Enforcement, Sanctions & Penalties

ENFORCEMENT & PENALTIES:

The Compliance Commission of The Bahamas (the Commission) has an ongoing enforcement program to detect non-compliance with the provisions of the FTRA, 2018.  In addition, the Commission has implemented a policy on Administrative Penalties pursuant to section 33 (2) of the FTRA 2018, effective February 6th, 2019. This policy sets out the process that the Commission will follow when a financial institution or individual of a financial institution fails to comply with the FTRA, 2018 or POCA, 2018.  The Commission may become aware of non-compliance based on examinations, evaluations, complaints or market intelligence.  Constituents must familiarize themselves with the penalties and obligations under the FTRA, 2018 and POCA, 2018.

Pursuant to section 57 of the FTRA, 2018 notwithstanding any penalties under the FTRA, 2018, the Commission as a Supervisory Authority (as defined in Section 2 of the FTRA, 2018) may impose administrative penalties to financial institutions and individuals of financial institutions for failure to comply with provisions of the FTRA, 2018 and Proceeds of Crime Act 2018 (POCA).

Administrative penalties are monetary penalties imposed by the Commission via legislative authority without the commencement of legal proceedings. The imposition of administrative penalties provides an alternative reprimand which is less costly and time consuming.

Penalties are imposed as a mechanism to enforce compliance with regulatory legislation and dissuade financial institutions and individuals from breaching their obligations under the FTRA, 2018 or POCA, 2018.

ASSESSMENT AND APPLICATION OF THE PENALTY

  • The Commission will impose penalties on a case-by-case basis according to the facts of each case.
  • For breaches made by a company, the Commission may impose a maximum penalty up to $200,000.00 (Section 57(1)(i) of the FTRA, 2018) and with respect to an individual, a penalty up to $50,000.00 (Section 57(1)(i) of the FTRA, 2018). Breaches will be classified in categories of minor, serious or very serious.
  • When determining the quantity of the penalty, the Commission may take into consideration several factors outlined in paragraph 4 as well as reference made to the annexed Schedule. 

FACTORS CONSIDERED FOR AMOUNT OF PENALTY

In determining the amount of a penalty, the Commission will consider the following factors:

  1. The gravity and duration of the contravention or failure;
  2. The degree of responsibility of the financial institution or person on whom the Commission proposes to implement the penalty;
  3. The financial strength of the financial institution or person;
  4. The amount of profit gained or loss avoided by the financial institution or person;
  5. The loss to third parties caused by the contravention;
  6. The level of cooperation of the financial institution or person with the Commission;
  7. Any previous contraventions; and
  8. Any potential systemic consequences of the contravention.

THE ABOVE FACTORS ARE NOT EXHAUSTIVE, AND NOT ALL FACTORS MAY BE APPLICABLE TO EACH CASE.  ADDITIONAL FACTORS MAY ALSO BE CONSIDERED. 

Registrants of the Commission are hereby notified that Non-Compliance with the provisions of the Financial Transactions Reporting Act, 2018 (FTRA, 2018) and Proceeds of Crime Act, 2018(POCA, 2018) the under-noted procedures will take effect pursuant to section 57 (5) of the FTRA, 2018:

  1. The Commission will issue a written warning to the financial institution outlining the following:
    • The nature of the contravention committed;
    • The amount of the penalty; and
    • A reasonable period (no less than 28 days from the date of the notice) within which the financial institution may make representation to the Commission regarding the contravention.
  2. If the reasonable period elapses and the financial institution does not remedy the contravention, the Commission will issue a notice of its decision. The decision will be:
    • In writing; and
    • The Commission will give its reason for the decision. 

PAYMENT OF PENALTY 

All penalties must be made payable to the Commission within the allotted time specified by the Commission in its decision.  Penalties may be subject to the accrual of interest for late payment.

PUBLICATION OF PENALTY

The Commission will publish the name of individuals or firms that breached obligations, the nature of the offence and the amount of the penalty imposed.

Click here for the CC Schedule of Administrative Monetary Penalties

SANCTIONS: 

Sanctions are measures with which the international community targets certain countries, individuals and entities.  It is important to note that a portion of a country can be subject to sanctions as well as vessels and aircraft.

TARGETED FINANCIAL SANCTIONS RELATED TO TERRORISM AND TERRORIST FINANCING:

FATF Interpretive Note to Recommendation 6.6 (c) stipulates that countries should have mechanisms for communicating designations to financial institutions and DNFBPs – immediately upon taking such action, and providing clear guidance to financial institutions and other persons or entities, including DNFBPs, that may be holding targeted funds or other assets, on their obligations in taking action under freezing mechanisms.  To this end, the Commission, following the procedures established in law coupled with the United Nations Security Council Resolution (UNSCR) as set out in section 2.3 of the Codes of Practice, will notify its constituents immediately upon any such actions being taken from a national perspective.  Further, FATF Interpretive Note to Recommendation 6.6 (d) states that financial institutions, including DNFBPs, are required to report to competent authorities any assets frozen or actions taken in compliance with the prohibition requirements of the relevant Security Council resolutions, including attempted transactions, and ensure effective utilization of the information by the competent authorities.  Registrants are advised to take note of FATF Recommendations 27 and 35.

TARGETED FINANCIAL SANCTIONS RELATED TO PROLIFERATION: 

FATF Interpretive Note to Recommendation 7.1 requires countries to implement targeted financial sanctions to comply with the UNSCRs that requires countries to freeze, without delay, the funds or other assets of, as well as to ensure that no funds and other assets are made available to, and for the benefit of, any person or entity designated by the UNSC under Chapter VII. This is in accordance with the UNSCRs that relate to the prevention and disruption of the financing of proliferation of mass destruction.

The Bahamas, in order to discharge its responsibilities in keeping with FATF Interpretive Note to Recommendation 7.1, depends on financial institutions that come in contact with clients or funds (including attempted transactions) suspected or linked to proliferation financing, to report to the competent authorities, without delay, actions taken or funds frozen in compliance with the prohibition requirements of the relevant UNSCRs.  This will facilitate and ensure timely and effective utilization of the information by the competent authorities.