A former attorney general yesterday warned The Bahamas against letting a “proper probe” into FTX’s implosion slide because of its perfect score in the financial crime fight and Sam Bankman-Fried’s departure.

John Delaney, now principal at the Delaney Partners law firm, told Tribune Business that simply moving on and treating the crypto currency exchange’s collapse as if it never happened would be “the wrong thing” for the jurisdiction to do as there were likely lessons that have to be learned.

And, while yesterday’s confirmation that The Bahamas is now fully compliant with the 40 global anti-financial crime standards (see other article on Page 1B) may show “there’s no systemic weaknesses in the industry writ large”, he argued that The Bahamas has a duty to itself and “the financial services arena” to conduct a comprehensive investigation into all aspects of FTX’s multi-billion dollar failure.

Mr Delaney, telling this newspaper there had been no “immediate reaction” to the crypto exchange’s collapse in terms of loss of business, especially in the “established” Bahamian financial services industry, said the country’s upgrading by the Caribbean Financial Action Task Force (CFATF) to ‘compliant’ on digital assets regulation will bolster its “credibility” in the face of recent international attacks.

“This assessment by the CFATF will go a long way in showing there’s no systemic weaknesses in the industry writ large,” the former attorney general said. “Having said that, I think there is undoubtedly a need to have a proper inquiry and analysis of everything that touched the FTX collapse simply because of the scale of its presence here, and The Bahamas being the its place of domicile.

“It’s important to equip ourselves properly with that regulatory role, and duty to the jurisdiction and financial services arena, to show we are responsible and doing a full, proper inquiry as to what transpired and whether it makes apparent any weakness in our system and regulatory framework, and determine what needs to change if anything going forward. We must determine lessons from this. The wrong thing will be if we divide time, let it go past, and continue as if it never were.”

The Wednesday evening extradition of Mr Bankman-Fried to New York, where he now faces multiple fraud and money laundering charges in a federal court, means the focus of FTX-related attention has shifted away from The Bahamas to some degree. Little has been heard of both the Securities Commission and Royal Bahamas Police Force investigations that were triggered in early November amid whistleblower revelations that FTX had been misusing customer funds.

The temptation may now be to leave the investigation to US authorities, and regulators such as the Securities & Exchange Commission (SEC) and Commodities and Futures Trading Commission (CFTC), although the joint provisional liquidators will continue their work and inquiries as part of fulfilling the Supreme Court mandate to trace, seize and protect assets for the benefit of creditors of the local subsidiary, FTX Digital Markets.

“While in some sense it bears no direct connection or nexus, it’s a great Christmas present with the timing,” Mr Delaney said of The Bahamas’ upgrade by the CFATF. “It’s happened at a time when The Bahamas is under not so good scrutiny about its dealings relating to FTX.

“I think it is good by way of credibility. When something that is sensational happens, and I’m not suggesting that FTX is merely sensational, but when something of that nature happens it’s very easy for persons on the outside looking at The Bahamas not to have the full perspective..

“The Bahamas has, for the past 22 years, been on the road to ensuring our anti-money laundering and counter terror financing regimes are world class. It’s been an arduous journey that The Bahamas has undertaken over successive administrations, and the whole financial services industry, civil servants and technical people have worked hard to ensure we are well regulated in the domestic and international space,” he continued.

“It’s so easy for one sensational thing to come up and damage the effort. It’s good we have the timing of this [CFATF report] at this particular time and, hopefully, it can get enough attention from persons that they have a more balanced approach in terms of looking at The Bahamas as a jurisdiction for financial services. It will help shore up confidence.”

Hubert Edwards, head of the Organisation for Responsible Governance’s (ORG) economic development committee, told Tribune Business that the CFATF’s assessment that The Bahamas is in full compliance with global anti-financial crime standards is “a real feather in our cap and we should wear it proudly, especially against the backdrop of FTX developments”.

He said: “Obviously with FTX and Sam Bankman-Fried we’ve have lost a bit of wind from our sails regardless of how you want to look at it. News like this is positive. When you look across many, many jurisdictions, and jurisdictions considered well-regulated, in many instances they are nowhere near ‘40 out of 40’ where they are regarded as ‘compliant’ or ‘largely compliant’, so The Bahamas stands out in that regard.

“The Bahamas is in an enviable position. The fact the report speaks to crypto assets is also a good thing despite the fact we’ve had a little bit of a stumble with FTX. There are certainly some things we have to go back to the drawing board on as it relates to the regulatory framework for digital assets. We would have learned some important lessons, and there’s more to come to the extent we fully understand how to manage these risks.

“But to look past that at this point in time, without any adjustments, and not suggest there’s anything negative around our regulatory framework for digital assets is significant. It’s a vindication, in many ways, of the work that The Bahamas has done, it’s a vindication of the framework put in place. I wouldn’t say, though, that this is a guarantee nothing else has to be done as these issues are constantly evolving,” Mr Edwards continued.

“Yes, we have been troubled a bit on the digital assets side, but clearly it’s not going to be fatal. This demonstrates to the outside world that our commitment to the underlying regulatory framework is strong. Next year we will still have to confront the fall-out, or ongoing fall-out, from FTX but this is a good thing.”