Non-compliance with AML/CFT/CFP laws and regulations

The CBCS has concentrated its supervision with regard to Anti-Money Laundering, Combating the Financing of Terrorism & Counter Financing or Proliferation in the Governance, Compliance & Conduct Supervision (GCCS) department. This department performs off-site reviews and supervisory examinations on a risk- based basis. In 2022 and 2023, based upon its off-site reviews, the GCCS department performed various risk-based examinations, especially on banks and trust service providers. The examinations were mainly focused on the functioning of customer due diligence, as well as the monitoring of transactions and reporting of unusual transactions to the Financial Intelligence Unit (FIU).

The main conclusions of these examinations are that especially the areas of the (periodic) monitoring of clients and transactions need extra attention. Examples that we witnessed include late reviews, incorrect and incomplete client risk assessments and transaction profiles, and uncertainty as to whether clients and/or Ultimate Beneficial Owners (UBOs) had been timely screened against PEP and Sanctions lists. In addition, we have noticed that in a number of occasions institutions needed to improve their business rules for detecting unusual transactions.

The 2022-2023 examinations showed that compliance with the applicable laws and regulations was still an area of attention. That is why the institutions – in as far appropriate - have been addressed by the CBCS about the shortcomings in their business operations by means of strict letters/reports, with the request to remediate the shortcomings and not only for the files reviewed by the CBCS. In case an individual institution had material shortcomings, the institution had to review the entire client base for that specific shortcoming and to remedy the deficiencies within a reasonable period. As a positive, the CBCS noted that the institutions examined, recognized the need to be compliant with AML/CFT/CFP laws and regulations to prevent possible involvement in money laundering, terrorism or proliferation financing and therefore started to remedy the shortcomings, which have been monitored by the CBCS. Most institutions have been successful therein, but in as far it appeared that institutions were reluctant to remedy their shortcomings in a timely manner, the CBCS took more formal measures. This included formal instructions, a public warning, or other formal measures. For instance, the CBCS recently imposed an administrative fine on a financial institution for non-compliance with the applicable rules and regulations.

An ethical financial system is of great importance for the financial sector and for the countries of Curac?ao and Sint Maarten as a whole. If this is not assured, there is a risk that investors, but also, for example, correspondent banks will withdraw their operations from our countries.

To prevent this, it is essential that financial institutions comply with the applicable laws and regulations. In this regard, the interactions between the CBCS and the financial sector not only include our traditional supervisory activities, but also active and open communication and discussions with the sector, for instance, on new areas of attention.? For an effective approach, cooperation between parties is paramount.