What's Happening

Steps being undertaken to amend the Digital Asset Business Act 2018 in Bermuda

An enhancement of the digital asset regulatory framework in Bermuda is being sought through a Consultation Paper that outlines the proposed changes to the country’s current Digital Asset Business Act, 2018. The amendments put forward in the Consultation Paper seeks to give “greater clarity to certain sections and to make other changes that are intended to facilitate the development of the FinTech sector in Bermuda and a more effective administration of the Act”.

 The Consultation Paper notes that the primary intended amendments to the Digital Asset Business Amendment Act, 2020 (Bill) will: 1) amend some definitions to clarify the Bermuda Monetary Authority’s (BMA’s) intent in certain sections; 2) insert a requirement to notify the BMA of changes to exemption conditions; 3) extend the Authority’s ability to modify applicable fees and 4) establish a new testing licence to be called a Class T licence, which will facilitate the testing and piloting of a business model, product or service within the FinTech regulatory framework.

The consultation period for the submission of views on the proposals set out in the paper and Bill will conclude on September 7th, 2020 at which time further steps would be taken. The Consultation Paper for the Digital Asset Business Amendment Act, 2020 can be found here.

Increase in Cyber-crime Reports in The Bahamas

The Royal Bahamas Police Force has reported a 36 percent increase in hacking and extortion in The Bahamas. Between January 1st and June 30th, 2020, there were 118 cyber-crime incidents reported to authorities, compared to the 87 matters reported during the same period in 2019.

The rise in cyber-crime activity is not exclusive to The Bahamas, but a regional and global challenge during the ongoing COVID-19 pandemic. During the Virtual Security Conference held by CARICOM IMPACS from July 27th to 31st, several representatives expressed concerns about the vulnerability of the region, and particularly its members in relation to cyber-crimes.  Concerns about the need to increase the legal and cyber-security frameworks were also raised. The UN Resident Coordinator for Trinidad and Tobago, Suriname, Aruba, Curacao and Sint Marteen, Marina Walter, expressed concern about the lack of comprehensive cyber-security policies among member states relating to “the high number of unsecured servers.”

She further stated that based on reports from member states that have come in since the COVID-19 lockdown period, “there is an increase in attempted COVID-19-stimulus fraud schemes, a rise in hate speech on social media, phishing attacks and the dissemination of obscenities.”  Ms. Walter further noted that in the new normal, countries in the region are likely to digitize their economies, therefore raising the risk levels related to cyber-crime. Consequently, this is an area for all partners to engage more forcefully, identifying appropriate support for countries to tighten frameworks that allow for the better control for cyber-crime.

Police Action in The Bahamas

Commissioner of the Royal Bahamas Police Force, Mr. Paul Rolle stated that the organization will increase money laundering prosecutions and convictions; disrupt the benefits of criminal enterprises; increase confiscations of the proceeds of crime; and reduce financial and commercial crimes. The Commissioner said that Bahamian authorities will partner with the Asset Recovery Inter-Agency Network for the Caribbean (ARIN-CARIB), which shares intelligence to seize assets and counteract crime across international borders. He stated that “we will strengthen the Financial Crime Investigations Branch. The Financial Crime Unit and the Anti-Corruption Unit will continue to conduct financial crime investigations, money laundering, terrorist financing investigations, and parallel investigations into proceeds of crime.”

The Commissioner committed to strengthening the capacity of the Financial Crime Investigations Branch by providing standardized financial investigation training. He also pledged to increase the complement of investigators within the Financial Crime Unit, inclusive of the forensic accountants and analysts.

The Bahamas maintains International Tier 1 Status in Fight Against Trafficking in Persons

On July 8th, 2020, the Minister of National Security of The Bahamas, the Honourable Marvin Dames announced that during the last reporting period, April 1st, 2019 to March 31st, 2020, The Bahamas has continued to advance its national mandate to fight Trafficking in Persons (TIPs)  and maintained its Trafficking in Persons (TIP) Tier 1 Status that for the sixth consecutive year. The Honourable Minister stated that the Tier 1 Status is one given to countries whose governments strengthen anti-trafficking measures. The Honourable Minister noted that the status was achieved by enabling members of the TIP Committee to lead within their respective agencies and organisations through investigation of cases and prosecution of perpetrators, with the goal of protecting victims.   

The Honourable Minister went on the state that The Bahamas’ success is due to the readiness and cooperation of all its government and non-government partners. The Prime Minister’s Delivery Unit (PMDU) continues to provide support and acts as a reporting mechanism to keep TIP initiatives on track. “Specifically, the investigative team from the TIP Task Force took the opportunity to screen 151 migrant nationals from Abaco to eliminate the existence of the possibility of trafficking in persons. Moreover, for the past reporting period, the TIP Unit continued to heighten its awareness and training through the strategic placement of multiple digital media boards displaying anti-trafficking messages on main thoroughfares and at the Lynden Pindling International Airport” he added.

The TIP Unit was also guided by the delineated recommendations made by the U.S. Department of State during the last reporting period. The Honourable Minister noted that to date,  “there were increased efforts to prosecute and convict and increased awareness raising through the distribution of translated brochures into four languages: Spanish, Mandarin, Creole and French. “TIP has also embraced new initiatives for this new reporting period, mainly the focus on greater inter island educational campaigns and the training of the judiciary that is well underway through webinars.”

Minister Dames pointed out that given the current climate of Covid-19, the TIP Committee had four virtual meetings and their work continued unabated during “this new normal”. He also acknowledged the role of several agencies in organizing training, investigations, prosecutions and support; the Royal Bahamas Police Force, the Royal Bahamas Defence Force, the Office of the Director of Public Prosecutions, the Departments of Customs, Health, Immigration, Labour and Social Services.


Germany assumes FATF Presidency

Dr. Marcus Pleyer of Germany assumed the position of President of the FATF on July 1st, 2020. The German Presidency will be the first two-year Presidency since the FATF’s members adopted its revised mandate in April 2019. Dr. Pleyer presented his objectives for the Plenary period (July 2020 - June 2022) to the June 2020 Virtual Plenary.

During the German Plenary years, the FATF will prioritise work in the following areas:

  1. Digital Transformation of AML/CFT
  2. Financing of ethnically or racially motivated terrorism
  3. Money laundering and migrant smuggling
  4. Environmental crime
  5. Illicit arms trafficking

Ms. Elisa de Anda Madrazo of Mexico will serve as Vice-President of the FATF from July 1st, 2020 to June 30th, 2021. 

Financial Investigations Division (FID), Jamaica, Targets Assets after Five Convicted in $400m Manchester Municipal Fraud Trial

The Government of Jamaica has begun the legal process of seeking to take possession of properties and other assets valued at more than $220 million that have been traced to former Manchester Parish Council (renamed  Manchester Municipal Corporation(MMC)) official Sanja Elliott. The properties and assets, which include an apartment complex consisting of 11 units, a four-storey family house, four residential lots, six high-end motor vehicles, as well as a Honda Ridgeline, and several bank accounts, have been frozen by the Supreme Court.

Mr. Elliott, a former Deputy Superintendent in charge of roads and works, was one of three former MMC officials who were found guilty in the Manchester Parish Court on May 15th, 2020 for their roles in a scheme used to defraud the local government authority of approximately $400 million. The other persons were David Harris, former Secretary-Manager and Finance Director and Kendale Roberts, former Temporary Works Overseer. The official’s wife and his close friend were also convicted for their involvement in the scheme, which involved the creation of dozens of fictitious payment vouchers in the names of friends and associates of the former local government official.

After the verdicts were announced, an attorney for the FID stated that the agency will request that the five convicted persons be committed to the Supreme Court. “We are putting it on record that we intend, on the date of sentencing, to make applications that the convicted parties be committed to the Circuit Court for the hearing of a forfeiture order or pecuniary penalty order,” the attorney said.

This is the largest fraud case in Jamaica’s history involving a municipal authority. Evidence was obtained from dozens of cheques, drawn on the account of the MMC and made payable to friends of Mr. Elliott and persons previously employed to the municipality for works which were never done. Two other witnesses testified that they also cashed dozens of cheques, drawn in their names on the account of the MMC, and turned over the monies to Mr. Elliott or his close friend. One witness stated that she cashed about 40 cheques. The Senior Parish Judge who presided over the case stated that “she made no enquiries of Mr Elliott as to why she was encashing cheques when she did no work for the Manchester Parish Council…she never caused any work to be done, she was never employed by the council and she submitted no document in the form of an invoice to the Manchester Parish Council in relation to any work.”

The Judge also pointed to evidence of the “lifestyle” of Mr. Elliot and his wife. “The evidence is that over an eight-day span in May 2016, Mr Elliott had expended more than $1.5 million on luxury items…it’s the court’s findings that this was right before her eyes, she was a part of it, enjoying it. She must have become suspicious that there was some criminal conduct of some kind involved.”

The five convicted persons were offered bail until the date of sentencing on July 27th, 2020.