The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The US government yesterday criticised the Bahamas’ almost non-existent number of prosecutions/convictions for money laundering, suggesting there should be far more given the size of this nation’s financial services industry.

The US State Department, in its 2015 international narcotics control strategy (INCSR) report, noted that there were no prosecutions, or convictions, for money laundering by the Bahamian judicial authorities in 2013.

While data for 2014 was not available, the report said: “While the Government of the Commonwealth of the Bahamas has the requisite institutional and legal framework to combat money laundering, the number of prosecutions and convictions is low given the scale of the country’s financial sector.”

Some 270 suspicious transactions reports (STRs) were submitted to the Bahamas’ Financial Intelligence Unit (FIU) in 2013, according to the report, which called for more resources and training to help the police and Attorney General’s Office to investigate and prosecute money laundering offences.

The State Department report alleged that “significant sums of money” were laundered via the Bahamian financial services industry, even though it provided no data, evidence or concrete examples to support this assertion.

“There is a significant black market for smuggled cigarettes and guns,” the report added. “Money laundering trends include the purchase of real estate, large vehicles, boats and jewellery, as well as the processing of money through a complex web of legitimate businesses and international business companies (IBCs) registered in the offshore financial sector.

“Drug traffickers and other criminal organisations take advantage of the large number of IBCs and offshore banks registered in the Bahamas to launder significant sums of money, despite strict Know Your Customer and transaction reporting requirements.”

Noting the moves to legalise, then regulate, the domestic web shop gaming industry, the US State Department added: “With the expansion of gaming oversight, the Government should ensure full implementation of appropriate safeguards, and provide additional suspicious transaction report (STR) training.

“The FIU, in cooperation with Royal Bahamas Police Force financial investigators, should continue its outreach, training and coordination with banking and non-banking sectors to assist institutions in implementing and maintaining effective STR regimes.”

The US State Department’s report then reiterated complaints it has made in previous years, urging the Bahamas to pass laws criminalising bulk cash smuggling and membership/participation in organised criminal gangs.

It also called on this country to establish a “public registry” of all entities licensed in the financial services sector; implement a system to collect and analyse cross-border currency movement data; and create a currency transaction reporting system.

The Bahamas has heard this all before in successive INCSR reports, along with the request to ensure full compliance with UN Security Council Resolutions 1267 and 1373.

The two UN Security Council resolutions relate to the freezing/seizing of assets or funds belonging to alleged terrorists, and previous Caribbean Financial Action Task Force (CFATF) reports said the Anti-Terrorism Act did not implement 1267 “adequately”.

A 2010 follow-up report on the Bahamas by the CFATF said proposed legislative reforms would address these weaknesses, but it is unclear whether these have been enacted.

That 2010 report said financial regulators were finalising a report on a “fixed threshold currency reporting system”, while the currency declaration section on border entry forms was being revised.

Meanwhile, yesterday’s report also called on the Bahamas’ National Anti-Money Laundering Task Force to “engender an anti-money laundering culture in the Bahamas”.