FATF AML Deficient List
Offshore Finance Centre
Bermuda is not on the FATF List of Countries that have been identified as having strategic AML deficiencies
Compliance with FATF Recommendations
The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Bermuda was undertaken in 2019. According to that Evaluation, Bermuda was deemed Compliant for 28 and Largely Compliant for 11 of the FATF 40 Recommendations. It was deemed Highly Effective for 1 and Substantially Effective for 6 of the Effectiveness & Technical Compliance ratings.
US Department of State Money Laundering assessment (INCSR)
Bermuda was deemed a ‘Monitored’ Jurisdiction by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -
Bermuda, a British Overseas Territory, is a major offshore financial center. It is the third largest reinsurance center in the world and the second largest captive insurance domicile. Bermuda is not considered a major drug transit country. To the extent money laundering occurs in Bermuda, it is believed to be principally related to the domestic drug trade. Money laundering proceeds are controlled primarily by drug trafficking organizations and domestic gangs, which have proliferated in recent years.
There is no significant black market for smuggled goods in Bermuda. There is no known money laundering/terrorist financing activity through free trade zones, or money or other value transfer services in Bermuda. However, there were cases where domestic criminals utilized the formal financial sector for money laundering purposes. Bermuda does not permit offshore banks. A foreign bank may establish a subsidiary as a Bermuda company with its own board of directors, but it may not establish a branch. Bermuda does not permit bearer shares, nor does it permit shell companies. Sports betting is legal, but online betting and casinos are not permitted; however, the Casino Gaming Act 2014, passed in December 2014, will permit casino gaming in future hotel developments, subject to the oversight of an independent gaming commission.
EU Commission Tax Blacklist
On May 17, 2019, the EU Council confirmed that Bermuda had been removed from the EU Tax Blacklist and moved to the 'grey' list of jurisdictions being monitored by the EU.
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index N/A
World Governance Indicator – Control of Corruption 87
Tourism accounts for about 5% of Bermuda's GDP, but a much larger share of employment. Over 80% of its visitors come from the US. The sector struggled in the wake of the global recession of 2008-09. International business, which consists primarily of reinsurance and other financial services, is the real bedrock of Bermuda's economy, consistently accounting for about 85% of the island's GDP. Even this sector, however, has lost roughly 5,000 high-paying expatriate jobs since 2008, weighing heavily on household consumption and retail sales. Bermuda must import almost everything. Agriculture and industry are limited due to the small size of the island.
Bermuda's economy entered its seventh straight year of recession in 2015. Unemployment is 9%, public debt is growing and exceeds $2.3 billion, the government pension fund faces a $2.4 billion shortfall, and the economy has not attracted significant amounts of new foreign investment. Bermuda's FY 2015-16 budget projects a 12% larger deficit than FY14/15. The government announced it would borrow $125 million in 2015 to meet current operating expenses. Still, Bermuda enjoys the fourth highest per capita income in the world, about 70% higher than that of the US.
Agriculture - products:
bananas, vegetables, citrus, flowers; dairy products, honey
international business, tourism, light manufacturing
Exports - commodities:
reexports of pharmaceuticals
Exports - partners:
US 14.4%, Iceland 13.7%, Spain 6.8%, UK 5.8%, Mauritius 5.6% (2015)
Imports - commodities:
clothing, fuels, machinery and transport equipment, construction materials, chemicals, food and live animals
Imports - partners:
South Korea 49.5%, US 14.6%, Germany 11.4%, China 9%, Turkmenistan 5.2% (2015)
Bermuda is a British Island territory located in the North Atlantic Ocean. The government of Bermuda (GOB) welcomes foreign direct investment (FDI). Bermuda’s economy is almost wholly dependent on FDI in the insurance, reinsurance, and financial services sectors – with a small contribution from the tourist sector. In 2014, the latest date for which data is available, these international businesses contributed the most to total GDP at 27.1 percent, compared to tourism’s roughly 5 percent.
Bermuda is slowly coming out of more than six straight years of economic recession. Bermuda’s real gross domestic product increased for the fourth consecutive quarter in Q3 2015, a 4.4% increase over the same period in 2014 after adjusting for inflation of 1.8%. The primary driver was a $53 million gain in the surplus on trade in goods and services, primarily from household consumption, which increased 3.8%. However, job losses and business closures continue to affect the overall economy.
Bermuda's investment climate presents a series of advantages for potential investors. These include:
• a stable, democratic government;
• low personal and corporate taxes;
• a pool of skilled professionals;
• proximity to the United States, and extensive air and communication networks;
• a stable currency, the Bermuda dollar (BMD), pegged at par to the USD.
As a British Overseas Territory, Bermuda’s legal system is grounded in UK common law. Its legal, regulatory and accounting systems adhere to high ethical and transparency standards. It generally effectively and impartially enforces its laws to combat corruption and money laundering. There is no government interference in the court system that could affect foreign investors.
Bermuda law recognizes and enforces secured interests in real property. The GOB’s policies facilitate the free flow of financial resources in the product and factor markets, and the U.S. Securities and Exchange Commission recognizes the Bermuda Stock Exchange (BSX) as a Designated Offshore Securities Market. There is a general awareness of responsible business conduct among both producers and consumers.
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