FSC Supplemental Counter Proliferation Financing Guidelines

FINANCIAL SERVICES COMMISSION THE FINANCIAL SERVICES COMMISSION SUPPLEMENTAL GUIDELINES ON COUNTER PROLIFERATION FINANCING These supplemental guidelines are issued to treat with amendments to the United Nations Security Council Resolutions Implementation Act (November 15, 2019) and the passage of the United Nations Security Council Resolutions Implementation (Reporting Entities) Regulations (November 21, 2019). JULY "2020

T.ltBLEDFDOh'TE.NT'S Foreword . . . $35-$36 Interpretation . . . . $36-$3? Ecopeandfltpplicability ofthe Ciuideli|tes........ . Legal Status oftlteGuidelines .. .. Requirements under the UHSCRIA and related Arnendments and Regulations Functions ofthe Competent Authofity Prescribed Titnefratne Formaiting Regulations fortitefltpplicetion offiecurity Council Resolutions Prohibition from Dealing with Assets ofPrescribed Person or Entity Requests for . . . . . . . . . . . Rep-ortingfibligatioris........................ . . Directions from Designated Authority . . . . . . . Applicable UNSC Resolutions .. . . Continuous Screening of Customers . . . . . . . . . . Conclusion......................................... YT . Schedule ofOffences and Penalties underthe UNSCRIA and UH SCRI-KER I . SET-533 . 53?-533 . 533%-39 . 589590 . 590-59] . 590-591

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• 1e.:';,e_-c-.2 Q hor' <>t~=Pts; THE llllflllllill lillE'l"l'E EXTRAORDINARY 57“- _;;g I 585 Vol. CXLIII FRIDAY, JULY 24, 2020 N0. 161 The following Notification is, by command of His Excellency the Govemor-General, published for general information. Snouurae BOOTHE, (MISS) Govemor-General’s Secretary and Clerk to the Privy Council (Assigned). GOVERNMENT NOTICE MISCELLANEOUS N0. I75 The Financial Services Commission Supplemental Counter Proliferation Financing ("CPF") Guidelines (Z020) Pursuant to the provisions ofthe United Nations Security Council Resolutions lmpfementation Act and its attendant Regulations, the Minister ofForeign Affairs and Foreign Trade has approved these Guidelines issued by the Financial Services Commission to its regulated entities. FOREWORD i. Consequent upon the passage of the United Nations Security Council Resolutions Implementation (Amendment) Act (“UNSCRIAA”) on November 15, 2019, and the United Nations Security Council Resolutions Implementation (Reporting Entities) Regulations (“UNSCRI - RER”) on Novembt-:r2 I , 20 I 9, the Financial Services Commission (“FSC“) developed these supplemental guidelines to provide appropriate and updated guidance to its licensees and registrants. ii. The United Nations Security Council Resolutions Implementation Act (“UNSCRIA”), the UNSCRIAA and related Regulations were promulgated to comply with Financial Action Task Force (“FATF”) Recommendation 7 which requires that countries implement proliferation financing-related targeted financial sanctions (“TFS”) made under the United Nations Security Council Resolutions (“UNSCRs”).

586 THE JAMAICA GAZETTE EXTRAORDINARY [JULY 24, 2020 Regulated entities are required to immediately freeze the funds, assets and economic resources that are under their control at the date of adoption or at any time thereafler, that are owned wholly or jointly, or controlled, directly or indirectly by the designated personslentities. Additionally, regulated entities are to ensure that no funds, other assets or economic resources are made available to such persons and entities, except in specific situations, and under conditions specified in the UNSCRs. A significant amendment to the UNSCRIA relates to the narrowingofthe definition of“financial institution” with respect to insurance companies. The definitionnow stipulates that within the meaningofthe InsuranceAct, the term ‘financial institution’ is limited to a person that carries on life insurance business, or performs services as an insurance intermediary in respect of life insurance business. However, the term does not include an insurance consultant or an adjuster. The UNSCRI - RER provides the framework and prescribed form for regulated entities to submit reports to the Designated Authority, which is the ChiefTechnical Director ofthe Financial Investigations Division. These Guidelines are to be used in conjunction with the FSC’s Guidelines on the Prevention of Money Laundering and Counteringthe FinancingofTerrorism and Proliferation (IER-GUID - I9.-'08-000I) published in the Jamaica Gazette on October 31,2019. INTERPRETATION “asset” means— (a) Property ofany kind-— i. whether tangible or intangible, movable or immovable, however acquired; and ii. owned wholly orjointly, directly or indirectly, by a person or entity proscribed under section 3(2)(a) or by order of a Judge under section 3A ofthe UNSCRIA; or by a person or entity acting on behalf of, or at the direction of, a person or entity proscribed under section 3(2)(a) or by order of a Judge under section 3A ofthe UNSCRIA; or (b) A legal document or instrument in any form, including electronic or digital, evidencing title to, or interest in, property as described in paragraph (a), including (but not limited to) bank credits, traveller’s cheques, bank cheques, money orders, shares, securities, bonds, debt instntments, drafts and letters of credit. “competent authority” means the authority from time to time authorised in writing by the Minister with portfolio responsibility for Foreign Affairs (“the Minister”) to— (a) Monitor compliance by any type of business in the regulated sector; and (b) issue guidelines to businesses in the regulated sector. "designated authority " refers to the ChiefTechnical Director ofthe Financial Investigations Division. “a'esignatea‘ non-financial institution” means a person who is not primarily engaged in carrying on financial business and who is designated as a non-financial institution under the Proceeds ofCrime Act (“POCA”) or an entity to which the provisions ofsection I5 ofthe Terrorism Prevention Act (“TPA”) apply. ‘financial institution" means—- (a) a person who carries on life insurance business or who performs services as an insurance intermediary in respect of life insurance business, within the meaning of the Insurance Act, but does not include an insurance consultant or an adjuster; (b) a person who is licensed under the Securities Act as a dealer or investment adviser; (c) a commercial bank as defined in the Banking Services Act; (d) a merchant bank as defined in the Banking Services Act; (c) a building society as defined in the Banking Services Act; (l) a cooperative society which carries on credit union business; (g) a person licensed under the Bank ofJamaica Act to operate an exchange bureau; (h) a money transfer and remittance agent or agency (as defined in section 2 ofthe Bank of Jamaica Act); or (i) any person or category ofpersons declared by the Minister, by order subject to afiirmative resolution, to be a financial institution for the purposes ofUNSCRIA. “implementing regulations " means regulations made under section 3 of UNSCRIA. “person” means an individual or a legal entity. “proIiferationfinancing" means the act of providing funds or financing services which are used in whole or in part, for the manufacture, acquisition, possession, development, export, trans-shipment, brokering, transport, transfer, stockpiling or use of nuclear, chemical or biological weapons and their means ofdelivery and related materials. “regulatedentity " means a financial institution or adesignated non-financial institution(DNFI) which falls under the provisions ofPOCA, TPA and UNSCRIA. 3

JULY 24,2020] THE JAMAICA GAZETTE EXTRAORDINARY 587 "relevant authority " means (a) any entity responsible, under any Law of Jamaica, for the regulation of financial institutions, DNFls, border control, defence or foreign relations; (b) the Jamaica Constabulary Force; or (c) any other entity to which a UN sanction enforcement law requires information or a document to be given. "reporting entity” means an entity in relation to which section 5(2) ofUNSCRIA applies. "Security Council" means the Security Council constituted under Chapter V ofthe Charter. SCOPEANDAPPLICABILITYOFTHE GUIDELINES l. The Guidelines are directed to all financial institutions, which are regulated by the FSC and falling within the regulatory ambit ofthe— (a) insurance Act and Regulations; and (b) Securities Act and Regulations, only to the extent that such persons fall within the definition of financial institution under the UNSCRIA, as amended. LEGALSTATUS OF THE GUIDELINES 2. The FSC was designated Competent Authority under the UNSCRIA by the Minister on February 28, 2020 for relevant financial institutions registered under the Insurance and Securities Acts. Accordingly, the role ofthe FSC involves advising and supervising these financial institutions in their responsibilities under the UNSCRIA and its attendant amendments and regulations. 3. Pursuant to UNSCRI-RER, a Court will take notice ofthese Guidelines when considering whether a person has committed an offence under these Regulations. 4. The relevant provisions are: Regulation 3(l ): In determining whether a person has complied with any ofthe requirements ofthese Regulations, a court shall take account of any relevant guidance that was at the time concerned, issued by the designated authority, competent authority or a boay that regulates, or is representative of any trade, profession, business or employment concerned with the approval ofthe Minister andpublished in the Gazette. Regulation 3(2): In proceedings against any personfor an oflence under these Regulations, it shall be a defencefor that person to show that he took all reasonable steps and exercised due diligence to avoid committing the offence. 5. Section l4A (b) ofthe UNSCRIA states that "The relevant authority shall issue guidelines I0 suchfinancial institutions and designated non-financial institutions on measures to prevent proliferationfinancing". REQUIREMENTS UNDER THE UNSCRIA AN D RELATEDAMENDMENTSAND REGULATIONS Functions ofthe Competent Authority 6. Under Regulation 9, the competent authority:--- (a) Shall exercise its functions with a view to monitoring compliance by reporting entities with the requirements of UN SCRIA, its attendant amendments and regulations; (b) May issue guidelines to reporting entities regarding effective measures to prevent the commission ofrelevant offences; (c) Shall establish such measures as it thinks fit, including carrying out, or directing a third party to carry out, such inspections or such verification procedures as may be necessary; (d) May issue directions to a reporting entity and such directions may require the reporting entity to take measures to ensure that it is not in possession or control of assets owned or controlled by or on behalfof a proscribed person or entity; (e) May examine and take copies ofinfonnation or documents in the possession or control ofany reporting entity relating to the operations ofthat reporting entity; (t) May share information, pertaining to any examination conducted by it under this regulation, with another competent authority, or an authority in anotherjurisdiction exercising functions analogous to those of any of the aforementioned authorities:— i. Other than information which is protected from the compromising or obstruction of any investigation in relation to an offence under these Regulations or any other enactment; and ii. Subject to any terms, conditions or under-takings which it thinks fit in order to prevent disclosure of the kind referred to in sub-paragraph i and secure against the compromising or obstruction of any investigation in relation to an offence under these regulations or any other relevant enactment. (g) May require the reporting entity concemed, in accordance with such procedures as it may establish by notice in writing:— i. To register with the competent authority such particulars as may be prescribed, if a registration requirement does not already exist under any other law; and 4

588 THE JAMAICA GAZETTE EXTRAORDINARY [JULY 24, 2020 ii. To make such reports to the competent authority in respect of such matters as may be specified in the notice. 7. Areporting entity that fails to comply with any requirement or direction issued to it under this regulation by the competent authority, commits an offence and is liable:— i. On summary conviction before a Judge ofa Parish Court to a fine not exceeding $3 million; or ii. On indictment before a Circuit Count to a fine. Prescribed Timejramefor making Regulations for the Application ofSecurity Council Resolutions 8. Under section 3(1) ofUNSCRIA, the Minister may, subject to affirmative resolution, make regulations to giveeffectto decisions ofthe Security Council under Chapter VII ofthe Charter, within thirty (30) days after the date of adoption of such resolutions and which are required to be carried out by Jamaica under Article 20. 9. Section 3A of UNSCRIA permits the Director of Public Prosecutions (“DPP”) to make an application to a Judge of the Supreme Court for an order to declare any person proscribed by a decision of the Security Council to be so declared. This section facilitates giving a more timely effect to the Security Council Resolutions and the Order will remain in force until the passage of regulations under section 3(1). 10. Upon any such application by the DPP, the Judge may, by order, declare a person or entity to be a proscribed person or entity, as the case may require. ll. This order must be published on the websites ofthe Ministry of Foreign Affairs and Foreign Trade and the Designated Authority within tvventy-four (24) hours after the order has been made. There is also a requirement to have the order published in a daily national newspaper. I2. As required under section l4AofUNSCRIA, the FSC shall notify, in the prescribed manner, all its regulated entities ofall designations and de-listing ofproscribed persons and entities. The FSC will therefore publish this order on its website and send written correspondence to licenseeslregistrants advising of new or amended listings. Protection ofThird Parties l3. Section 3(2)(fa) of UNSCRIA provides for the protection ofbonafide third parties who act in good faith in dealing with assets in the manner so provided under section 8A ofUNSCRIA. Prohibtionfiom Dealing with Assets ofProscribed Person or Entity l4. Section 8A of UNSCRIA prevents any person in Jamaica or any Jamaican outside of Jamaica, in relation to a person or entity that is proscribed by section 3(2) ofUNSCRIA or by an order made under section 3A ofUNSCR1A fi'om knowingly (a) Dealing directly or indirectly with any assets that are controlled by or on behalf of, or at the direction of, the person or entity that is proscribed, including funds derived or generated from assets owned or controlled directly or indirectly by that person or entity; (b) Entering into or facilitating, directly or indirectly, any transaction in respect of assets referred to in paragraph (a); (c) Providingany financial or other related services in respect ofany assets refen"ed to in paragraph (a) to, for the benefit of, or at the direction of, the person or entity; or (d) Making any propeny or any financial or related services available, directly or indirectly, for the benefit ofthe person or entity, or converting any such property or taking steps to convert or disguise that the property is owned or controlled by or on behalf of the person or entity. 15. A person who contravenes section 8A( l) ofUNSCRIA commits an offence and is liable on conviction on indictment, to a fine or imprisonment for life. Requestsfor De-listing l6. Section 3(5A) ofUNSCRIA pemtits a proscribed person or entity to submit a request for de-listing directly to— (a) The appropriate authority designated to receive de-listing requests pursuant to the relevant committee established under Chapter VII ofthe Charter; or (b) The focal point established for de-listing under the UNSCR, 1730. I 7. Section 3(5B) ofUNSCRIA allows a person in Jamaicaor a Jamaican outside ofJamaicato submit a request for de-listing through the Minister for transmission in the manner provided for in subsection (SA), as the case may require. Reporting Obligations Reporting Entites l8. The following entities are required to submit reports to the designated authority:— (a) Foreign companies in respect oftheir business in Jamaica relating to banking, securities, investment advice or trusts; (b) Financial institutions; (c) DNFls;and (d) Any entity or category of entity designated by the Minister, by order subject to affinnative resolution. 5

JULY 24,2020] THE JAMAICA GAZETTE EXTRAORDINARY 589 Reporting Period 19. Each reporting entity is required to submit reports to the designated authority in a fomiat as directed by the designated authority, at least once in every four calendar months, or in response to a request from the designated authority stating either:— (a) That it is not in possession or control of any assets connected to a proscribed person or entity; or (b) That it is in possession or control of such assets and provide the requisite infonnation on the prescribed form. Information to be Reported 20. Every reporting entity is required to report to the designated authority:— (a) Any transaction or attempted transaction that is believed or known to be related to a proscribed person or entity and any assets that are owned or controlled by or on behalf of such person or entity and are in the possession and control ofthe reporting entity; (b) Any breach ofany provision under the UNSCRIA by a proscribed person or entity; (c) Any assets i. which are owned and controlled by or on behalf of a person or entity that is proscribed by regulations made under section 3(2) or by an order made under section 3A; ii. in possession or control ofthe reporting entity; and (d) Any other action that has been taken in relation to a proscribed person or entity in compliance with any directives or requirements ofthe UNSCRIA. Statutory Protectionfor Reporting Entities 2] . There will be no criminal or civil liability incurred by any person for the makingand submission ofa report to the designated authority in good faith. Disclosure to Regulatior 22. Under section 5(3B) a regulated entity is required to disclose this report to its regulator as an authorized disclosure. Non-Disclosure ofReport 23. An entity that makes a report to the designated authority shall not disclose the existence ofthat report to any other person, except to its regulator. Penalties 24. A person who contravenes any of the provisions of section 5 of UNSCRIA commits an offence and shall be liable on summary conviction in a Parish Court to: (a) in the case ofan individual, a fine not exceeding $500,000 or to imprisonment for a term not exceeding six months, or to both such fine and imprisonment; or (b) in the case ofa body corporate, a fine not exceeding $3 million. 25. ln proceedings against a person for contravening section 5(3) ofUNSCRIA, it is a defence for the person charged that he had a reasonable excuse for not making the required report. Directlonsflom Designated Authority 26. In making a report under section 5 ofUNSCRIA, a reportingentity must comply with such directions as may be given by the designated authority. 27. The directions given by the designated authority may be related to matters such as:— (a) Previous or current reports; (b) The provision ofinformation required in such reports; (c) The provision of additional information in relation to queries conceming specific matters arising from the reports, including:— i. Due diligence procedures followed in relation to a specific transaction; ii. Persons authorized to sign on the account in question; (d) Errors identified in the reports; and (e) Such other matters as may be specified in the directions. 28. A reporting entity that fails to comply with directions given by the designated authority under Regulation 8 of UNSCRI￾RER commits an offence and is liable upon conviction before a Parish Court, in the case of: i. an individual, to a fine not exceeding $3 million or imprisonment for a term not exceeding 3 years, or both such fine and imprisonment; ii. a body corporate, a fine not exceeding $5 million. Applicable UNSC Resolutions 29. The UNSC Resolutions implementation (Asset Freeze Democratic People’s Republic of Korea) Regulations, 2013‘ (“DPRK Regulations”) were issued pursuant to section 3 ofthe UN SCRIA and these Regulations outline Jamaica’s mandates in 6

590 THE JAMAICA GAZETTE EXTRAORDINARY [JULY 24, 2020 relation to the directives ofthe UNSC regarding the Democratic People’s Republic ofKorea (DPRK) in Resolutions l7l 8 (2006) and successor resolutions 1874 (2009) and 2087 (20 I 3). These resolutions represent UN required sanctions comprising financial prohibitions to prevent the provision of financial services, financial resources or financial assistance to the DPRK. 30. These Regulations criminalize the following activities: (a) The holding of, using or dealing with freezable assets, that is, assets owned or controlled by a designated entity. A designated entity is defined as: i. an entity designated in Annex I orAnnex II to UNSC Resolution 2087 (2013); or ii. an entity designated by the UN Sanctions Committee or by the UNSC for the purposes of paragraph 5(a) of UN Resolution 2087 (2013) as a person in respect of which countries must freeze funds immediately, or other financial assets and economic resources which are in their territories, owned or controlled directly or indirectly by such designated entity, an entity acting on behalf of, or at the direction of an entity that has been designated, or an entity ovmed or controlled by such designated entity; (b) Allowing fi'eezabIe assets to be used or dealt with; (c) Facilitating the use ofor dealing with freezable assets; (d) Directly or indirectly making a fieezable asset available to a designated entity otherwise than pursuant to a written notice allowing this to be done pursuant to Regulation 7 ofthe DPRK Regulations. (Regulations 5(1) and 6(1)). 31. Since 2013, the UN SC has issued several other Resolutions with respect to DPRK. 32. A comprehensive listing ofall UNSC designated persons can be accessed at UNSC’s website at www.un.org/sc. Altemately, persons may access this information via a link on the FSC’s website at www.fscjamaica.org. Continuous Screening ofCustomers 33. Regulated entities are required to screen customers against the UNSC’s consolidated list of designated persons and entities in the following circumstances: (a) During the onboarding process; (b) At regular intervals (preferably every 2 weeks but no less than once per month); (c) Without delay on the receipt of notification from the designated or competent authority (or through appropriate software systems utilized by the regulated entity) of new or amended listings. 34. In the event that a regulated entity identifies a designated-"proscribed person as a customer, then TFS are to be imposed immediately by the regulated entity. The regulated entity cannot have any dealings with the assets of the designated person (account, property, motor vehicles, funds etc.) as these are now “fieezable assets", unless the transaction is for the sole purpose of preserving the value of such assets. A report on this designated person must be submitted immediately to the designated authority. Conclusion 35. These supplemental guidelines on counter proliferation financing are to be used in conjunction with the FSC’s AML/CFT.-"CFP Guidelines issued on October 31, 2019. These guidelines provide minimum standards to which regulated entities are expected to adhere. The infonnation contained herein can be used by regulated entities to infonn and develop their policies and procedures. APPENDIX] Schedule ofOffences and Penalties under the UNSCRIA and UNSCR1-RER Offences Individual Sanctions Body Corporate Sanctions Up to 6 months in prison Fine up to $3M (Parish Court) and/or fineof$500,000 (Parish Court) Failure to report (section 5) Breaches ofimplementing regulations (section 6) Dealing with assets of proscribed person or entity (section 8A) Contravention ofa UN sanction enforcement law (section 10) Giving false or misleading infonnation in connection with a UN sanction enforcement law (section 12) Up to I2 months in prison and/or fine of$I M (Parish Court) Fine or imprisonment up to I0 years (Circuit Court) Fine or life imprisonment Up to I0 years in prison and/or fine (Circuit Court) Up to I0 years in prison and/or fine (Circuit Court) '? Fine up to $3M (Parish Court) A fine (Circuit Court) A fine (Circuit Court)

JULY 24,2020] TI-IE JAMAICA GAZETTE EXTRAORDINARY APPENDIX I , contd. Offences Individual Sanctions Body Corporate Sanctions Failure to comply with Not specified notice issued by relevant authority (section 15) Failure to comply with Up to 3 years in prison and.-"or Fine up to $5M (Parish Court) directions from the designated fine up to $3M (Parish Court) authority (Regulation 8) Failure to comply with direction N.-"A Up to $3M (Parish Court) or requirement fi'om the competent A fine (Circuit Court) authority (Regulation 9) PRINTED BY JAMAICA PRINTING SERVICES (1992: LTD [GOVERNMENT PRINTERS]. D.-KE STREET KINGSTON, JAMAICA S