Source: 2006
Released by the Bureau for International Narcotics and Law Enforcement Affairs
In 2000, The Government of Brunei Darussalam adopted anti-money laundering legislation referred to as the Money Laundering Order and created a presiding organization called the National Anti-Money Laundering Committee (NAMLC), comprised of the: Financial Institutions divisions, Ministry of Finance (Domestic), Brunei International Financial Center (BIFC), Attorneys General's Chambers (AGC), Royal Brunei Police Force (RBPF), Royal Customs and Excise Department, Anti-Corruption Bureau, Narcotics Control Bureau, Immigration Department and Brunei Currency and Monetary Board. Brunei also implemented an asset seizure and forfeiture law, and the Criminal Conduct (Recovery of Proceeds) Order. This legislation applies both domestically and offshore.
In 2001, Brunei set into motion its plans to become an offshore financial center by bringing into effect a series of laws that established the Brunei International Financial Center (BIFC). The relevant laws are: the International Business Companies Order 2003 (amended in 2005); the International Banking Order 2000; the Registered Agents and Trustees Licensing Order 2000; the International Trusts Order 2000; the International Limited Partnerships Order 2000; the Mutual Fund Order 2001; the Securities Order 2003 (originally established in 2001) and the International Insurance and Takaful Order 2002.
The BIFC offers general banking, Islamic banking, insurance, international business companies (IBCs), trusts (including asset protection trusts), mutual funds, and securities services. Bearer shares are not permitted, but nominee shareholders are allowed for IBCs. Brunei residents are allowed to become shareholders of IBCs. In December 2005, 4,064 IBCs were registered in the BIFC database. Reportedly, many may be inactive. The eight Registered Agents and Licensed Trustees are responsible for filing all IBC compliance documents and for the International Trusts and asset protection trusts
There are six offshore banks licensed in Brunei. In July 2005,the Overseas Chinese Banking Corporation Ltd (OCBC) was awarded a full international Islamic banking license and opened its inaugural international Islamic banking branch in Brunei.
The BIFC also launched a virtual Stock Exchange in 2002 that offers securities and mutual funds. The Government also recently established the Brunei Economic Development Board to attract more foreign direct investment. There are no exchange controls.
The BIFC also offers International Insurance and Takaful. Comprehensive and imaginative legislation, coupled with a flexible regulatory regime to suit sophisticated business and personal international insurance and insurance related activities are governed by the International Insurance and Takaful Order, 2002 (IITO). There are several types of licenses available, which include the conduct of general insurance, life insurance, life and general insurance and captive insurance businesses. Licenses for the players include the International Insurance Manager, the International Underwriting Manager and the International Insurance Broker. Applicants may be companies including an established foreign or domestic insurance company or licensed registered agent and trust company in Brunei acting as representative for the purpose of license application. Special provision has been provided to the needs of unit-linked life products, reinsurance and captive insurance.
Brunei has no Central Bank. Acting through the Financial Institutions Division and the Head of Supervision, a segregated unit of the Ministry of Finance oversees the BIFC. This unit combines both regulatory and marketing responsibilities. The multi-disciplinary group is comprised of persons responsible for the supervision of banking, insurance, corporations, and trusts.
In 2002, Brunei enacted the Drug Trafficking Recovery of Proceeds Act and the Anti-Terrorism Financial and other Measures Orders. The latter explicitly criminalize the financing and support of terrorism.
Brunei is a party to the 1998 UN Drug Convention and to the UN International Convention for the Suppression of the Financing of Terrorism. Brunei became a member of the Asia/Pacific Group on Money Laundering (APG) in 2003. The APG's Terms of Reference include a commitment to adopt the international standards contained in the revised FATF Forty Recommendations on Money Laundering and the Special Nine Recommendations on Terrorist Financing.
In early 2005, Brunei Darussalam underwent a mutual evaluation by the Asia/Pacific Group on Money Laundering of its Anti-Money Laundering regime. The Government of Brunei has evaluated the report and is adopting recommendations from the evaluation. The Ministry of Finance has been discussing the establishment of a Financial Intelligence Unit (FIU) and the Australian FIU, AUSTRAC, has provided consultation to the Government of Brunei regarding the development of the unit. The Government is drafting a new Banking Order, which will incorporate such provisions as, amongst others, confidentiality of customers and permitted disclosures, confidentiality of inspection and investigation reports.
Under the jurisdiction of the Attorney General's Office, The Mutual Assistance in Criminal Matters Order, 2005 was published in March 2005 and will came into force on January 1, 2006. Brunei has signed the Treaty on Mutual Legal Assistance in Criminal Matters in Kuala Lumpur, Malaysia and will ratify the treaty in early 2006. To date, the treaty has been signed by eight Asian countries.
The Government of Brunei should continue to enhance its anti-money laundering regime by separating the regulatory and marketing functions of the Authority to avoid potential conflict of interest. Additionally, Brunei should adequately regulate its offshore sector to reduce its vulnerability to misuse by money launderers and financiers of terrorism. For all IBCs, Brunei should provide for identification of all beneficial owners, or immobilized the bearer shares. Brunei should also establish a Financial Intelligence Unit capable of receiving, analyzing and disseminating financial information to law enforcement agencies and to foreign analogs. As a member of the APG, Brunei has committed to comport with international anti-money laundering/counterterrorist financing standards. The Government of Brunei Darussalam should remedy all deficiencies noted in the APG mutual evaluation report.