The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A former attorney general yesterday warned that The Bahamas' removal from a list of countries with identified weaknesses in their anti-financial crime defences "is not an end to the blacklisting cycle".

John Delaney, while hailing this nation's exit from the Financial Action Task Force's (FATF) enhanced scrutiny initiative (see article on Page 1B), told Tribune Business that The Bahamas' achievement did not necessarily mean it will secure instant removal from a similar European Union (EU) blacklist.

Even though the EU acknowledges the FATF as the global standard-setter on anti-money laundering and counter-terrorism financing matters, Mr Delaney pointed out that the 27-nation bloc has already warned it is applying an even harsher criteria that The Bahamas and other jurisdictions on its "high risk" list must meet to escape.

While branding The Bahamas' FATF delisting as "huge" for the country and its financial services industry, the Delaney Partners chief argued that the experience of the past two decades showed it was only a matter of time before another adverse ranking or rating arrived unless this nation urgently allied with like-minded jurisdictions to press for a global regulatory "level playing field".

"My view is consistent in that these things have an adverse impact reputationally because it diminishes the credibility of the jurisdiction among our customer base, and as a consequence it adversely impacts our attractiveness and competitiveness in getting business," Mr Delaney said of The Bahamas' three-year stay on the FATF listing.

"To the extent we're no longer on one listing, the hope and expectation would be we'd also likely be delisted from the EU listing. But the EU purports its criteria for listing is FATF-plus, which means that just because we may no longer be on the FATF listing doesn't necessarily mean we will be off their list."

The EU previously said a key reason for The Bahamas' inclusion on its own list of nations deemed to have deficiencies in their anti-financial crime defences, which makes them "high risk", was its presence on the FATF's monitoring list. The Bahamas' exit from the latter's initiative has also raised hopes it could soon likewise be removed from the EU initiative.

Hubert Edwards, principal of Next Level Solutions, a Bahamas-based corporate governance and risk management consultancy, told Tribune Business that the FATF escape was "foundational" in establishing a base for this nation to be delisted from similar adversarial initiatives.

"It is going to be difficult for the EU to continue to make the argument that we are not compliant, or not compliant with standards as it relates to anti-money laundering and counter-terror financing when the EU is part of the standard-setter [FATF] that has oversight of us and put us through a rigorous process," Mr Edwards said.

"This will go a long way to help us, and it would be my expectation that the EU will delist us. If that does not happen in a very short time, the EU will have played its hand and showed us clearly what the objective is.

"When you have a body they answer to in some ways, and they give us the green light, it's very difficult for the EU to make that argument against delisting. We know there are some other issues driving the EU agenda. It has more to do with tax, and tax advantages of being in The Bahamas, more than anti-money laundering and counter terrorism financing."

Similarly Craig A. 'Tony' Gomez, the Baker Tilly Gomez accountant and partner, said it would be difficult for the EU to keep The Bahamas on its 'blacklist' when the FATF had given its anti-financial crime reforms the stamp of approval.

"While we have yet to be removed from the blacklist of the EU, I am certain that, shortly into 2021, The Bahamas can look forward to receiving the stamp of approval for all we continue to do in the jurisdiction," Mr Gomez said. "We hope they continue to measure and treat all jurisdictions with the same global standard."

Mr Delaney, though, said securing The Bahamas' removal from the EU listing as well as future so-called "blacklists" will not be so simple. While the FATF escape is "a positive development", he added: 'If one were to step back and view it from a wider lense, one has to remain concerned from a systemic point of view.

"It's to the fairness of these listings, and it's whether it's a level playing field for The Bahamas and jurisdictions like ourselves, in the non-EU and non-G-20 space. It is believed with good reason that it is not an even standard, and it is believed these lists are often misused for illegal competitive purposes.

"The whole thing needs to be examined, and not just by one country like The Bahamas acting alone, but a group of similar countries coalescing so we get far better transparency and fairness as to the application of these standards across all countries."

Mr Delaney, warning that it was only a matter of time before another blacklisting initiative arrived, said that "as a delisting comes there will be a listing that does not do any good for the jurisdiction".

"We've been in this state for two decades," he told Tribune Business. "There's no reason to believe this is the end of the cycle that has been ongoing despite our efforts. I say that regretfully. It has been an uneven playing field.

"Institutions want a certain degree of stability and continuity in their business affairs, and to not be dealing with prejudicial challenges arising from external sources. It's not a desirable state of affairs, especially if it is felt something is not entirely within the jurisdiction's capacity to address because of so-called evolving standards and unequal application of them."