Bahamas faces July 16 FATF completion target

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Global standard-setters will receive The Bahamas' final report on the elimination of deficiencies in its financial regulatory regime on July 16, the Attorney General confirmed yesterday.

Carl Bethel QC told Tribune Business that the government was "finalising" its report to the Financial Action Task Force's (FATF) Review Group of the Americas, having kept it abreast of The Bahamas' progress throughout the process.

"We've done most things now," he said. "We're preparing our report that is due on July 16. There's a matrix we're completing to mark our progress. We're now finalising that, and have to submit the final report by July 16."

Mr Bethel declined to be drawn further, especially on how the FATF assessment team was likely to react to reforms designed to address weaknesses identified by its regional affiliate, the Caribbean Financial Action Task Force (CFATF), in its review of the Bahamas' regulatory regime that was published last year.

The CFATF's July 2017 Mutual Evaluation Report (MER), an assessment of this nation's defences against financial crime, identified numerous legal and practical deficiencies in the regime. In particular, the Bahamas' was found to have 'low' effectiveness in six out of 11 anti-money laundering/counter terrorism financing categories.

The CFATF, in summarising its findings on the Bahamas, said: "The main deficiencies in technical compliance are in targeted financial sanctions for terrorist financing and financing of proliferation; understanding and assessing national money laundering/terror financing risks; and developing anti-money laundering/counter terror financing national strategies, and transparency and beneficial ownership of legal persons and arrangements.

"Significant weaknesses in effectiveness are in the areas of money laundering/terror financing confiscations, investigations, prosecutions and convictions; the identification of national money laundering/terror financing risks; and development of appropriate anti-money laundering/counter terror financing strategies and proliferation financing financial sanctions."

Mr Bethel last September acknowledged in an interview with Tribune Business the potential jeopardy facing the financial services industry and wider economy if these deficiencies were not closed immediately, especially since the CFATF is the regional affiliate of the body that 'blacklisted' the Bahamas in 2000. The FATF is considered the global standard-setter in combating money laundering and terrorism financing.

The Attorney General said that when he saw the CFATF's initial report, he asked Attorney General's Office staff: "What have you been doing for five years?

"It was entirely unacceptable for me for the Bahamas to be rated non-compliant in many of its international obligations. When I read the initial report, I said it was unacceptable and is not going to be allowed to continue. I said there's absolutely no way I'm going to accept it.

"I started [work] before the report was published, and will not stop until we are fully compliant in all our international obligations. We take our responsibilities very seriously."

Key reforms passed by Parliament include the new Proceeds of Crime Act and Financial Transactions Reporting Act. However, financial services industry sources yesterday revealed that there appeared to have been no wide sector consultation on the regulations accompanying the latter Act.

They revealed that they only saw them for the first time on Monday, and found that the regulations had already been in effect for three weeks as they were 'gazzetted' on June 11, 2018.

Mr Bethel also previously warned that should the Bahamas fail to sufficiently address its regulatory deficiencies it could suffer the same fate as Trinidad & Tobago, where $7.50 was added to every incoming and outgoing financial transaction because of the additional regulatory scrutiny/sanctions enacted by other countries.

"This process could well lead to financial consequences for the country, not one industry," he said. "Trinidad has had $7.50 added to every single financial transaction, in or out, on the basis of the enhanced review process. That is the kind of sanction we are intent on avoiding. It is bigger than any single undertaking in the country.

"This is about country now. I don't know when people are going to wake up and smell the roses that the world is serious about cutting off potential avenues for criminals and terrorists to launder their money."