Q4: Quarterly Compliance Newsletter

Issue 2 | Bermuda Regulatory & Financial Crime Update

December 2025

Executive Summary

This quarter’s developments reinforce a consistent theme for Bermuda-regulated entities: sanctions implementation and counter-proliferation financing (CPF) controls are now inseparable from “core” AML/ATF programmes. Bermuda’s sanctions communications and advisory signals continue to converge with FATF’s evolved standards (now explicitly spanning proliferation financing), with practical implications for customer risk assessment, trade/payment controls, and governance oversight.

Bermuda Regulatory Developments

1) Bermuda Regulatory Spotlight

(A) Ministerial Advisory 3/2025: Higher-risk jurisdictions and Enhanced Due Diligence (EDD)

On 16 December 2025, Bermuda’s Ministry of Justice issued AML-ATF Advisory 3/2025, emphasizing ML/TF control weaknesses in higher-risk jurisdictions and the expectation of EDD where relevant. This should be treated as a governance-level trigger to confirm your risk framework, onboarding standards, and ongoing monitoring arrangements are aligned and evidenced.

Practical actions (recommended):

• Refresh country risk mapping in the Business Wide Risk Assessment/Country Risk Assessment and document the rationale for EDD triggers.

• Confirm screening cadence and periodic review cycles for higher-risk relationships.

• Ensure Board/Compliance Committee minutes reflect awareness and planned actions.

(B) Bermuda preparing for the 5th Round Mutual Evaluation (FATF)

Bermuda is preparing for its 5th round mutual evaluation (noting the stated timetable of October 2026 in industry commentary) and related legislative modernization discussions have been publicly referenced, including expansion and refinement of obligations to remain aligned with updated FATF standards.

2) FATF Update: What changed, and why it matters in Bermuda

October 2025 Plenary outcomes

The FATF’s October 2025 Plenary outcomes included:

• Updates to jurisdictions under increased monitoring (and removals), and

• Approval of new guidance on asset recovery—relevant to confiscation, restraint, tracing, and cross-border cooperation themes that increasingly appear in supervisory expectations.

Operational takeaway: Where your programme is “CDD-strong” but “asset recovery / proceeds-of-crime weak” (e.g., limited escalation pathways for recovery, restraint, or civil recovery awareness), you should strengthen internal playbooks—particularly for higher-risk typologies, fraud proceeds, and sanctions evasion indicators.

Counter‑Proliferation Financing

FATF’s CPF materials emphasize implementation of the financial provisions of UN Security Council Resolutions and building effective national and supervisory mechanisms—translation for firms: sanctions compliance must also address proliferation typologies and evasion patterns (not merely name matching).

Key programme enhancements to consider:

• Integrate CPF red flags into transaction monitoring/scenario libraries (e.g., dual-use goods indicators, intermediary trading entities, unusual routing, front-company signals).

• Strengthen trade/payment controls: invoice scrutiny, shipping documentation verification (where applicable), and beneficial ownership coherence checks.

• Expand staff training beyond “sanctions screening,” to include evasion typologies and escalation decisioning.

Sanctions Landscape

(A) Bermuda sanctions updates (FSIU) – recent postings

The Bermuda Government FSIU sanctions page shows multiple Financial Sanctions Updates posted in December 2025 (including Russia, Syria, Iran (Nuclear), Chemical Weapons regimes), reinforcing the need for firms to maintain an auditable process for: intake → assessment → screening refresh → client impact analysis → reporting/escalation.

(B) UK–Bermuda joint statement: enforcement expectations and “no safe haven”

A UK–Bermuda joint statement (25 September 2025) highlighted the importance of robust implementation and enforcement of UK sanctions across the UK family and referenced freezing of over US$200m of sanctioned assets. This is a meaningful public signal: the expectation is not simply policy adoption, but demonstrable operational effectiveness.

Practical actions (recommended):

• Confirm you are subscribed to Bermuda FSIU sanctions alert channels and have a defined internal distribution list and SLA for actioning updates.

  • https://public.govdelivery.com/accounts/BERMFSIU/signup/46844?BMA 

• Test your end-to-end sanctions workflow (including false positives governance, asset freeze steps, and reporting lines).

Legal and Enforcement Trends

(A) Bermuda: money laundering matters remain active in the criminal list

https://www.gov.bm/court-judgments 

Bermuda’s published Supreme Court criminal listings (e.g., 2025 arraignments) reflect ongoing prosecutions including money laundering charges under the Proceeds of Crime Act—a useful reminder that financial crime risk is not theoretical and that evidencing controls remains critical in investigations and production-order scenarios.

(B) Bermuda: public reporting on a money-laundering charge involving a public figure

Local reporting has covered a Magistrates’ Court money laundering charge against a Bermudian public figure which was later dropped (as reported). Regardless of outcome, such matters underscore the reputational and governance sensitivity of PEP proximity, payments, and source-of-funds narratives in a small jurisdiction.

(C) International: sanctions evasion and AML convergence – Halkbank

In October 2025, the U.S. Supreme Court declined to hear Halkbank’s appeal seeking to avoid prosecution connected to alleged Iran sanctions evasion and related money laundering allegations, allowing the case to proceed. This is a strong, current example of how sanctions and AML enforcement are operationally intertwined.

(D) International: major ML convictions remain enforcement bellwethers – 1MDB

In December 2025, a Malaysian court sentenced former Prime Minister Najib Razak to additional imprisonment in a 1MDB-related case involving abuse of power and money laundering charges (as reported). Large corruption/ML cases continue to shape typologies used by supervisors and FIUs globally.

What Boards, MLROs, and Compliance Officers should prioritize

next quarter

Control effectiveness (what regulators tend to test):

1. Ongoing monitoring cadence is defined, risk-based, and evidenced (not just stated).

2. Sanctions update intake is systematic, time-bound, and produces documented outcomes.

3. CPF integration exists in BWRA/CRA, training, and escalation pathways.

4. Governance: Board minutes demonstrate oversight, challenge, and approval of enhancements.

Suggested “quick wins” checklist:

• Run a sanctions effectiveness test (sample of customers/payments; rescreen after key updates).

• Refresh Business Wide Risk Assessment sections for sanctions evasion and proliferation financing risk.

• Update training: add one module on CPF typologies and evasion indicators.

• Perform a file review on higher-risk relationships to confirm EDD triggers are consistently applied.

How The Pillars Consultancy Can Assist

·         AML/ATF/CPF programme health checks (policy, BWRA, CRA, governance minutes, evidence packs)

·         Sanctions framework implementation reviews (workflow design, testing, reporting readiness)

·         Training (Board-level briefing; operational training for senior management and relevant staff)

·         Independent AML audits or file reviews for higher-risk customers, PEPs, and complex ownership structures

Disclaimer

This newsletter is provided for general information and does not constitute legal advice. Organizations should obtain advice tailored to their specific facts, sector, and licensing obligations.