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FATF Statement re AML Strategic Deficiencies:
Date: 16 February 2012
In June 2011, Brunei Darussalam made a high-level political
commitment to work with the FATF and APG to address its
strategic AML/CFT deficiencies. The FATF has determined that
certain strategic AML/CFT deficiencies remain. Brunei Darussalam
should continue to work on implementing its action plan to
address these deficiencies, including by: (1) adequately
criminalising money laundering and terrorist financing
(Recommendation 1 and Special Recommendation II); (2)
establishing and implementing adequate procedures to identify
and freeze terrorist assets (Special Recommendation III); (3)
establishing and implementing adequate procedures for the
confiscation of funds related to money laundering
(Recommendation 3); (4) improving suspicious transaction
reporting requirements (Recommendation 13 and Special
Recommendation IV); (5) ensuring a fully operational and
effectively functioning Financial Intelligence Unit
(Recommendation 26); and (6) enacting and implementing
appropriate mutual legal assistance legislation (Recommendation
36 and Special Recommendation V). The FATF encourages
Brunei Darussalam to address its remaining deficiencies and
continue the process of implementing its action plan.
____________________________________________________
Sanctions:
None applicable
____________________________________________________
Offshore Jurisdiction Blacklists:
As a recognised offshore finance jurisdiction this country may fall
under various country offshore jurisdiction blacklists.
____________________________________________________
US State Department Money Laundering Report - 2011:
Brunei is not a regional financial center. Brunei’s proximity to high
crime regions, along with its large foreign worker population and
limited AML/CFT controls, make it vulnerable to cross-border
criminal activity. Domestically, Brunei is a generally low threat
country for money laundering and terrorist financing, and
proceeds of crime generally originate in fraud, gambling, the drug
trade, and fuel smuggling. Brunei has experienced an increase in
cyber crime and financial fraud such as pyramid schemes and e-
mail scams.
While Brunei criminalized money laundering and terrorist
financing, law enforcement and prosecutors are hampered by a
lack of capacity and gaps in the legal framework. Brunei lacks an
effective method to monitor cross-border currency and bearer
instruments, and both domestic and cross-border wire transfers
are not comprehensively monitored. Brunei has a small offshore
center, with weak AML/CFT controls, and no free trade zones.
DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY
TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS
TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US
CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN
THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE
U.S.: NO
CRIMINALIZATION OF MONEY LAUNDERING:
“All serious crimes” approach or “list” approach to predicate
crimes: List approach
Legal persons covered: criminally: YES civilly: YES
CRIMINALIZATION OF TERRORIST FINANCING:
Ability to freeze terrorist assets without delay: YES
UN lists of designated terrorists or terrorist entities distributed to
financial institutions: YES
KNOW-YOUR-CUSTOMER RULES:
Covered entities: Domestic and offshore banks, insurance
companies, finance companies, money exchanges and remitters,
and securities broker/dealers
Enhanced due diligence procedures for PEPs: Foreign: NO
Domestic: NO
SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:
Covered entities: Domestic and offshore banks, insurance
companies, finance companies, money exchanges and remitters,
and securities broker/dealers
Number of STRs received and time frame: 24 in 2010
Number of CTRs received and time frame: 3,068 in 2010
MONEY LAUNDERING CRIMINAL
PROSECUTIONS/CONVICTIONS:
Prosecutions: None
Convictions: None
Assets forfeited: criminally: Not applicable civilly: Not applicable
RECORDS EXCHANGE MECHANISM:
With U.S.: NO
With other governments/jurisdictions: YES
Brunei is a member of the Asia/Pacific Group on Money
Laundering (APG), a Financial Action Task Force (FATF)-style
regional body. Brunei’s most recent mutual evaluation can be
found here:
http://www.apgml.org/documents/docs/17/Brunei%20Darussalam%
20MER2_FINAL.pdf
ENFORCEMENT AND IMPLEMENTATION ISSUES AND
COMMENTS:
Brunei’s weak AML/CFT controls and lack of institutional capacity
to enforce AML/CFT compliance have been of particular concern
given its proximity to countries with high money laundering and
terrorist financing profiles. The Government of Brunei (GOB)
committed to strengthening its AML/CFT regime by approving an
order in July 2010, which includes stronger KYC rules. The order
is to be implemented on January 1, 2011. The GOB should make
implementation of the KYC rules a priority. As this order does not
address designated non-financial businesses and professions
(DNFBPs), the GOB should draft notices to cover DNFBPs as well.
Only money changer and remittance companies are obliged to
report cash transactions above B$5,000 (approximately $3,850).
New reporting procedures for banks have been proposed.
The GOB issued a notice to banks to conduct enhanced due
diligence on politically exposed persons (PEPs); however, the
official GOB order instituting enhanced due diligence for PEPs is
not yet in force. The GOB should ensure the order covering PEPs
is gazetted as soon as possible in 2011.
Brunei should establish cross-border currency requirements and
strengthen its actions against investment fraud and illegal deposit
taking. Intellectual property theft generates significant proceeds
but is not a priority for authorities. The GOB should ensure
intellectual property crimes are fully criminalized, and effective
controls are in place to prevent theft and prosecute offenders.
____________________________________________________
US State Dept Narcotics Report 2011 (introduction):
No Report available
____________________________________________________
US State Dept Trafficking in Persons Report 2011
(introduction):
(Tier 2 Watch List)
Brunei is a destination, and to a lesser extent, a source and
transit country for men and women who are subjected to forced
labor and forced prostitution. Men and women from Indonesia,
Malaysia, the Philippines, Pakistan, India, Bangladesh, China, and
Thailand migrate to Brunei for domestic work or other low-skilled
employment, but sometimes face conditions of involuntary
servitude after arrival. There are over 87,500 migrant workers in
Brunei, some of whom face debt bondage, nonpayment of wages,
passport confiscation, confinement to the home, and contract-
switching – conditions widely recognized as key indicators of
human trafficking. There were credible reports of South Asian
nationals in Brunei who are subjected to nonpayment of wages
and debt bondage of up to a year’s wages in order to pay off fees
owed to labor recruitment agencies. Some of the 25,000 female
domestic workers in Brunei were required to work exceptionally
long hours without being granted a day for rest, creating an
environment consistent with involuntary servitude. Although it is
illegal for employers in Brunei to withhold wages of their domestic
workers for more than 10 days, some families are known to
withhold wages to compensate for labor broker or recruitment
fees they are charged and as a tool with which to maintain the
service of the workers. Although government regulations prohibit
wage deductions by agencies or sponsors and mandate that
employees receive their full salaries, some foreign workers
continued to pay high fees to overseas recruitment agents to
obtain work in Brunei, leaving them vulnerable to debt bondage.
There are reports of women forced into prostitution in Brunei, and
that women arrested for prostitution attest to having been victims
of trafficking. Many of these victims enter the country on social
visit passes or tourist visas. Brunei is a transit country for
trafficking victims in Malaysia, including Filipinas, who are brought
to Brunei for visa renewals before being returned to Malaysia.
The Government of Brunei does not fully comply with the minimum
standards for the elimination of trafficking; however, it is making
significant efforts to do so. Despite these efforts and ample
resources, the government has not shown evidence of increasing
efforts to address human trafficking over the previous year;
therefore, Brunei is placed on Tier 2 Watch List. The government
has yet to prosecute a human trafficking case using its 2004 anti-
trafficking law. In November 2010, authorities announced plans to
create an anti-trafficking unit within the Royal Brunei Police Force,
though the unit has yet to begin operations. During the year, the
government did not identify or assist any trafficking victims. The
government has yet to develop or implement formal procedures to
identify victims of trafficking.
For full report click here
____________________________________________________
US State Dept Terrorism Report 2009
No report available
Date: 16 February 2012
In June 2011, Brunei Darussalam made a high-level political
commitment to work with the FATF and APG to address its
strategic AML/CFT deficiencies. The FATF has determined that
certain strategic AML/CFT deficiencies remain. Brunei Darussalam
should continue to work on implementing its action plan to
address these deficiencies, including by: (1) adequately
criminalising money laundering and terrorist financing
(Recommendation 1 and Special Recommendation II); (2)
establishing and implementing adequate procedures to identify
and freeze terrorist assets (Special Recommendation III); (3)
establishing and implementing adequate procedures for the
confiscation of funds related to money laundering
(Recommendation 3); (4) improving suspicious transaction
reporting requirements (Recommendation 13 and Special
Recommendation IV); (5) ensuring a fully operational and
effectively functioning Financial Intelligence Unit
(Recommendation 26); and (6) enacting and implementing
appropriate mutual legal assistance legislation (Recommendation
36 and Special Recommendation V). The FATF encourages
Brunei Darussalam to address its remaining deficiencies and
continue the process of implementing its action plan.
____________________________________________________
Sanctions:
None applicable
____________________________________________________
Offshore Jurisdiction Blacklists:
As a recognised offshore finance jurisdiction this country may fall
under various country offshore jurisdiction blacklists.
____________________________________________________
US State Department Money Laundering Report - 2011:
Brunei is not a regional financial center. Brunei’s proximity to high
crime regions, along with its large foreign worker population and
limited AML/CFT controls, make it vulnerable to cross-border
criminal activity. Domestically, Brunei is a generally low threat
country for money laundering and terrorist financing, and
proceeds of crime generally originate in fraud, gambling, the drug
trade, and fuel smuggling. Brunei has experienced an increase in
cyber crime and financial fraud such as pyramid schemes and e-
mail scams.
While Brunei criminalized money laundering and terrorist
financing, law enforcement and prosecutors are hampered by a
lack of capacity and gaps in the legal framework. Brunei lacks an
effective method to monitor cross-border currency and bearer
instruments, and both domestic and cross-border wire transfers
are not comprehensively monitored. Brunei has a small offshore
center, with weak AML/CFT controls, and no free trade zones.
DO FINANCIAL INSTITUTIONS ENGAGE IN CURRENCY
TRANSACTIONS RELATED TO INTERNATIONAL NARCOTICS
TRAFFICKING THAT INCLUDE SIGNIFICANT AMOUNTS OF US
CURRENCY; CURRENCY DERIVED FROM ILLEGAL SALES IN
THE U.S.; OR THAT OTHERWISE SIGNIFICANTLY AFFECT THE
U.S.: NO
CRIMINALIZATION OF MONEY LAUNDERING:
“All serious crimes” approach or “list” approach to predicate
crimes: List approach
Legal persons covered: criminally: YES civilly: YES
CRIMINALIZATION OF TERRORIST FINANCING:
Ability to freeze terrorist assets without delay: YES
UN lists of designated terrorists or terrorist entities distributed to
financial institutions: YES
KNOW-YOUR-CUSTOMER RULES:
Covered entities: Domestic and offshore banks, insurance
companies, finance companies, money exchanges and remitters,
and securities broker/dealers
Enhanced due diligence procedures for PEPs: Foreign: NO
Domestic: NO
SUSPICIOUS TRANSACTION REPORTING REQUIREMENTS:
Covered entities: Domestic and offshore banks, insurance
companies, finance companies, money exchanges and remitters,
and securities broker/dealers
Number of STRs received and time frame: 24 in 2010
Number of CTRs received and time frame: 3,068 in 2010
MONEY LAUNDERING CRIMINAL
PROSECUTIONS/CONVICTIONS:
Prosecutions: None
Convictions: None
Assets forfeited: criminally: Not applicable civilly: Not applicable
RECORDS EXCHANGE MECHANISM:
With U.S.: NO
With other governments/jurisdictions: YES
Brunei is a member of the Asia/Pacific Group on Money
Laundering (APG), a Financial Action Task Force (FATF)-style
regional body. Brunei’s most recent mutual evaluation can be
found here:
http://www.apgml.org/documents/docs/17/Brunei%20Darussalam%
20MER2_FINAL.pdf
ENFORCEMENT AND IMPLEMENTATION ISSUES AND
COMMENTS:
Brunei’s weak AML/CFT controls and lack of institutional capacity
to enforce AML/CFT compliance have been of particular concern
given its proximity to countries with high money laundering and
terrorist financing profiles. The Government of Brunei (GOB)
committed to strengthening its AML/CFT regime by approving an
order in July 2010, which includes stronger KYC rules. The order
is to be implemented on January 1, 2011. The GOB should make
implementation of the KYC rules a priority. As this order does not
address designated non-financial businesses and professions
(DNFBPs), the GOB should draft notices to cover DNFBPs as well.
Only money changer and remittance companies are obliged to
report cash transactions above B$5,000 (approximately $3,850).
New reporting procedures for banks have been proposed.
The GOB issued a notice to banks to conduct enhanced due
diligence on politically exposed persons (PEPs); however, the
official GOB order instituting enhanced due diligence for PEPs is
not yet in force. The GOB should ensure the order covering PEPs
is gazetted as soon as possible in 2011.
Brunei should establish cross-border currency requirements and
strengthen its actions against investment fraud and illegal deposit
taking. Intellectual property theft generates significant proceeds
but is not a priority for authorities. The GOB should ensure
intellectual property crimes are fully criminalized, and effective
controls are in place to prevent theft and prosecute offenders.
____________________________________________________
US State Dept Narcotics Report 2011 (introduction):
No Report available
____________________________________________________
US State Dept Trafficking in Persons Report 2011
(introduction):
(Tier 2 Watch List)
Brunei is a destination, and to a lesser extent, a source and
transit country for men and women who are subjected to forced
labor and forced prostitution. Men and women from Indonesia,
Malaysia, the Philippines, Pakistan, India, Bangladesh, China, and
Thailand migrate to Brunei for domestic work or other low-skilled
employment, but sometimes face conditions of involuntary
servitude after arrival. There are over 87,500 migrant workers in
Brunei, some of whom face debt bondage, nonpayment of wages,
passport confiscation, confinement to the home, and contract-
switching – conditions widely recognized as key indicators of
human trafficking. There were credible reports of South Asian
nationals in Brunei who are subjected to nonpayment of wages
and debt bondage of up to a year’s wages in order to pay off fees
owed to labor recruitment agencies. Some of the 25,000 female
domestic workers in Brunei were required to work exceptionally
long hours without being granted a day for rest, creating an
environment consistent with involuntary servitude. Although it is
illegal for employers in Brunei to withhold wages of their domestic
workers for more than 10 days, some families are known to
withhold wages to compensate for labor broker or recruitment
fees they are charged and as a tool with which to maintain the
service of the workers. Although government regulations prohibit
wage deductions by agencies or sponsors and mandate that
employees receive their full salaries, some foreign workers
continued to pay high fees to overseas recruitment agents to
obtain work in Brunei, leaving them vulnerable to debt bondage.
There are reports of women forced into prostitution in Brunei, and
that women arrested for prostitution attest to having been victims
of trafficking. Many of these victims enter the country on social
visit passes or tourist visas. Brunei is a transit country for
trafficking victims in Malaysia, including Filipinas, who are brought
to Brunei for visa renewals before being returned to Malaysia.
The Government of Brunei does not fully comply with the minimum
standards for the elimination of trafficking; however, it is making
significant efforts to do so. Despite these efforts and ample
resources, the government has not shown evidence of increasing
efforts to address human trafficking over the previous year;
therefore, Brunei is placed on Tier 2 Watch List. The government
has yet to prosecute a human trafficking case using its 2004 anti-
trafficking law. In November 2010, authorities announced plans to
create an anti-trafficking unit within the Royal Brunei Police Force,
though the unit has yet to begin operations. During the year, the
government did not identify or assist any trafficking victims. The
government has yet to develop or implement formal procedures to
identify victims of trafficking.
For full report click here
____________________________________________________
US State Dept Terrorism Report 2009
No report available
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*Please note that FATF deems that a country has significant aml deficiencies if any
of the 'Core' Recommendations, R1, R5, R10, R13, SRII, or SRIV are rated either
Partially of Non-Compliant. These are marked in red.
For FATF to remove a country from the regular follow-up process, it has to be rated
Compliant or Largely Compliant in the above mentioned Core Recommendations
and the following Key Recommendations: -
R3, R4, R23, R26, R35, R36, R40, SRI, SRIII, SRV
Please also note that any risk assessment should take into consideration all
follow-up reports.
of the 'Core' Recommendations, R1, R5, R10, R13, SRII, or SRIV are rated either
Partially of Non-Compliant. These are marked in red.
For FATF to remove a country from the regular follow-up process, it has to be rated
Compliant or Largely Compliant in the above mentioned Core Recommendations
and the following Key Recommendations: -
R3, R4, R23, R26, R35, R36, R40, SRI, SRIII, SRV
Please also note that any risk assessment should take into consideration all
follow-up reports.
| KnowYourCountry |
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| BRUNEI |
_________________________________________________________
AML News / Updates
September 20, 2010 - Brunei uplifted to OECD implementation of tax
standard white list.
View current list.......
Links:
Worldwide AML Legislation (International Bar Association)
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| Last Updated: 16 April 2012 |