Regulator: Financial crime gaps up to 60% of licensee weakness

By Fay Simmons

Tribune Business Reporter

The Securities Commission’s top executive yesterday revealed that anti-money laundering and counter-terror financing non-compliance accounts for between 40-60 percent of licensee deficiencies.

Christina Rolle, the regulator’s executive director, told the Nassau Conference that it will next year start imposing fines on licensees if examinations reveal weaknesses and infractions in this area. She said: “Anti-money laundering and counter terror financing probably occupies about 40 percent to 60 percent of the deficiencies that we see in a licensee.

“Some of the things that licensees have to prepare for is that we will, in 2024, continue to focus on anti-money laundering and counter terror financing. We also will be looking to add to our examination process programmes that go deeper into the products that our licensees are offering.

“One thing that we have been patient with so far, and all of the regulators have in terms of anti-money laundering and counter terror financing features, is coming out of the examinations licensees should expect to in 2024 begin to see penalties with respect to anti-money laundering and counter terror financing. And the policies will likely extrapolate penalties across the population of your clients.”

Ms Rolle added that corporate governance deficiencies, and licensees not fully understanding their product offerings, are also key issues that have been uncovered when the Securities Commission conducts on-site examinations.

She said: “The other big area after anti-money laundering is corporate governance, and licensees ensuring that they have the proper governance structures in place that have proper oversight at the Board level, at risk committee level.

“Another issue that we see coming out of our examinations, we think that licensees probably need to pay a lot closer attention to understanding their product offerings, and developing this framework around their products and understanding the anti-money laundering or the operational risk of their product offering.”

Ms Rolle explained that cyber risks are an area of concern among securities firms through frequent bot attacks that mimic consumer activities, while banks have more anti-money laundering and counter terror financing issues which can leave the industry open to risks.

She said: “Cyber risks are a serious concern, and licensees probably should be paying very close attention to information technology security. We’re seeing a lot of activities within the space. I don’t know if it’s so much on the banking side as much as it on the securities industry side. We see a lot of bot attacks and bot complaints, and cyber-related activity that that is very difficult to distinguish from a real client of an institution.

“On the bank side its probably much more compliance than it is in the broader industry. But we think that anti-money laundering and counter terror financing is still very much a concern, and it’s a driver for a lot of the risks that we see in in the jurisdiction.”

John Rolle, the Central Bank of the Bahamas governor, told the Nassau Conference that the increasing use of digital currency has highlighted the cyber risks associated with technology advances. He added that the financial sector should get a greater understanding of cyber-related risks from an operational standpoint to better combat it.

He said: “One issue that I highlight from an emerging risk perspective is that I think we want to get to a point from an operational standpoint where we start to get a much more defined understanding and treatment of cyber-related risk.

“The reason why I am also more aware of it is because now with payments, particularly in the domestic space, I think we are all more conscious about the availability issues around services. So technology risk ncan have a cyber malicious component, but it also has other non-malicious components that are equally concerned when you’re looking at our digital channels for service provision.”

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