Revenue Act 1898 to strengthen 
the requirements relating to cross border transportation of 
currency and monetary instruments. The threshold for reporting 
is $10,000.  Mandatory declaration forms are used for all 
incoming passengers (regardless of point of embarkation) and for 
outgoing passengers to the US.  For outgoing passengers to 
Canada and the U.K. there is a disclosure system in place. 
Additionally, goods, currency and negotiable instruments may be 
forfeited if not declared or are falsely declared.  Penalties 
for related offenses were increased and directors and officers 
of companies can now be charged. 
 
The Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist 
Financing) Regulations 2008, which came into effect on January 
1, 2009, give the BMA broader responsibilities and powers for 
monitoring and compliance enforcement of AML/CTF-regulated 
financial institutions.  It formalized the requirements for 
customer due diligence, including for correspondence banking, 
and broadened the range of financial institutions, including 
trust service providers, lawyers and accountants.  Financial 
institutions are required to take specified measures to 
compensate for higher risk when a customer has not been 
physically present for purposes of identification and must 
conduct enhance customer due diligence for politically exposed 
persons (PEPs). 
 
 
 
The GOB enacted the Proceeds of Crime (Supervision and 
Enforcement) Act 2008 (SEA) effective January 1, 2009, to 
establish a civil money penalty regime and to allow the BMA to 
use its regulatory powers to address AML/ATF breaches.  The 
definition of "financial institution" under SEA includes 
insurers, but not reinsurers, licensed under the Insurance Act. 
The BMA has established a specialized AML/ATF unit to undertake 
its supervisory and monitoring functions, including both on-site 
and off-site monitoring. 
 
 
 
Also effective on January 1, 2009, the Anti-Terrorism (Financial 
and Other Measures) Amendment Act 2008 essentially addressed the 
recommendations in the 2007 IMF Report relating to terrorism and 
terrorist financing.  It broadens the meaning of "terrorism,"and 
terrorist financing" and adds the offences of "tipping-off," 
"organizing or directing others to commit offences," and 
"offences by bodies corporate, partnerships, and unincorporated 
associations."  It also makes provisions for offenses by bodies 
corporate, and authorizes the Minister of Justice to make 
regulations for the purposes of detecting and preventing the 
financing of terrorism. The latter provision resulted in the 
Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist 
Financing) Regulations 2008 relating to customer due diligence, 
ongoing monitoring, record keeping, etc. 
 
 
 
Collective investment schemes (CISs) are regulated by the BMA, 
and fund administrators are regulated persons for the purposes 
of the POCA.  To strengthen regulations, CISs, including hedge 
funds, are subject to the Investment Funds Act 2006, which came 
into effect in January 2007.  The Investment Funds Act is the 
legal framework for regulating investment funds, which includes, 
in addition to mutual funds and unit trusts, other business 
vehicles that pool and manage investment monies.  The act also 
required fund administrators in Bermuda to be licensed and 
subjects them to minimum standards and a code of conduct. 
 
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Licensees are also recognized persons for POCA purposes and are 
subject to compliance monitoring by the BMA.  The BMA continues 
to apply differentiated requirements involving lighter 
regulation of schemes catering to institutional and 
sophisticated investors, with greater reliance on transparency 
and disclosure.  The BMA is also able to conduct compliance 
checks of POCA procedures as carried out by CIS administrators. 
 
The Insurance Amendment Act 2004 implemented a number of changes 
to Bermuda's insurance regime pursuant to the International 
Association of Insurance Supervisors' (IAIS) adoption of revised 
core principles for supervision.  Further amendments to the 
Insurance Act were enacted in the summer of 2006 to upgrade 
provisions and powers to provide the BMA with the ability to 
comply with IAIS core principles, like those existing for 
banking and investments. 
 
The amended Investment Business Act 2003 enhances the regulatory 
powers of the BMA, granting the BMA stronger intervention powers 
and clarifying certain provisions, such as the BMA's ability to 
cooperate with foreign regulatory bodies. Other provisions 
include measures to strengthen criminal and regulatory 
penalties.  The Act also brought the Bermuda Stock Exchange 
(BSX) under the regulation of the BMA.  In 2004, provisions were 
added to the Criminal Code Amendment Act to create specific 
offenses of insider trading and market manipulation in 
securities markets.  Fines up to $100,000 and prison terms of 
five years are in place for market manipulation and up to 
$175,000 and seven years jail time for insider trading.  These 
provisions are in addition to existing regulations of the 
Bermuda Stock Exchange that prohibit members from insider 
trading and market manipulation, on penalty of sanctions, 
including expulsion from the BSX. 
 
In March 2009, the BMA issued Guidance Notes for AML/ATF 
Regulated Financial Institutions on Anti-Money Laundering and 
Anti-Terrorist Financing, outlining and interpreting the legal 
and regulatory framework, indicating good industry practices, 
and assisting institutions to design and implement systems and 
controls to limit AML/ATF risks to institutions. 
 
 
 
2006 Guidance Notes broadened the scope of the POCA regulations. 
The POCA includes "know your customer" requirements and provides 
for the monitoring of accounts for suspicious activity. 
Furthermore, the GOB performs due diligence on persons seeking 
to undertake business on the island.  The vetting process is 
undertaken when an entity is incorporated.  A personal 
declaration form must be submitted for beneficial owners of 
international businesses prior to incorporation.  Similar 
requirements apply to proposals to transfer shares. 
Additionally, a company must detail its business plan and 
maintain a register of shareholders at its registered office. 
 
The Basel Committee's Core Principles for Effective Banking 
Supervision are implemented through the Banks and Deposit 
Companies Act 1999.  Banks and other financial institutions are 
required to retain records for a minimum of five years.  Bermuda 
has not adopted bank secrecy laws, but like the UK, recognizes a 
banker's common-law duty of client confidentiality.  Bankers and 
others are protected by law with respect to their cooperation 
with law enforcement officials.  Bermuda law requires money 
transmission services to be conducted in association with a 
licensed deposit-taker, and conversion of funds is subject to 
bank reporting standards. 
 
¶17. (32) No, Bermuda has no secrecy laws. 
 
FINANCIAL SECTOR 
 
¶18. (33) No, Section 53 of the Companies Act 1981 prohibits 
bearer shares. 
 
¶19. (34) Responsibility for determining AML/CFT policy 
statutorily rests with the National Anti-Money Laundering 
Committee (NAMLC), which was created by POCA in 1997.  The NAMLC 
now resides within the Ministry of Justice, and is headed by an 
independent National AML/CFT Chairman.  Bringing together key 
ministries and departments - including the FIA, police, attorney 
general, director of public prosecutions, Ministry of Finance, 
and the BMA - the NAMLC advises the Minister of Justice in 
 
HAMILTON 00000006  006 OF 012 
 
 
relation to the detection and prevention of money laundering and 
terrorist financing in Bermuda, the development of a national 
plan of action, and the participation of Bermuda in the 
international effort against money laundering.  The BMA 
supervises, regulates, inspects and secures compliance of 
financial institutions operating in or from Bermuda and assists 
other authorities in Bermuda with the detection and prevention 
of financial crime. 
 
 
 
The Bermuda Monetary Authority is the sole regulatory body for 
financial services and is responsible for the licensing, 
supervision, and regulation of financial institutions, including 
those conducting deposit-taking, insurance, investment, and 
trust business in Bermuda.  The BMA Amendment Act 2002 
formalized the BMA's responsibilities to include assisting with 
the detection and prevention of financial crime.  The BMA 
conducts on-site reviews and detailed compliance testing of 
financial institutions' AML/CTF controls.  It engages in active 
perimeter policing responsibilities and has legal powers to 
undertake investigations of unlicensed persons suspected of 
breaching the regulations, although the BMA has not found it 
necessary to use these legal powers extensively.  In 2008 
Bermuda passed the Proceeds of Crime Regulations (Supervision 
and Enforcement) Act 2008, which designated the BMA as the 
supervisory body for securing compliance with the regulations by 
regulated entities.  BMA officers have indicated that it needs 
more resources, including increased staffing, to handle its 
responsibilities. 
 
¶20. (35) Yes, banks and other financial institutions are 
required to know and record the identity of customers.  However, 
Bermuda's reporting framework currently is based only on a 
suspicion of money laundering or terrorist financing.  Financial 
institutions are required to conduct customer due diligence on 
all customers and transactions without a threshold.  Simplified 
due diligence is only permitted in certain limited 
statutorily-defined circumstances pertaining to specified types 
of financial products.  There is no general statutory threshold 
for these purposes.  However, in March 2009 Bermuda updated the 
Revenue Act 1898 to strengthen the requirements relating 
specifically to cross border transportation of currency and 
monetary instruments. The threshold for such reporting is 
$10,000. 
 
¶21. (36)  Yes, the Proceeds of Crime (Anti-Money Laundering and 
Anti-Terrorist Financing) Regulations 2008 require that records 
of a customer's identity and supporting evidence and records for 
business relationships and occasional transaction which are the 
subject of customer due diligence be kept for five years.  In 
any case where a police officer has notified a relevant person 
in writing that particular records are or may be relevant to an 
investigation which is being carried out, the relevant person 
must keep the records pending the outcome of the investigation. 
 
¶22. (37) Yes, all financial institutions are required to and do 
report suspicious transactions. Such reporting is mandatory for 
all persons who during the course of any trade, profession, 
business or employment acquire knowledge or suspicion of another 
person's involvement in money laundering.  A failure to report 
this knowledge or suspicion to the Financial Intelligence Agency 
(FIA) is a criminal offence.  There is no statutory threshold 
for the reporting of suspicious transactions. 
 
¶23. (38) Yes, there is statutory protection for all persons who 
make the disclosure of any knowledge or suspicion of money 
laundering which comes to them during the course of their trade, 
profession, business or employment. 
 
INFORMAL FINANCIAL SECTOR AND NONFINANCIAL BUSINESSES AND 
PROFESSIONS 
 
¶24. (39) AML/CFT controls apply to all categories of financial 
institutions as defined by FATF, both bank and non-bank (NBFIs). 
 Bermuda has not made Designated Non-Financial Businesses and 
Professions (DNFBPs) subject to reporting obligations, customer 
due diligence, etc., although the GOB is planning such 
legislation for 2010.  However, some intermediaries, such as 
lawyers and accountants, are already included.  Bermuda 
considers trust service providers, brokerage houses and money 
service businesses as financial institutions, so they are 
 
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covered. 
 
 
 
FINANCIAL INTELLIGENCE UNIT (FIU)/INVESTIGATIONS 
 
 
 
¶25. (40) Yes, Bermuda law establishes and authorizes funding for 
an FIU, although it is called a Financial Intelligence Agency 
(FIA) in Bermuda. 
 
 
 
¶26. (41) Yes, Bermuda established the FIA in November 2008 to 
replace the FIU housed within the Police Department.  The FIA 
operates as an independent agency within the Ministry of 
Justice.  It has both operational and budgetary independence. 
It has a small staff, which the FIA has plans to augment. 
 
 
 
¶27. (42)  The FIA acts as an independent agency authorized to 
receive, gather, store, analyze and disseminate information 
relating to suspected proceeds of crime and potential financing 
of terrorism, received in the form of Suspicious Activity 
Reports (SARs).  It does not have investigative or regulatory 
responsibilities. 
 
 
 
¶28. (43) Yes, Section 16 of the Financial Intelligence Agency 
Act gives the FIA access to any information required for enquiry 
into a SAR.  Sections 18 and 19 also allow for disclosure of 
information to relevant authorities.  There are also the 
necessary gateways in place to allow for sharing of information 
with relevant authorities both domestically and internationally. 
In addition, although not required for sharing of information, 
the FIA has signed memoranda of understanding (MOUs) with a 
number of other FIUs to ensure efficient and effective 
cooperation. 
 
 
 
¶29. (44) The FIA received 651 SARs in 2009.  Of those, it 
referred 73 to investigatory authorities - the BPS, Bermuda 
Customs and the BMA.  The GOB does not routinely keep statistics 
on the number of SARS actually investigated.  The following 
information for 2008 was prepared especially in response to 
Michael Foot's Review of the U.K.'s offshore financial centers, 
released in October 2009. 
 
 
 
Bermuda averaged 200-250 SARs per year from 2003-2008. Of those, 
only a fraction was investigated: 24 cases in 2008, four in 2007 
and one in 2006.  Local prosecutions for financial crime 
2003-2008 were in the single digits, although there were 
prosecutions in other jurisdictions where Bermuda evidence 
contributed: sixteen in 2007 and ten in 2006.  The courts seized 
proceeds of crime assets in 2008 amounting to $45.7 million; 
assets confiscated that year were $22.9 million. The POCA, as 
amended, provides protection from criminality resulting from a 
SARs filing. 
 
 
 
¶30. (45) The FIA is responsible for analyzing SARS; the BPS, 
Bermuda Customs and the BMA investigate financial crimes. The 
BMA has indicated it needs additional staffing, and post 
believes that the BPS - currently engaged in combating anti-gang 
violence - would also benefit from additional staff. 
 
 
 
ASSET FORFEITURE AND SEIZURE LEGISLATION 
 
¶31. (46) There have been no arrests, prosecutions or convictions 
for terrorist financing in Bermuda.  Since January 2009 the BPS 
has arrested fifteen persons on suspicion of offences related to 
money laundering.  Of the fifteen arrested, two people were 
charged and five people are waiting to be charged. 
 
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In the past five years there has been one prosecution and 
conviction for money laundering. This case was in October 2008 
and involved monies resulting from drug trafficking ($159,985) 
being sent to Trinidad and Tobago.  The monies were sent through 
a variety of methods including the use of "nominees" (named 
recipient who is not the ultimate beneficiary), wire transfers, 
and ATM cards being sent to individuals in Trinidad and Tobago 
who then withdrew money using the ATM cards. 
 
Bermuda has assisted a number of other jurisdictions in money 
laundering cases that have resulted in prosecutions. 
 
¶32. (47) Yes, Bermuda has enacted asset forfeiture and seizure 
legislation.  For persons convicted of money laundering, the 
POCA Amendment Act 2008 empowers the court to order the 
forfeiture of any property used for the purposes of the money 
laundering offense.   Any payment received by a defendant in 
connection with a money laundering offense is subject to 
confiscation.  Any agreement entered into for the purposes of 
money laundering is void. 
 
 
 
The SEA Act empowers the BMA to impose civil penalties not 
exceeding $500,000.  The Customs Traveler Declaration form 
provides for reporting incoming transportation of currency and 
bearer negotiable instruments from all countries and outgoing 
transportation of currency to the US, and a disclosure system 
for the outgoing transportation of currency and bearer 
negotiable instruments to all countries, excluding the US. 
 
 
 
When seized currency is suspected as being the proceeds of 
crime, Bermuda Customs is required to forward the case for 
investigation and prosecution by the relevant authority.  The 
Revenue Amendment Act 2008 imposes a penalty of $100,000 or a 
term of imprisonment between 2-10 years. 
 
 
 
¶33. (48) There are no obstacles or disincentives to enacting 
asset seizure/forfeiture legislation. 
 
¶34. (49) Bermuda's laws permit seizure of property directly 
related to the commission of a crime.  Although real estate used 
in the cultivation of narcotics cannot be seized, it is possible 
to prevent it from being disposed of or otherwise used so as to 
deplete its value.  Bank accounts and other property can be 
restrained also to prevent use or depletion.  Substitute assets 
cannot be seized, unless made subject of a court order 
restraining the disposal of such property insofar as they 
represent realizable assets against. 
 
¶35. (50) The Financial Crimes Unit (FCU) of the Bermuda Police 
Service (BPS) is responsible for carrying out investigations 
into and tracing of assets arising as proceeds from the 
commission of crimes.  With the assistance of the Department of 
Public Prosecutions, the FCU is also responsible for seeking 
restraint orders to prevent the disposal/depletion of such 
assets.  However, any investigating unit within the BPS 
conducting an investigation that gives rise to the discovery of 
property used in the commission of the crimes may seize such 
property under warrant. A magistrate may issue an order to 
freeze assets for a period not exceeding seven days. 
 
Restraint orders are made where there are reasonable grounds to 
believe that a confiscation order may be made in relation to the 
case in the future.  Accordingly, as long as an investigation or 
prosecution is pending or in progress, restraint orders will 
usually remain in effect until the date a confiscation order is 
made in relation to that case or until the court otherwise 
orders termination. 
 
Restrained funds are referred to the Accountant General's 
Department, but if they were in a bank account at the time of 
restraint, then they will remain with the bank in which the 
account resides. Cash which had been seized by the Police and 
retained under the Proceeds of Crime Act are deposited into the 
statutory Confiscated Assets Fund until the court makes further 
orders in relation to it. 
 
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A confiscation order is an order to the individual to pay an 
amount specified by the court on or before a stipulated date. 
There is no automatic procedure for restrained property to be 
converted immediately for satisfaction of the confiscation 
order.  Therefore, in order to prevent the depletion of the 
restrained funds when a confiscation order takes effect and 
terminates the restraint order, then a charging order is usually 
coupled with the confiscation order.  This means that if at the 
end of the stipulated time the confiscation order is not 
satisfied then further action can be taken against the charged 
property to satisfy the order. 
 
The Department of Public Prosecution applies for a confiscation 
order and pays this sum to a court or directly to the Accountant 
General's Department.  If the defendant fails to pay within the 
required time, the Department of Public Prosecutions returns to 
court to seek orders that will levy against his property. The 
court can name a receiver to manage the process of levying 
against the property. 
 
The Minister of Finance has responsibility for the management of 
the seized assets.  Pursuant to Section 55A(3) of POCA, the 
Minister of Justice and the Minister of Finance may authorize 
payments to be made out of the Confiscated Assets Fund, which 
are invested, with earned income returned to the fund.  The 
money can be disbursed for purposes related to law enforcement: 
to investigate suspected cases of drug trafficking, terrorist 
financing and money laundering; to cover costs associated with 
the treatment and rehabilitation of drug addicts;  to cover 
costs associated with the prevention and public education 
concerning drug abuse; to meet the expenses of the Department of 
National Drug Control; to train officials in the effective 
implementation of the provisions of POCA in relation to money 
laundering and in relation to terrorist financing; to satisfy an 
obligation of the Government of Bermuda to a foreign 
jurisdiction in respect of confiscated assets, whether under a 
treaty or arrangement providing for mutual assistance in 
criminal matters or otherwise;  to meet the expenses of the 
National Anti-Money Laundering Committee; to meet the expenses 
of the FIA;  to meet the remuneration and expenses of a receiver 
appointed under POCA or the Anti-Terrorism (Financial and Other 
Measures) Act 2004; to pay compensation or costs awarded under 
POCA or the Anti-Terrorism (Financial and Other Measures) Act 
2004; or to cover costs associated with the administration of 
the Confiscated Assets Fund.  Post cannot make a judgment as to 
the GOB's capacity to manage seized assets. 
 
¶36. (51) Yes, the banking community cooperates with enforcement 
efforts to trace funds and seize/freeze bank accounts. 
 
 
 
¶37. (52) Yes, Bermuda law allows for civil as well as criminal 
forfeiture. 
 
¶38. (53) Yes, the Bermuda government enforces existing asset 
seizure and forfeiture laws, and there are adequate police 
powers and resources.  The asset seizure and forfeiture laws are 
set out in the Proceeds of Crime Act 1997, the Anti-Terrorism 
(Financial and Other Measures) Act 2004 (ATFA) and the Terrorism 
(United Nations Measures) (Overseas Territories) Order.   Assets 
can be frozen without delay. 
 
¶39. (54) Yes, Bermuda does have an independent national system 
and mechanism for freezing terrorist assets.  The Terrorism 
(United Nations Measures) (Overseas Territories) Order gives the 
Governor power to freeze terrorist assets.   ATFA provides for 
`enabling cash' to be forfeited if it is intended to be used for 
the purposes of terrorism; or is, or represents, property 
obtained through terrorism; or is property earmarked as 
terrorist property.  Cash can be seized by an authorized officer 
("authorized officer" means a police officer, a customs officer 
or an immigration officer) if he has reasonable grounds for 
suspecting that it is terrorist cash.  An application for the 
forfeiture of the whole or any part of it may be made and the 
court may order the forfeiture if it satisfied that it is 
terrorist cash. 
 
¶44. (55)  CONGEN Hamilton has not been able to obtain asset 
seizure/forfeiture dollar amounts for the past year or previous 
years; however, post believes that such seizures/forfeitures 
 
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have occurred. 
 
¶45. (56) Yes, Bermuda has enacted laws for the sharing of seized 
assets with other governments and has negotiated Mutual Legal 
Assistance Treaties and other such agreements to allow for 
effective cooperation in this regard. 
 
TERRORIST FINANCING 
 
¶46. (57) Yes, Bermuda has criminalized the financing of 
terrorism.  The act of terrorism is defined in section 3 of the 
Anti-Terrorism (Financial and Other Measures) Act 2004 (ATFA) 
and also the Terrorism (United Nations Measures) (Overseas 
Territories) Order 2001, which the U.K. enacted under it powers 
established by the United Nations Act 1946 and is applicable to 
Bermuda. 
 
In December 2009, to implement Schedule 7 of the U.K. Counter 
Terrorism Act 2009, the Bermuda Parliament passed the 
Anti-Terrorism (Financial and Other Measures) Amendment Act 2009 
and the Proceeds of Crime (Anti-Money Laundering and Terrorist 
Financing) Regulations 2009.  The act and regulations will 
become effective on January 13, 2010 and are a very high 
priority for Bermuda.  The Minister of Justice will be 
empowered, under certain strictly defined conditions, to give 
directions relating to enhanced due diligence, enhanced ongoing 
monitoring, systematic reporting and limiting/ceasing business. 
The BMA is designated as the supervisory and enforcement 
authority.  The act will also bring non-long term insurance 
companies as potential recipients of Directions for Systematic 
Monitoring and Limit/Cease business only, in respect of the risk 
associated with the proliferation of certain types of weapons. 
Local and cross border wire transfers regulations aim to bring 
Bermuda into compliance with FATF recommendations. 
 
In relation to the financing of terrorism, pursuant to section 5 
of ATFA and article 3(1) of the Terrorism (United Nations 
Measures)(Overseas Territories) Order, a person commits an 
offence if he invites another to provide money or other 
property, and intends that it should be used, or suspects that 
it may be used, for the purposes of terrorism; receives money or 
other property, and intends that is should be used, or suspects 
that it may be used, for the purposes of terrorism; provides 
money or other property, and knows or suspects that it will or 
may be used for the purposes of terrorism. 
 
Pursuant to section 6 of ATFA, a person commits an offence 
relating to the use and possession if he uses money or other 
property for the purposes of terrorism or possesses money or 
other property, and intend that it should be used, or suspect 
that it may be used, for the purposes of terrorism. 
 
Pursuant to section 7 (funding arrangements) of ATFA, a person 
commits an offence if he enters into or becomes concerned in an 
arrangement as a result of which money or other property is made 
available or is to be made available to another, and he knows or 
suspects that it will or may be used for the purposes of 
terrorism. 
 
The U.K. has extended to Bermuda by Order in Council a number of 
legislative measures to comply with UN requirements.  These 
measures include:  The Terrorism (United Nations Measures) 
(Overseas Territories) Order 2001; the Afghanistan (United 
Nations Sanctions) (Overseas Territories) Order 2001; and the 
Al-Qa'ida and Taliban (United Nations Measures) (Overseas 
Territories) Order 2002 and its 2002 amendments.  The UK has not 
yet extended to Bermuda the Suppression of the Financing of 
Terrorism (Vienna Convention) or the UN Convention against 
Transnational Organized Crime 2000 (Palermo Convention), a 
situation that the IMF said in its 2008 review "should be 
remedied without delay."  Although the GOB notes that the 
provisions of those conventions have largely already been 
incorporated into Bermuda's legislation, the government will 
work with the U.K. in 2010 to officially extend those 
conventions to Bermuda. 
 
¶47. (58) Yes, Bermuda has circulated to its financial 
institutions all of the relevant lists relating to terrorist 
organizations/financiers.  Bermuda did not identify, freeze, 
seize and/or forfeit terrorist-related assets in 2009. 
 
¶48. (59) Bermuda does not have alternative remittance systems 
 
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such as hawala or hundi or black market exchanges.   Money 
service businesses are required to be licensed by the financial 
services regulator for them to operate within the jurisdiction. 
Bermuda has a declaration/disclosure system in place to address 
cross border cash transactions. 
 
¶49. (60) Charities are required to be registered with the 
Registrar General and to file annual accounts.   The Ministry of 
Culture and Social Rehabilitation, the Ministry of Justice and 
the NAMLC are currently undertaking a review of laws and 
regulations related to non-profit organizations to ensure that 
they cannot be misused for financing terrorism. 
 
CROSS-BORDER TRANSPORTATION OF CURRENCY AND NEGOTIABLE 
INSTRUMENTS 
 
¶50. (61) Yes, there are statutory requirements for monitoring 
the cross-border transportation of currency and monetary 
instruments.  In March 2009 Bermuda updated the Revenue Act 1898 
to strengthen the requirements relating to cross border 
transportation of currency and monetary instruments. The 
threshold for reporting is $10,000.  Mandatory declaration forms 
are used for all incoming passengers (regardless of point of 
embarkation) and for outgoing passengers to the U.S.  For 
outgoing passengers to Canada and the U.K. there is a disclosure 
system in place.  Additionally, goods, currency and negotiable 
instruments may be forfeited if not declared or are falsely 
declared.  Penalties for related offenses were increased and 
directors and officers of companies can now be charged. 
 
In December 2009, Bermuda's Parliament passed The Proceeds of 
Crime (Anti-Money Laundering and Anti-Terrorist Financing) 
Amendment Regulations 2009 authorizing the BMA to oversee wire 
transfers.  The regulations will become effective on January 13, 
¶2010.  The legislation requires financial institutions to verify 
the accuracy of the information on the payer/originator before 
transferring funds, require financial institutions to retain for 
a period of five years, complete records on the payor/originator 
of the fund transfer, require financial institutions receiving 
wire transfers to maintain effective procedures to detect 
whether complete information on the payor/originator is received 
with the wire transfer and specify how the receiving institution 
should treat transfers with missing or incomplete information. 
 
 
 
¶51. (62) No, cash declarations are not entered into a database, 
but smuggling reports are.  The information for smuggling 
reports is shared with the BPS and FIA if they pertain to cash. 
 
 
 
INTERNATIONAL COOPERATION 
 
 
 
¶52. (63) Yes, Bermuda executed its first Tax Information 
Exchange Agreement (TIEA) in 1986 in a treaty between the United 
States, the United Kingdom, and Bermuda.  Bermuda has similar 
arrangements with other jurisdictions.  On January 12, 2009, the 
United States and the GOB signed a Mutual Legal Assistance 
Treaty (MLAT), authorizing authorities in the U.S. and Bermuda 
to request and obtain assistance from each other in criminal 
investigations and prosecutions and related administrative and 
other proceedings.  The MLAT provides for cooperation between 
the U.S. and Bermuda in combating a wide variety of crimes, 
including economic crimes and money laundering, by facilitating 
the collection of evidence needed by authorities in one country 
but located within the other country. 
 
 
 
¶53. (64) In June 2009, Bermuda moved onto the OECD's "white 
list" with the signing of the minimum required 12 TIEAs.  As of 
December 21, 2009 Bermuda has signed 18 TIEAs with the Aruba, 
Australia, Denmark, Faroe Islands, Finland, France, Germany, 
Greenland, Iceland, Ireland, Japan, Mexico, the Netherlands, New 
Zealand, Norway, Sweden, the United Kingdom and the United 
States.  Bermuda expects to sign additional TIEAs in early 2010 
with Belgium, Canada, Japan, Portugal, and Spain. 
 
 
 
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Bermuda is also a member of the Egmont Group of Financial 
Intelligence Units, in which information sharing is implicit. In 
May 2009, the FIA officially replaced the former FIU as the 
member of record in Egmont.  Subsequently, the FIA signed 
Memoranda of Understanding (MOUs) to share AML/ATF information 
and intelligence with Armenia, Australia, Belgium, Canada, 
Indonesia, Korea, Monaco, Montenegro, the Netherlands Antilles, 
Nigeria, the Philippines, Romania, St. Vincent, United Arab 
Emirates, the United Kingdom, and the United States.  Meanwhile, 
the GOB continues to pursue MOUs with other countries. 
 
 
 
The BMA Amendment (No. 3) Act 2004 clarifies the power of the 
BMA to cooperate with other overseas authorities.  Other laws 
also authorize the sharing of information with overseas 
regulators:  the Banks and Deposit Companies Act 1999, the 
Trusts (Regulation of Trust Business) Act 2001 and the 
Investment Business Act 2003. 
 
¶54. (65) Yes, Bermuda cooperates well with the United States and 
other governments investigating financial crimes relating to 
narcotics, terrorism, and terrorist financing. 
 
¶55. (66) There are no known instances of refusals by the GOB to 
cooperate with foreign governments. 
 
 
 
¶56. (67)  No, the U.K. has not yet extended to Bermuda the 
Suppression of the Financing of Terrorism (Vienna Convention) or 
the UN Convention against Transnational Organized Crime 2000 
(Palermo Convention), a situation that the International 
Monetary Fund said in its 2007 review "should be remedied 
without delay."  Although the GOB notes that the provisions of 
those conventions have largely already been incorporated into 
Bermuda's legislation, the government will work with the UK in 
2010 to officially extend those conventions to Bermuda. 
 
 
 
The U.K. has extended to Bermuda by Order in Council a number of 
legislative measures to comply with UN requirements.  These 
measures include:  The Terrorism (United Nations Measures) 
(Overseas Territories) Order 2001; the Afghanistan (United 
Nations Sanctions) (Overseas Territories) Order 2001; and the 
Al-Qa'ida and Taliban (United Nations Measures) (Overseas 
Territories) Order 2002 and its 2002 amendments. 
 
 
 
¶57. (68) Yes, Bermuda strives to adhere to international money 
laundering standards.  Bermuda is a        member of the 
Caribbean Financial Action Task Force, and the FIA is a member 
of the Egmont Group.  Bermuda is also a member of regulatory 
standard-setting bodies for banking, insurance and investment 
business. 
 
 
 
¶58.  AMCONGEN Hamilton's points of contact are Douglas Boudreau 
(boudreaudr@state.gov) or Astrid Black (blackac@state.gov). 
SHELTON