The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian IT specialist is warning the Government it faces a technical “minefield” over its Beneficial Ownership Registry, whose operations he urged it to outsource to the private sector.

Bruce Raine, International Private Banking Systems (IPBS) principal, told Tribune Business his complete “lack of confidence” in government was behind the call for the Registry to be run by a ‘third party’ such as a law firm.

With data protection and security key to calming investor fears over the Registry’s creation, Mr Raine said just one well-publicised data leak could “scare off” clients and business from the Bahamas.

The Government last week tabled legislation in the House of Assembly to create a central registry containing details of beneficial ownership for all Bahamas-incorporated legal and corporate entities, suggesting this was necessary to meet international anti-money laundering and automatic tax information exchange standards.

Mr Raine, though, argued that the data stored by the Registry needs to be “encrypted”, especially given that the lives of financial services clients and their families living in crime-ridden Latin American countries could be endangered by unauthorised disclosures.

“Given the standard of government services and things, it’s scary,” he told Tribune Business of the Registry proposal. “It’s scary anyhow. Just the talk of it scares people. They [the Government] can’t even maintain office premises.

“I don’t know that the Government does anything particularly well, and this is one that has to be done particularly well. Otherwise people will not have confidence, and they will leave. I see no reason why they can’t contract that out and have professional people deal with it; a third party who will have responsibility and, if they screw it up, will be held accountable.”

Mr Raine said an established, respected law firm would be his preference to operate the Beneficial Ownership Registry, given that they were used to protecting data and client confidentiality. An accounting firm was another option.

He added that he had spoken to Brent Symonette, minister of financial services, trade and industry and Immigration, on the Registry’s creation once the news broke last week. Mr Symonette indicated it would be located “in a separate room, not connected to the Internet” to make it harder to penetrate or hack.

This backs up comments by K P Turnquest, deputy prime minister, who last week suggested to Tribune Business that the Registry would not be in the ‘cloud’ or linked to the Internet to ensure the tightest security possible.

Mr Raine, though, said it was a must that all Registry data be encrypted, as “good practice in the IT industry” required it to be copied - with the ‘back up’ held at an alternative location - in case the main site was compromised.

“Are you going to do it on a CD, and who has the CD?” the IPBS chief queried. “It will be off-premises. If they do have access, do they have the keys to encrypt the data? It’s a big challenge, but I certainly don’t have the confidence in the Government being the entity that is keeping, holding that data and managing it.”

Mr Raine said the Registry faced tremendous technical challenges in collecting beneficial ownership data on hundreds of thousands of Bahamas-domiciled companies from their respective registered agents, then formatting this into one usable database.

He suggested it would “take years”, and added: “Then you’ve got the other side, which I’ve spoken to other people about. People don’t want their wealth exposed for legitimate reasons.

“People in Trinidad, people in Brazil, they’re kidnapped for their money. You don’t want information leaked that allows people to tie ‘two and two’ together, and shows ‘so and so’ is the owner of that business. If that gets out, that person is in a whole heap of trouble, yet they’ve not done anything wrong.”

Mr Raine continued: “If that’s what they [the Government] think they have to do, they’ve got to be very careful how they do it. If this is something we have to do to stay out of jail we have to do it, but we have to do it with the utmost care.

“It is a minefield, and if it doesn’t scare people off before, if something goes wrong it sure as hell will. I think they need to explain pretty clearly and go through the whole thing; this is how it’s going to be done, and this is why it’s safe. But if it’s not safe, don’t do it.”

Michael Paton, a former Bahamas Financial Services Board (BFSB) chairman, told Tribune Business he was unaware of anyone in the financial services having seen the draft legislation for the Beneficial Ownership Registry prior to its tabling in Parliament last week.

While Carl Bethel QC, the Attorney General, had indicated such a Bill was coming during the Government’s European Union (EU) ‘blacklisting’ briefings with the sector in March, Mr Paton added that no one was aware the legislation was so advanced.

The Lennox Paton attorney and partner, though, said the Bill was accompanied by an ‘Appointed Day Notice’, indicating that the Registry would take time to be implemented and come into effect once the legislation was passed by Parliament.

Suggesting that the Bill was likely intended to demonstrate to international bodies, such as the Financial Action Task Force (FATF) and Organisation for Economic Co-Operation and Development (OECD), that the Bahamas is implementing its commitments, Mr Paton said the Bill itself was unlikely to provoke a storm of protest provided “we have to do it”.

“The issue is going to come down to how this Registry works in practice, and the security aspects of how we deliver data to the Registry,” he told Tribune Business. “If someone delivers you a flash drive, is that safe?

“These security issues are beyond my comprehension, but we have to think these things through. If we’re relying on people sending in data, we have to make sure it’s not coming in with Trojan Horses and viruses.”