The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A former finance minister yesterday called for the Government to “push back more” on repeated US demands that the Bahamas implement a ‘public registry’ disclosing the owners of every corporate entity registered in this nation.

James Smith, also a former Central Bank governor, said it represented a “new form of economic colonialism”, and an attempt to drive the Bahamas and others into going beyond what is recognised as international regulatory standards.

The latest demand for the Bahamas to establish a public registry, listing the beneficial owners of every corporate entity registered into this nation, was contained in the State Department’s just-published International Narcotics Control Strategy report for 2017.

“The Bahamas does not disclose in a public registry information about trusts and foundations, maintain official records of company beneficial ownership, require that company accounts be placed on public record, or require resident paying agents to tell the domestic tax authorities about payments to non-residents,” the US report said.

“It should ensure beneficial ownership information of all entities licensed in its offshore financial centre is available upon the request of law enforcement authorities and kept up to date.”

The report has repeated this for several years, and Mr Smith said the tactic was reminiscent of the Organisation for Economic Co-Operation and Development (OECD), which “by repeating something often enough makes you almost believe you’ve got to change your policy”.

Pointing out that the Bahamas had complied with all the OECD’s tax transparency and information exchange standards to-date, Mr Smith suggested that the US ought to push for a public beneficial ownership registry to become the global standard before seeking to impose it on this nation and others.

There has, though, been some pressure in the UK and elsewhere for the creation of such registries, which has been resisted by the Bahamas’ international financial centre (IFC) rivals who are Crown dependencies.

Mr Smith added that a public beneficial ownership registry “doesn’t add anything” in terms of being a regulatory and crime-fighting tool, as there were multiple avenues for foreign countries to obtain this information via the Bahamian supervisory agencies and the court system.

“They continue to keep pressing this thing on us and other developing countries as if we have limitless wealth and capacity,” Mr Smith told Tribune Business, suggesting that the US help to finance such a ‘public registry’ given this nation’s fiscal woes.

“It’s kind of a new form of economic colonialism,” he added. “I wish the Government would push back more on this. It could be trouble down the road.”

Meanwhile, noting the Bahamas’ efforts to regulate the web shop industry, the US report said this nation needed to “ensure full implementation of appropriate [anti-money laundering] safeguards and provide additional STR (suspicious transaction reporting) training”.

It added that “greater emphasis should be placed on enforcement and effective implementation” of the Bahamas’ anti-money laundering regime, adding that it was impossible to assess its effectiveness given that no data on prosecutions and convictions had been provided.

Calling on the Government’s National Anti-Money Laundering (AML) Task Force “to engender an anti-money laundering compliance culture in the Bahamas”, the US State Department document added: “The Bahamas should further enhance its AML regime by criminalising bulk cash smuggling; continuing implementation of the National Strategy on the Prevention of Money Laundering; establishing a currency transaction reporting system; and implementing a system to collect and analyse information on the cross-border transportation of currency.”

Without providing supporting evidence, the US report concluded: “Drug traffickers and other criminal organisations take advantage of the large number of IBCs and offshore banks registered in the Bahamas to launder money, despite customer due diligence and transaction reporting requirements.

“The major sources of laundered proceeds are drug trafficking, firearms trafficking, gaming and human smuggling. There is a black market for smuggled cigarettes and guns.

“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 IBCs registered in the offshore financial sector.”