The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Attorney General yesterday accused the former Christie administration of “overreach” by appearing to target Save the Bays with new non-profit organisation regulations.

Carl Bethel effectively backed the position taken by the environmental activist group, also known as the Coalition to Protect Clifton, by agreeing that the Registrar General could only demand a non-profit organisation’s financial records if it was suspected of involvement in terrorism financing.

Disclosing that the lawsuit filed by Save the Bays over the matter was now settled, Mr Bethel said “the whole kerfuffle” over non-profit organisations had been driven by concerns the Bahamas was non-compliant with global anti-money laundering/counter terrorism financing standards.

“Our predecessors seem to have been somewhat selective in the non-profits they went after and got sued for it,” the Attorney General told Tribune Business.

“The only basis on which you can demand to see the accounts for those entities is if you have genuine reasons to suspect them of money laundering or terrorism financing.

“An inability to show you have legitimate reasons to demand the accounts is what led to the Save the Bays lawsuit, which is now settled,” Mr Bethel continued.

“The state may have overreached in demanding to see the accounts. The state can demand to see and get who the beneficial owners are, and their certification.”

Mr Bethel’s view matches that taken by Save the Bays, which argued in its lawsuit that the only occasion when the Registrar General could request its financial statements was to assess if it was being used to “assist terror financing”.

The Registrar General’s Department subsequently denied that it was targeting Save the Bays, adding that it had issued similar requests to100 other Bahamas-domiciled non-profit organisations.

However, the Government’s efforts to impose tighter regulation on non-profits through the Companies (Non-Profit Organisation) Regulations 2014 and other companies-related legislation continued after the May 10 general election.

A July 19 newspaper advertisement gave hundreds of non-profit organisations just two weeks to supply details of the organisation’s purpose, objective and activities; identity of persons who control or direct the activities of the organisation, including senior officers, directors, and trustees; annual financial statements and records that show and explain transactions within and outside the Bahamas, and show that monies have been used in a manner consistent with its objective and activities; and the source of gross annual income of the organisation.

The resulting controversy forced the Government to enter into a ‘special arrangement’ with Bahamian churches, who branded the demand as too intrusive, and instead agreed to ‘self-regulate’ their financial affairs.

Accountants will now assess churches’ financial records, rather than these being handed over to the Government, and will only report suspicious transactions to the Registrar General’s Department. This, though, has led other non-profits to demand the same or equal treatment.

Mr Bethel yesterday confirmed that the enhanced non-profit organisation regulations were intended to ensure the Bahamas meets international standards for combating money laundering and terrorism financing.

“All of these steps we’ve been taking incrementally are all part of a broad-based effort to address each and every concern,” he told Tribune Business.

The Bahamas’ concerns were heightened after the latest Mutual Evaluation Report (MER) by the Caribbean Financial Action Task Force (CFATF) (see other article on Page 1B), which found numerous deficiencies and weaknesses in this nation’s defences against financial crime.

However, Lester Mortimer QC, the Callenders & Co attorney and partner, previously told Tribune Business that the Registrar General’s demands of non-profit organisations (NPOs) were “unlawful”.

He added that he had warned the Christie administration of regulatory deficiencies almost three years ago, arguing that the Registrar General “has no regulatory authority” over non-profits who are not licensed under the Companies Act.

As for those who are registered under the Companies Act, Mr Mortimer said the regulator was basing its demand for their annual financial statements on the Act’s section 123.

However, he argued that the Companies Act’s section 124 stipulated that the legal basis being employed by the Registrar General did “not apply to private companies”, again rendering its move ‘ultra vires’.