EXTRAORDINARY

OFFICIAL GAZETTE
THE BAHAMAS
PUBLISHED BY AUTHORITYNASSAU

16th March, 2022(A)

DIGITAL ASSETS AND REGISTERED EXCHANGES(ANTI-MONEY LAUNDERING, COUNTERINGFINANCING OF TERRORISM AND COUNTERINGFINANCING OF PROLIFERATION) RULES, 2022
Arrangement of Rules
Rule
1.
2.

Citation................................................................................................................3Interpretation.......................................................................................................3

PART II – RISK RATING DUTY OF REGISTRANT
3.

PART III – INTERNAL CONTROLS
4.
5.
6.
7.

20

Maintenance of records......................................................................................20
Transaction records............................................................................................21
Other records......................................................................................................22

PART VI – MISCELLANEOUS
22.

8

Due diligence measures........................................................................................8
Simplified due diligence measures.......................................................................9
Enhanced due diligence measures........................................................................9
Verification of customer identity........................................................................11
Required information.........................................................................................12
Politically exposed persons................................................................................16
Reliance on third party verification procedures..................................................17
Eligible introducer..............................................................................................18
Suspension or termination of activity or business..............................................19
Exemption from verification of identity.............................................................19
Ongoing monitoring...........................................................................................20

PART V – RECORD KEEPING
19.
20.
21.

6

Duty of registrant concerning internal controls....................................................6
MONEY LAUNDERING REPORTING OFFICER............................................7
Outsourcing..........................................................................................................7
Suspicious transaction reporting..........................................................................8

PART IV – VERIFICATION OF CUSTOMER IDENTITY
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.

4

Duty of registrant to implement risk rating framework........................................4

22

Education and training.......................................................................................22

DIGITAL ASSETS AND REGISTERED EXCHANGES(ANTI-MONEY
LAUNDERING,
COUNTERING
DIGITALASSETS
AND REGISTEREDEXCHANGESFINANCINGOFTERRORISMAND
COUNTERING(ANTI-MONEY LAUNDERING, COUNTERINGFINANCING OF
OF TERRORISMPROLIFERATION)
RULES, 2022
FINANCING
AND COUNTERINGFINANCING OF PROLIFERATION) RULES, 2022

MINISTRY OF FINANCEDIGITAL ASSETSAND REGISTERED EXCHANGES ACTDIGITAL ASSETS AND REGISTEREDEXCHANGES ACT
2020
2020
(NO. 28 OF 2020)(NO.
28 OF 2020)
S.I. No. 32 of 2022

DIGITAL ASSETS AND REGISTERED EXCHANGES (ANTIDIGITALAND REGISTEREDEXCHANGES(ANTIMONEYASSETSLAUNDERING,
COUNTERINGFINANCING
OF
MONEY
LAUNDERING,
COUNTERINGFINANCINGOFTERRORISM AND COUNTERING FINANCING OF
TERRORISM
AND COUNTERINGFINANCINGOF
PROLIFERATION)
RULES,
2022
PROLIFERATION) RULES, 2022
The Securities Commission of The Bahamas, in exercise of the powers conferred bysection50 of theDigital Assets
and Bahamas,
RegisteredinExchanges(No.conferred
28 of 2020)
The
Securities
Commissionof Theexercise ofAct
the2020
powersbymakes theRules–
section
50 followingof the Digital
Assetsand Registered Exchanges Act 2020 (No. 28 of 2020)
makes the following Rules –1.
Citation.
1.
Citation.
These Rules may be cited as the Digital Assets and Registered Exchanges (AntiMoneyRules
Laundering,Countering
Financingof Registered
Terrorism Exchanges
and CounteringThese
may be citedas the Digital
Assets and(AntiFinancingLaundering,of Proliferation)
Rules, 2022.
Money
Countering
Financing of Terrorism and Countering
Financing of Proliferation) Rules, 2022.
2.
Interpretation.
2.
Interpretation.
In these Rules—
In these“Act”
Rules—
means the Digital Assets and Registered Exchanges Act, 2020 (No.
of 2020);“Act” 28means
the Digital Assets and Registered Exchanges Act, 2020 (No.
28
of2020);“beneficial owner” has the meaning specified in the Register ofBeneficial
Ownership
Act,meaning2018 (No.specified
38 of 2018);“beneficial
owner”
has thein the Register ofBeneficial
Ownership
Act,
2018
(No.
38
of
2018);“Commission” means the Securities Commission of The Bahamas ascontinued means
under Partof the Securities
Industry(No. 10“Commission”
the IISecurities
Commissionof Act,The 2011
Bahamasasof 2011). under Part II of the Securities Industry Act, 2011 (No. 10
continuedof assets”
2011). has the meaning specified in section 2 of the Act;“digital“digital
assets”
has the meaning
in section
2 ofinthethe
Act;Financial“financial
institution”
has thespecified
meaning
specified
Transaction
Reporting
Act,
2018
(No.
5
of
2018);“financial institution” has the meaning specified in the Financial
Transaction Reporting Act, 2018 (No. 5 of 2018);
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DIGITAL ASSETS AND REGISTERED EXCHANGES(ANTI-MONEY LAUNDERING, COUNTERINGFINANCING OF TERRORISM AND COUNTERINGFINANCING OF PROLIFERATION) RULES, 2022

“financing of proliferation” means the financing of proliferation of
weapons of mass destruction specified in section 9 of the AntiTerrorism Act, 2018 (No. 27 of 2018);“identified risks” has the meaning specified in the Proceeds of Crime
Act, 2018 (No. 4 of 2018);“key personnel” means senior management or other key employees who
effectively manage the business of a registrant;“Money Laundering Reporting Officer” or “MLRO” means the person
appointed pursuant to regulation 5 of the Financial Intelligence(Transactions Reporting) Regulations, 2001 (S.I. No. 7 of 2001);“occasional transactions” has the meaning specified in the Financial
Transactions Reporting Regulations, 2018 (S.I. No. 5 of 2018);“registrant" means a person registered under the Act;“senior management” means an officer or employee of a registrant with
sufficient knowledge and seniority to make decisions affecting theregistrant’s risk exposure and need not involve a member of theboard or directors and includes a person responsible for complianceor duly authorised to bind the registrant.

PART II – RISK RATING DUTY OF REGISTRANT
3.

Duty of registrant to implement risk rating framework.
(1)

Every registrant shall implement a risk rating framework which assesses
and identifies –(a) the risk profile of each customer;(b) its own risk profile in relation to the countries or jurisdictions inwhich it operates;(c) the risk profile associated with its own business practices, products,
services, transactions and delivery channels;(d) the nature and extent of risks related to the registrant’s non-face-toface business relationships; and(e) the nature and extent of risks related to the registrant’s businessactivities that permit customers to receive payments from unknown
or unassociated third parties.

(2)

The risk rating framework shall be approved by the registrant's senior
management based on the scope of the registrant's activities, and shall be
designed to—Page - 4

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(a)
(b)
(c)
(d)

(e)

(f)

(g)

(h)

Page - 4

take appropriate measures to continuously identify, measure,manage, and mitigate identified current and emerging risks;
take account of any risk assessment carried out at the national level
and any regulatory guidance issued by the Commission;categorize customer relationships and products to identify the levelof risk associated with each customer relationship or product;categorize customer relationships and products to take account ofrisk factors related to the particular customer relationship or
product, including—(i)customer type or profession;(ii) country of domicile;(iii) complexity of ownership;(iv) complexity of legal structure;(v) source of business;(vi) type of assets;(vii) type, size and volume of transactions;(viii) level of cash transactions;(ix) non-face-to-face Know Your Customer document
submission; and(x) adherence to customer activity profile;address which level of management can approve a decision for theregistrant to enter into customer relationships at the various levelsof risk rating categories;
establish Know Your Customer and due diligence information
requirements appropriate for the risk profile of the customer
relationship or product;
require the periodic review of the customer relationship or productto—(i)ensure that the categorizations are current and appropriate;
and(ii) enable the registrant to determine whether any adjustment
should be made to the risk rating;require the re-categorization of a customer relationship or productoffered by the registrant in the event of a change in the risk profile
of a customer relationship or product;

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DIGITAL ASSETS AND REGISTERED EXCHANGES(ANTI-MONEY LAUNDERING, COUNTERINGFINANCING OF TERRORISM AND COUNTERINGFINANCING OF PROLIFERATION) RULES, 2022

(i)

(j)

(k)

require the documentation of the basis for the risk rating applied toa customer relationship or product and of any changes in the risk
rating of particular customer relationship or product;
mitigate any additional risks due to the cross-border nature of atransaction, particularly where the transaction takes place in ajurisdiction which could reduce the registrant’s ability of oversightand the application of effective anti-money laundering, countering
the financing of terrorism and countering the financing of
proliferation controls;
identify and mitigate potential risks arising from products, services
or activities, provided to or by anonymous or private sources
including, but not limited to, unhosted wallets, the darknet andblacklisted addresses, particularly where the risk rating is high orwhere the type, size and volume of transactions is substantial.

(3)

A registrant shall assess the risk profile of each new customer and carryout a risk assessment of each new product, business practice or technology
prior to establishing a business relationship with such customer or
introducing such product, business practice or technology.

(4)

The outcome of each customer or product risk assessment conducted shallbe documented and retained as part of the registrant’s document keeping
requirements.

(5)

A registrant’s risk rating framework shall be subject to review by theCommission.

PART III – INTERNAL CONTROLS
4.

Duty of registrant concerning internal controls.
(1)

A registrant shall implement internal control policies and procedures forthe prevention, detection, and disclosure of identified risks associated withmoney laundering and the financing of terrorism and the financing of
proliferation, in accordance with the Financial Transactions Reporting
Act, 20181 and—(a) document and track financial crime typologies specific to digitalassets;(b) have a MLRO approved by the Commission; and1(S.I. No. 5 of 2018)

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DIGITAL ASSETS AND REGISTERED EXCHANGES(ANTI-MONEY LAUNDERING, COUNTERINGFINANCING OF TERRORISM AND COUNTERINGFINANCING OF PROLIFERATION) RULES, 2022

(c)

5.

6.

2

verify, on a regular basis, compliance with internal policies,
procedures, and controls relating to money laundering and thefinancing of terrorism and the financing of proliferation activities.

(2)

A registrant shall comply with the provisions of the Financial Transactions
Reporting (Wire Transfers) Regulations, 20182 and ensure proper internal
controls are in place.

(3)

A registrant shall ensure it understands its operating processes andprocedures, regularly verifies their integrity, and accounts for identified
money laundering and the financing of terrorism and the financing of
proliferation risks.

MONEY LAUNDERING REPORTING OFFICER.
(1)A MLRO shall—(a) if an individual, be sufficiently senior in the organizational structureof the registrant's business operations to exercise the necessary
authority to carry out their functions and duties;(b) if a legal person, is approved under the Act to provide outsourced
services as a MLRO;(c) have responsibility for making suspicious transactions reports to the
Financial Intelligence Unit regarding money laundering, and thefinancing of terrorism and the financing of proliferation.

(2)

A registrant shall submit the name of the person proposed to be the
MLRO to the Commission, and where the person is approved andappointed as the MLRO, the registrant shall—(a) register the name of the person with the Financial Intelligence Unit;(b) ensure that the MLRO or any person appointed to assist the MLRO
has timely access to systems, customer records and all relevant
information required to perform their duties; and(c) submit a statement that the MLRO is a fit and proper person.

Outsourcing.
(1)

A registrant may outsource the role of the MLRO.

(2)

Prior to outsourcing the registrant shall—(a) notify the Commission of the particulars and regulatory status of
the proposed MLRO, including whether that person is an employee
of a parent company or a company affiliated with the registrant;(S.I. No. 36 of 2018)

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DIGITAL ASSETS AND REGISTERED EXCHANGES(ANTI-MONEY LAUNDERING, COUNTERINGFINANCING OF TERRORISM AND COUNTERINGFINANCING OF PROLIFERATION) RULES, 2022

(b)

(c)

7.

satisfy the Commission that the proposed MLRO has the relevant
qualifications, knowledge, experience, managerial resources andoperational capacity to meet the obligations of a Compliance
Officer; andprovide the Commission with a copy of the executed outsourcing
contract with the MLRO.

(3)

The outsourcing arrangement must permit the Commission access to any
records and information held by the MLRO relating to the activities
carried out in relation to the registrant, as if those records and information
were held by the registrant.

(4)

Notwithstanding paragraph (1), a registrant shall retain ultimate
responsibility for ensuring compliance with the provisions of the Financial
Intelligence (Transactions Reporting) Regulations (Ch. 367).

(5)

The Commission may, by notice to the registrant, object to the proposed
appointment or to the continued use of a MLRO and the registrant shallterminate the appointment promptly after receipt of such notice from theCommission.

Suspicious transaction reporting.
(1)

A registrant shall implement policies and procedures to facilitate an
employee exercising their duty to report their knowledge or suspicionsthat a customer is or may be engaged in money laundering or thefinancing of terrorism or the financing of proliferation to the MLRO.

(2)

It shall be the responsibility of the MLRO to assess the sufficiency of theinformation contained in a report referred to in paragraph (1).

PART IV – VERIFICATION OF CUSTOMER IDENTITY
8.

Due diligence measures.
(1)

Except where specifically exempted by any Rules issued by theCommission, the customer due diligence measures implemented by theregistrant shall use independent and reliable source documents, data or
information (whether or not electronically sourced).

(2)

The risk rating framework of a customer shall be applied by a registrant toits due diligence measures.

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(3)

9.

Once a business relationship has been established with a customer, theregistrant shall take reasonable steps to ensure that due diligence measures
are periodically reviewed and kept up to date.

Simplified due diligence measures.
Where a registrant determines a client to be of lower risk and intends to utilise a
simplified due diligence procedure to verify the identity of that client—(i)the registrant shall submit a written outline of the registrant’s risk
rating procedure and proposed simplified due diligence process;and(ii) the Commission shall review the proposed simplified due diligenceprocess; and approve the registrant to proceed with the verificationof the client utilising due diligence processes appropriate to suchclient.

10.

Enhanced due diligence measures.
(1)

Enhanced due diligence measures shall be applied by a registrant for
categories of customers, business relationships, or transactions that may
present a higher risk for money laundering, or the financing of terrorism
or the financing of proliferation based on the risk profile developed
relative to the customer, business relationship or transaction, whichmeasures shall include taking additional verification measures.

(2)

A customer may present a higher risk for money laundering, or thefinancing of terrorism or the financing of proliferation if, without
limitation, a customer—(a) is involved in digital asset mining operations (either directly or
indirectly through relationships with third parties) that take place ina high-risk jurisdiction, relate to higher-risk digital assets including,
without limitation, those with anonymity enhancing features, orwhere its organisation gives rise to higher risk;(b) is unable to produce the required Know Your Customer informationand documentation;(c) uses anonymous or randomly generated email addresses or atemporary email service;(d) requests an exchange to or from cash or other digital assets withanonymity enhancing features;(e) persistently avoids Know Your Customer thresholds throughsmaller transactions;Page - 8

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(f)
(g)

requests an exchange to or from state-sponsored digital assets thatare suspected of being used to avoid sanctions;is a politically exposed person as defined in rule 13.

(3)

A transaction may present a higher risk for money laundering, or thefinancing of terrorism or the financing of proliferation if, without
limitation—(a) it is a peer-to-peer transaction;(b) a significant proportion of the digital assets held or used in atransaction is associated with anonymity enhancing features or
products and services that potentially obfuscate transactions orundermine a registrant’s ability to know its customers andimplement effective anti-money laundering, countering thefinancing of terrorism and countering the financing of proliferation
controls;(c) the digital asset comes from, or is associated with, the darknet orother illegal/high-risk sources, such as an unregulated exchange, oris associated with market abuse, ransomware, hacking, fraud, Ponzi
schemes or sanctioned digital asset addresses or accounts;(d) the results of blockchain analysis or similar analysis indicate ahigher risk.

(4)

Enhanced due diligence measures may include—(a) corroborating the identity information received from the customer
with information in third party databases or other reliable sources;(b) for non-face to face Know Your Customer verification—(i)video conferencing with the proposed customer;(ii) requiring identification documentation to be certified by anotary public or the equivalent;(iii) verifying with the customer, additional aspects of theiridentity (or biometric data) which is held electronically;(c) tracing the customer’s IP address;(d) corroborating activity information consistent with the customer’stransaction profile;(e) obtaining additional information on the source of funds and sourceof wealth of the customer;(f) obtaining information on the reasons for the intended or performed
transaction;(g) enhanced monitoring of the business relationship and transactions;Page - 10

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(h)
11.

requesting data relating to transaction and trading history.

Verification of customer identity.
(1)

A registrant shall not enter into a business relationship or execute anoccasional transaction with any person without applying customer due
diligence measures to verify the identity of the person, including any
beneficial owner(s).

(2)

When verifying the identity of a person referred to in paragraph (1), theregistrant shall –(a) satisfy itself that the prospective customer is who the customer
claims to be by applying the customer due diligence measuresreferred to in rules 8 to 10;(b) ensure that sufficient information is obtained and documented –(i)on the nature and purpose of the business that the customer
intends to undertake; and(ii) concerning any expected or predictable volume and patternof transactions and activities; and(c) satisfy itself that any independent and reliable source documents,
data or information (whether or not electronically sourced)
sufficiently verifies a customer’s identity.

(3)

Where a prospective customer fails or is unable to provide adequate
evidence of identity, or a registrant is not satisfied that a new transaction
with an existing customer is legitimate, the registrant shall –(a) determine whether –(i)other steps should be taken to verify the customer's identity;(ii) it is appropriate to proceed or continue with the business
relationship; and(b) file a suspicious transaction report with the Financial Intelligence
Unit.

(4)

Registrants shall have a clear policy regarding the escalation of decisions
to senior management concerning the acceptance or continuation of highrisk business relationships.

(5)

When verifying the identity of a customer, a registrant shall only accept
either—(a) original documents;(b) certified copies of documents from a prospective customer wheresubmission of original documents is impractical or impossible;

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(c)

(d)

(6)

12.

independent and reliable source documents, data or otherinformation (whether or not electronically sourced) which
sufficiently verifies a customer’s identity; orphotographed or scanned copies of identifying documents provided
that the registrant has adequate internationally recognized tools toverify the authenticity of the documents.

Notwithstanding any provision of these Rules, a registrant shall in allcases verify the identity of a customer, prospective or existing, where theregistrant knows or suspects money laundering, or the financing ofterrorism or the financing of proliferation and where such suspicion or
knowledge is confirmed, shall make a report to the Financial Intelligence
Unit.

Required information.
(1)

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Every registrant shall obtain independent and reliable source documents,
data or other information (whether or not electronically sourced)
appropriate to the nature and structure of the proposed customer whenverifying the proposed customer's identity, which shall include, but is not
limited to the following, in the case of –(a) a natural person –(i)full and correct name(s);(ii) at least two current means of contact which may include—(aa) personal email address;(bb) business email address;(cc) personal mobile telephone number;(dd) personal landline number;(ee) business landline number;(ff) personal mailing address, which must include whereapplicable, the street, post office box number, city,
state or province, postal or zip code, landline telephone
contact, and country;(gg) business mailing address, which must include whereapplicable, the street, post office box number, city,
state or province, postal or zip code, landline telephone
contact, and country;(hh) residential mailing address, which must include whereapplicable the street, post office box number, city, state

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(b)

(c)

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or province, postal or zip code, landline telephone
contact, and country; or(ii) any specific means of contact which the Commission
may specify;(iii) date of birth;(iv) country of domicile; and(v) the purpose of the account and nature of the business
relationship;a corporate customer –(i)the original or a certified copy of the certificate ofincorporation, registration or the equivalent;(ii) certificate of good standing or the equivalent evidence thatthe company has not been or is not about to be struck off theregister or wound up;(iii) a copy of the relevant board resolution authorizing theestablishment of the business relationship, or authorizing the
opening of an account and conferring permission on any
person authorized to undertake transactions;(iv) satisfactory evidence of the identity of all persons authorized
to undertake transactions and details of their relationship withthe company; and(v) satisfactory evidence of identification of each natural person
having a beneficial interest of ten percent or more of thecompany, or having principal control over the company's
assets or otherwise exercising control over the managementof the company;a partnership or unincorporated business—(i)a copy of the partnership agreement or document establishing
the partnership agreement, or document establishing thepartnership or unincorporated business;(ii) a mandate authorizing the establishment of the business
relationship or the opening of an account, and conferring
permission on any person authorized to undertake
transactions;(iii) satisfactory evidence of the identity of all partners andcontrollers of the firm or business; and(iv) satisfactory evidence of the identity of all persons authorized
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(d)

(e)

(f)

Page - 14other legal structures and fiduciary arrangements, such as trusts,
fiduciary or nominee structures –(i)the applicable documents establishing the legal structure or
fiduciary or nominee arrangement;(ii) all applicable documents, identifying persons exercising
effective control over the legal structure or fiduciary or
nominee arrangement, including the power to direct,
withhold, consent to or veto the exercise of any power related
to the legal structure or fiduciary or nominee arrangement;(iii) satisfactory identification evidence of all persons providing
funds or assets to the structure;(iv) all applicable documents, identifying the known beneficiariesof the trust;(v) all applicable documents, identifying all beneficiaries of afiduciary or nominee structure;(vi) all applicable documents, appointing and identifying any
signatory powers in relation to the legal structure or fiduciaryor nominee arrangement; and(vii) satisfactory evidence of the identity of all persons authorized
to undertake transactions;a foundation –(i)the foundation Charter;(ii) the foundation's certificate of registration issued by theRegistrar General, or the foreign equivalent;(iii) the source of funds, and where a person other than thefounder provides funds for the foundation, verification of theidentity of the third party providing the funds or for whom
the founder may be acting;(iv) identification evidence of each founder, officer, and council
member of the foundation as may be signatories for theaccounts of the foundation;(v) identification evidence of beneficiaries that hold a vested
interest in the foundation; and(vi satisfactory evidence of the identity of all persons authorized
to undertake transactions;a non-profit association or charity –(i)identification evidence of at least two signatories, and anyone
authorized to give instructions on behalf of the entity;
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(ii)

(g)

the nature of the proposed association's or charity's purposeand operations;(iii) the source of funds; and(iv) satisfactory evidence of the identity of all persons authorized
to undertake transactions;powers of attorney –(i)identification of each donee;(ii) identification evidence of the donor;(iii) proof of any third party mandates; and(iv) satisfactory evidence of the identity of all persons authorized
to undertake transactions.

(2)

A registrant shall, in the case of services being provided to the estate of a
deceased person, obtain identification evidence of each personal
representative of the said estate.

(3)

A registrant shall review its records periodically to ensure that theidentification and other information kept by it is current and reflects theexisting facts related to a customer, and in all cases when there have beenchanges to –(a) persons authorized to undertake transactions;(b) board resolutions or mandates authorizing the opening of an
account and authorizing any person to undertake transactions;(c) partners, controllers, trustees, fiduciaries or nominees; and(d) the corporate structure of a customer.

(4)

Where there has been a change to any of the items specified in paragraph(3), the registrant shall undertake the verification process in compliancewith the provisions of this paragraph.

(5)

For the purpose of the verification process, a registrant shall exercise
additional care in relation to the provision of trading services with respect
to digital assets with anonymity enhancing features or that obscure auser’s identity or other transactional information.

(6)

Where a registrant offers the service specified in paragraph (5), theregistrant shall independently verify the identity of the proposed facility
holder and any beneficial owner(s) through reliable and independentsource documents, data, or information.

(7)

In all cases, a registrant shall maintain adequate documentation toevidence the implementation of due diligence measures and shall ensurethat the verification of identification procedures implemented, are

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appropriate to the nature and structure of the proposed customer being
verified.
(8)

13.

A registrant shall, as part of due diligence measures, implement
procedures for the periodic reverification of customers, which at theminimum, shall require re-verification to occur where –(a) during the course of the business relationship, the registrant hasreason to doubt the identity of the customer;(b) there is a material change in the way transactions are undertaken; or(c) there is a reasonable suspicion that any transaction carried out by
the customer might have breached the law concerning money
laundering, the financing of terrorism or the financing of
proliferation.

Politically exposed persons.
(1)

A registrant shall, in addition to applying enhanced due diligencemeasures, develop clear procedures and controls for the identification andverification of a politically exposed person when—(a) establishing a business relationship with that politically exposed
person, or a legal person in which any politically exposed person –(i)is a director, officer, founder or council member;(ii) is a partner or trustee;(iii) is a signatory or person authorized to undertake transactions;(iv) has a beneficial interest of ten per cent or more in the legal
person;(v) has principal control over the legal person's assets;(vi) exercises control over the management of the legal person; or(b) the registrant is continuing a business relationship with a customer
who has become a politically exposed person, after theestablishment of the business relationship.

(2)

For the purposes of this rule the terms set out below are defined as follows—“international organization” means an entity established by a formal
political agreement equivalent in status to an international treaty,
made between, and recognized by law, in member countries, andwhich is not treated as a resident institutional unit of the country inwhich it is located;“politically exposed person” means—

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(a)

(b)
(c)

(d)

14.

an individual who is or has been entrusted with—(i)a prominent public function within The Bahamas,
inclusive of a head of state or government, seniorpolitician, senior government, judicial or military
official, senior executive of a state-owned corporation,or an important political party official;(ii) a prominent public function by a foreign jurisdiction,
inclusive of, a head of state or government, seniorpolitician, senior government, judicial or military
official, senior executive of a state-owned corporation,or senior political party official; or(iii) a prominent function within an internationalorganization, including directors, deputy directors,
members of the board, members of senior
management, or individuals who have been entrustedwith equivalent functions;an individual who is related to a politically exposed person,
including a parent, child, spouse or sibling;
an individual who is closely associated to a politically
exposed person either socially, or professionally and includes
a person who can conduct substantial domestic orinternational financial transactions on behalf of the politically
exposed person;
any corporation, business or other entity formed by or for the
benefit of a head of state, head of government or individuals
referred to in paragraph (a) above.

Reliance on third party verification procedures.
(1)

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A registrant may rely on the customer due diligence procedures
implemented by another virtual asset service provider or financial
institution, provided that the virtual asset service provider or financial
institution is a regulated entity subject to anti-money laundering,countering the financing of terrorism and countering the financing of
proliferation obligations and is an entity located in a country which is not
the subject of any list issued by an international organization relative tothe issues of money laundering, or the financing of terrorism or thefinancing of proliferation activities, and is able to –(a) provide written confirmation that it has verified the identity of therelevant customer; andPage - 17

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(b)

(2)

15.

confirm the existence of the account or facility provided to thecustomer by the virtual asset service provider or financial
institution.

Notwithstanding paragraph (1), a registrant shall only rely on the due
diligence measures implemented by another virtual asset service provider
or financial institution with respect to those categories of transactions,services, or products which that other virtual asset service provider or
financial institution provides to the customer, and in all othercircumstances, must undertake its own verification procedures.

Eligible introducer.
(1)

In all cases, a registrant's duty to verify the identity of all prospective
customers shall apply to any customer introduced by another virtual asset
service provider or financial institution, except where a virtual asset
service provider or financial institution is an eligible introducer.

(2)

Where a registrant relies on the verification procedures of an eligible
introducer, it shall obtain from that introducer –(a) written confirmation that the eligible introducer has verified thecustomer's identity in accordance with the national laws of theeligible introducer;(b) certification from the eligible introducer that any photocopies
provided to the registrant are identical to the original document; and(c) clear and legible copies of all documentation, including whereappropriate, certified translations, within thirty days of receipt of
the written confirmation referred to in subparagraph (a).

(3)

For the purposes of this paragraph, an eligible introducer shall be –(a) in relation to a domestic financial institution –(i)a person registered under Part VI of the Securities Industry
Act, 2011 (No. 10 of 2011);(ii) an investment fund administrator licensed under section 34 of
the Investment Funds Act 2019 (No. 2 of 2019);(iii) a bank or trust company licensed by the Central Bank of The
Bahamas under the Banks and Trust Companies Regulation
Act 2020 (No. 22 of 2020);(iv) a digital asset business registered under the Act; or(b) in relation to a foreign virtual asset service provider or financial
institution, a service provider or institution –Page - 17

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(i)

(ii)
(iii)

(iv)

16.

exercising functions similar to a domestic digital asset
business or financial institution to which subparagraph (a)(i)through (iv) applies;
registered or functioning pursuant to Part VI of the Securities
Industry Act, 2011 (No. 10 of 2011);
located in a country which is not the subject of any list issued
by an international organization relative to the issues ofmoney laundering or the financing of terrorism or thefinancing of proliferation activities; andhaving no obstacles administrative or otherwise which would
prevent the registrant from accessing the original
documentation.

Suspension or termination of activity or business.
A registrant shall –a.
suspend activity on the account of a prospective customer, if
reasonable efforts have been made to directly verify the prospective
customer's identity without success; andb.
terminate the business relationship with a prospective customer
where it is unable to obtain the relevant information anddocumentation from the eligible introducer within thirty days ofreceiving the eligible introducer's confirmation.

17.

Exemption from verification of identity.
A registrant shall not be required to verify the identity of a prospective customer
where that customer is –(a) a digital asset business or financial institution licensed or registeredby the Central Bank of The Bahamas, the Securities Commission of
The Bahamas, The Insurance Commission of The Bahamas, or the
Gaming Board for The Bahamas;(b) a virtual asset service provider or financial institution which –(i)is subject to anti-money laundering, countering the financing
of terrorism and countering the financing of proliferation
obligations;(ii) is under supervision for compliance with the obligations
referred to subparagraph (i) and;(iii) has adequate procedures for compliance with customer due
diligence and record keeping requirements;

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(c)
(d)

18.

any central or local government agency or statutory body;a publicly traded company listed on The Bahamas International
Stock Exchange or any other marketplace registered by theCommission and specified in the Schedule to the Financial
Transactions Reporting Regulations, 2018.

Ongoing monitoring.
(1)

A registrant shall, after the verification procedures have been concluded
and a business relationship has been established –(a) monitor the conduct of the business relationship periodically; and(b) ensure, on an ongoing basis, that the business relationship isconsistent with the risk profile and nature of the business statedwhen the relationship was established.

(2)

Ongoing monitoring of business relationships includes, without limitation—(a) scrutiny of transactions undertaken throughout the course of therelationship (including, where necessary, the source of funds) toensure that the transactions are consistent with the registrant’s
knowledge of the customer, their business and risk profile;(b) ensuring that the source documents, data or other information
obtained for the purposes of applying due diligence are kept up todate;(c) analysing blockchain and similar transactions in line with a riskbased approach including, without limitation, taking into accountthe nature of the registrant’s business and whether it is appropriate
to use such analysis for all transactions;(d) where large volumes of transactions occur on a regular basis, using
automated systems to monitor transactions provided that flagged
transactions are subject to human expert analysis to determine
whether such transactions are suspicious.

PART V – RECORD KEEPING
19.

Maintenance of records.
(1)

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A registrant shall, in compliance with all relevant laws, prepare andmaintain records of its business relationships and transactions that enable–
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(a)

(b)
(c)
(d)

20.

competent third parties to assess the registrant's compliance with
anti-money laundering, countering the financing of terrorism andcountering the financing of proliferation policies and procedures;transactions effected through the registrant to be reconstructed;
the registrant to satisfy court orders or enquiries from theCommission or appropriate authorities; andthe identification of customers.

(2)

A registrant shall keep all records required to be maintained by theseRules, for a period of seven years from the date that the customer ceases
to be a facility holder.

(3)

For the purpose of paragraph (2), a person ceases to be a facility holder
from the date of –(a) the carrying out of a one-off transaction or the last transaction in aseries of transactions;(b) the closing of the account(s) or the ending otherwise of the business
relationship; or(c) the commencement of proceedings to recover debts payable on
insolvency.

(4)

The seven-year period referred to in paragraph (2) commences on the dateof the completion of the last transaction where formalities to end abusiness relationship have not been undertaken but a period of seven years
has elapsed since the date of the last transaction.

(5)

Where the registrant is a company that is being liquidated, the liquidator
shall retain the relevant records of the regulated person for the balance ofthe prescribed period remaining at the date of dissolution.

(6)

A registrant may maintain records in the form of original documents orother electronic media provided—(a) there are appropriate internal controls in place to guard against therisk of loss, damage, destruction or falsification(b) such method provides a means to furnish promptly to theCommission upon request legible, true and complete copies of
those records; andthe registrant has suitable back-up and disaster recovery programs.

Transaction records.
A registrant shall maintain transaction records containing –(a) a description of the nature of the transaction;

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(b)
(c)
(d)
(e)
(f)

(g)
21.

details of the transaction, including the amount of the transaction
and the denomination of the currency;
the date on which the transaction was conducted;
the identification verification details of the parties to thetransaction;
the public keys (or equivalent identifiers) of relevant parties; 
where applicable, information on the facility through which thetransaction was conducted and any other facility directly involvedin the transaction; andthe files, business correspondence, and records connected to thefacility.

Other records.
A registrant shall maintain records of –(a) suspicions raised internally by the Money Laundering Reporting
Officer, but not disclosed to the relevant authorities;(b) suspicions which the Financial Intelligence Unit, the Commissionerof Police, or the relevant supervisory authority have advised are of
no interest; and(c) findings of inquiries conducted by the regulated person into unusual
activity.

PART VI – MISCELLANEOUS
22.

Education and training.
(1)

A registrant shall take appropriate measures to ensure that every employee
is aware of –(a) the policies and procedures put in place to detect and preventmoney laundering, to counter the financing of terrorism and tocounter the financing of proliferation, including those for theidentification, record keeping, detection of unusual and suspicioustransactions and internal reporting; and(b) the anti-money laundering, countering the financing of terrorism
and countering the financing of proliferation legislative framework.

(2)

A registrant shall ensure that—

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(a)

(b)

(c)

the relevant staff members and key personnel are trained on an
ongoing basis to—(i) identify, prevent, detect and disclose financial crime risks;(ii) recognise and handle suspicious transactions;its key personnel possess the adequate knowledge, skills,
experience and capability to understand the registrants’ businessand customer needs;
key personnel and staff are aware of their obligations to comply
with policies and procedures.
Made
thisthis
16th dayMade
dayofofMarch, 2022.
, 2022.

.

SignedDeputy PATON
Chairman
MICHAEL
Securities
Commissionof The Bahamas
DeputyChairman
Securities Commission of The Bahamas

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