Bermuda names bank fined for laundering
Public shaming of Sun Life a sharp contrast to Canada’s secrecy surrounding breaches
It took more than 10 months for Canadians to learn the name of the bank that had been fined for about 1,200 breaches of money-laundering laws last year.
The same day Manulife Bank admitted to being the culprit, Bermudan authorities named and shamed a Canadian investment firm for similar infractions, saying it always identifies offending businesses because it makes them publicly accountable for their actions. On Monday, the Bermuda Monetary Authority announced a $2-million fine against the local division of Sun Life Financial for five breaches of money-laundering laws, and froze the company’s business by prohibiting deposits and withdrawals.
It’s the largest fine ever handed out by the Bermudan financial regulator, confirmed spokesperson Stuart Roberts, who added that since last year all financial institutions found to have breached the law are named publicly.
“This increased transparency was critical to the reputation of the jurisdiction,” Roberts wrote in an email.
The case has strong parallels to Manulife’s penalty, which was also a record fine for Canada’s anti-moneylaundering agency, FINTRAC. But last April, when the fine was made public, FINTRAC refused to name Manulife, stating that the announcement of the $1.5-million penalty alone would be deterrence enough for the banking industry.
The decision to keep Manulife anonymous sparked outcry across Canada, according to internal FINTRAC records showing public comments submitted to the agency.
“The Canadian public is really agitated and wants people to go to jail for financial crimes like tax evasion. But in government, there isn’t that same drive to go after white-collar crime. It’s a real disconnect,” said Christine Duhaime, a Vancouver lawyer and anti-money-laundering expert.
After Manulife came forward and admitted it was the anonymous bank, FINTRAC director Gérald Cossette committed to reviewing the naming policy. Duhaime believes the agency has been chastened by the public outcry.
“The hidden message is this isn’t going to happen again,” said Duhaime. “What he’s really saying is they’re going to change the policy going forward. I don’t think they want to get put in this position again.”
Financial regulators around the world are moving toward default transparency, Duhaime said, and Canada is falling behind.
Since its establishment in 2008, FINTRAC has kept anonymous more than half of the institutions it has fined. Bermuda Monetary Authority (BMA), on the other hand, did away with all secrecy last year.
Bermuda Monetary Authority CEO Jeremy Cox announced Bermuda’s new transparency policy in January 2016. Once the offending business has exhausted its right to appeal, the BMA issues a release detailing the nature of its penalty, the names of the business and any employees involved, and the circumstances of the breach of the law, according to the agency’s 2016 business plan.
“(Increased transparency) is intended to demonstrate to those who rely on our supervisory adjudications that their trust is not misplaced and that Bermuda-based entities found to be deficient in meeting their obligations run the risk of being required to account publicly for their actions,” said Cox.
Niall O’Hare, president of Sun Life Financial Investments (Bermuda) Ltd., issued a statement responding to Monday’s penalty announcement.
“We are working co-operatively 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,” he said.
Sun Life Financial in Canada did not return a request for comment.