The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE attorney general has voiced optimism the financial services industry will go “from strength to strength” after The Bahamas’ efforts to shore up its anti-financial crime regime gained global approval.

Carl Bethel QC, hailing the two-year “team effort” that secured the country’s removal from the Financial Action Task Force’s (FATF) enhanced surveillance initiative, told Tribune Business that its newly-secured status as a fully compliant represented a “good selling point” for the sector in attracting new business.

Speaking after the FATF, the global standard-setter on anti-money laundering and counter-terror financing issues, certified on Friday that The Bahamas merited delisting after addressing previous weaknesses in its regulatory regime, Mr Bethel pledged that authorities will “not celebrate the glow of this moment and go back to sleep”.

Disclosing that the government’s “focus has already started to shift”, he disclosed that The Bahamas plans to ramp-up its engagement with the European Union (EU) early in the New Year in a bid to secure its removal from the 27-nation bloc’s own so-called “blacklist” of countries deemed “high risk” because of deficiencies in their anti-financial crime regimes.

The FATF’s confirmation of The Bahamas’ exit from its own initiative removes one of the major hurdles to The Bahamas’ delisting by the EU. The latter had cited this nation’s inclusion on the FATF list as a key reason for placing it on its own, but Mr Bethel cautioned that escaping Europe’s scrutiny may not be so simple given that the bloc is applying its own standards.

Still, describing The Bahamas’ departure from the FATF process as “a good day”, he told this newspaper of the consequences: “The [financial services] industry will, I’m sure, go from strength to strength, and will market themselves - as they should - as being situated in a clean and well-regulated jurisdiction.

“The idea of places where persons of ill-repute can operate with impunity, those days are gone. The true competitive advantage for the country is to show we’re fully compliant with everything, and that this is grounded in the way business is conducted.

“It’s a good selling point that the jurisdiction is compliant, not only at one point in time but continuing the work of being compliant retooling the regulatory regime. Once that has happened, and the costs are absorbed, the ability to conduct business and the opportunities are enhanced,” Mr Bethel added.

“We expect the industry will embrace the opportunity to develop new sources and types of business, and expand their own businesses, given that the jurisdiction has attained the highest ratings for anti-money laundering and counter-terror financing supervision.

“People don’t want to be in a jurisdiction where their name is going to get called in a negative light. It’s important to not only develop a culture of full compliance, and when I say that all I mean is we have a framework which is effective if all players respect and follow it. It’s only by having an effective system that performs that we can position ourselves in the global market as a safe jurisdiction.”

Mr Bethel spoke after the FATF praised “the significant progress” made by The Bahamas in improving its anti-money laundering and counter-terror financing regime.

“The Bahamas has strengthened the effectiveness of its anti-money laundering and counter-terror financing regime system, and addressed related technical deficiencies to meet the commitments in its action plan and remedy the strategic deficiencies identified by the FATF in October 2018,” the FATF said.

“The FATF now de-lists The Bahamas from the list of jurisdictions under increased monitoring. The Bahamas is therefore no longer subject to the FATF’s increased monitoring process. The Bahamas will continue to work with CFATF (the FATF’s Caribbean affiliate) to improve further its anti-money laundering and counter-terror financing regime.”

Besides the reputational risk created by inclusion on the FATF list, it also created practical issues for Bahamas-based financial institutions and their clients. Transactions originating from, or involving, this nation were subject to enhanced scrutiny by other countries, resulting in increases costs, time and red tape for the parties involved, and thus undermining the country’s competitive attractions.

The FATF listing also placed further pressure on The Bahamas’ already-strained correspondent banking relationships, which provide the gateway through which this nation’s international trade and commerce model functions by enabling businesses and individuals to clear and settle transactions abroad.

In addition, the FATF move also sparked the US and UK Treasuries to issue their own advisories and call for greater scrutiny of Bahamian transactions. These warnings may now also fall away.

Mr Bethel, meanwhile, said that while the Attorney General’s Office had led efforts to secure The Bahamas’ removal, the initiative required the full involvement of the national identified risk framework co-ordinator, Dr Cassandra Nottage; all financial services regulators; the Royal Bahamas Police Force; Customs; and the financial services industry itself.

Revealing that stakeholders had been meeting weekly over the past year to drive the reforms, the attorney general said this had resulted in “ten major legislative changes” including new Proceeds of Crime, Financial Transactions Reporting and Financial and Corporate Services Providers Acts, as well as the Register of Beneficial Ownership Act.

The Penal Code was reformed to include tax-based offences, while the Attorney General’s Office was upgraded with a new digital case management system. The Financial Intelligence Unit (FIU) was also enhanced with new software to speed up its file and case management, eliminating the “backlog” and enabling real-time management of the suspicious transactions reports (STRs) it analyses.

Despite this work, Mr Bethel said securing The Bahamas’ removal from the EU’s blacklist will be another task as “they are FATF-plus”. “Our focus has already shifted in some ways,” he told this newspaper. “We’ll be looking in early January to have further discussions with them.

“That will be a more deliberate process. I cannot make any prediction save The Bahamas will do its very best to engage in a particular and responsive manner with parties at the EU and the EU Commission. At the end of the day we are simply seeking our living space, and we don’t want to have our living space at the expense of any other jurisdiction.

“Within those broad parameters we feel there’s more than adequate space for The Bahamas to have a financial services sector that’s in compliance with evolving global financial standards.”