Sun Life subsidiary in Bermuda fined $1.5 million for failing to adequately comply with Proceeds of Crime rules

By The IJ Staff | March 01 2017 01:30PM

Sun Life Financial Investments (Bermuda) Ltd has been sanctioned $1.5 million (BMD) in civil penalties and has had restrictions placed on its licence for failing to adequately comply with Bermuda’s Proceeds of Crime (Anti-Money Laundering & Terrorist Financing Supervision & Enforcement) Act.

The Bermuda Monetary Authority announced the decision Feb. 27, explaining that the penalties were imposed for the company’s failure to comply adequately with the following rules:

- The application of Customer Due Diligence (CDD) measures;
- Ongoing monitoring of business relationships;
- Ceasing transactions where it is not possible to apply CDD measures;
- The application of Enhanced Due Diligence; and
- The establishment and maintenance of appropriate and risk sensitive policies and procedures.

Breaches demonstrated systemic weaknesses

In its announcement, the regulator stated, “Some of the findings represented failings of the Company to adequately remediate similar findings from an onsite review conducted in 2013. The Authority views these breaches as serious because of their extent and duration, and because they demonstrated systemic weaknesses in the Company’s internal AML/ATF controls.”

The Authority also imposed restrictions on the Company’s licence :

It is prohibited from accepting or soliciting any new investment business; prohibited from making or permitting any redemptions or withdrawals from any existing policy or account unless such policy or account has been verified as compliant by an approved third party and prohibited from accepting or permitting any payments into any existing policy or account. The company is also required to make significant progress to remediate existing files to meet regulatory standards in conjunction with a qualified third party provider, and complete the remediation plan within a period of 24 months.

Restrictions imposed to reduce risk of money laundering

The Authority said it was necessary to impose these restrictions “to reduce the risk of money laundering/terrorist financing and because it was in the best interests of the investors.”

The breaches came to light during an onsite review of the Company’s activities by the Authority in May 2016.

Agreed to implement appropriate controls

Contacted by The Insurance and Investment Journal about the penalties, Sun Life Financial provided an emailed response from Niall O’Hare, President, Sun Life Financial Investments (Bermuda) Ltd who said, "We are working cooperatively with the Bermuda Monetary Authority and have agreed to implement appropriate controls to ensure that we are in compliance with both the license restrictions and applicable regulations moving forward."

"We place the highest priority on compliance with all requirements and regulations and on meeting our obligations to Clients."

O’Hare noted that this business has been closed to new sales since January 1, 2016.