The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An ex-attorney general has slammed the “absurdity” of the criteria that will determine whether The Bahamas should be removed from an anti-financial crime monitoring list.

Alfred Sears, pictured, said the Financial Action Task Force’s (FATF) assertion - that it needs to assess whether this nation has “sufficient political will” to sustain reforms to its anti-money laundering and counter terror financing regime - introduces “subjective” and “unverifiable” mechanisms into The Bahamas’ efforts to escape its surveillance.

Questioning whether such standards would be applied to the likes of the US, Canada and the European nations, Mr Sears argued that the new laws, strengthened regulatory bodies and increased investigations/prosecutions of financial crime resulting from The Bahamas’ implementation of the October 2018 “action plan” agreed with the FATF should be evidence aplenty of “political will”.

While there was “no question” that The Bahamas needed to escape the FATF’s monitoring list, given the negative impact for its international financial centre and trade model, the former attorney general said the assessment criteria further highlighted the need for all global anti-financial crime initiatives to be placed under the United Nations (UN) supervision.

He told Tribune Business that The Bahamas needed to insist that the FATF team, which will visit this nation before mid-May 2020 to determine if enough progress has been made to warrant its removal from the 18-state list, feature representatives from its Caribbean and international financial centre (IFC) peers and not merely be comprised of officials from the major onshore centres.

This, Mr Sears argued, would improve The Bahamas’ chances of enjoying a fair and unbiased assessment given that the FATF’s major members are the countries driving global regulatory reforms in a manner many believe is intended to push this nation and other IFCs out of the financial services business.

A former chairman of the FATF’s regional affiliate, the Caribbean Financial Action Task Force (CFATF), Mr Sears urged the Minnis administration not to be “intimidated” and to challenge the basis upon which The Bahamas’ case for escape will be assessed.

His concerns were triggered by Friday’s FATF statement which said The Bahamas had made sufficient progress in implementing its reforms to “warrant” a visit by an assessment team, which is usually the last step in a country being removed from its surveillance list if all goes well.

The FATF added that its team’s objectives will be to “verify that the implementation of The Bahamas’ anti-money laundering/counter terror financing (AML/CFT) reforms has begun and is being sustained, and that the necessary political commitment remains in place to sustain implementation in the future”.

Voicing alarm, Mr Sears said: “First of all, political will and commitment is so subjective, it is so utterly subjective. With respect to implementation you can always determine that by either the legislation being enacted, the regulatory bodies having the capacity or mechanisms to prosecute and undertake international co-operation.

“Those things are observable, they are concrete experiences and they are quantifiable. But how do you measure political will or commitment? This is an absurdity, and if we do not really challenge it and take a stand against this kind of subjectivity..... Is it the level of subservience, the level and degree of compromise you are prepared to make?

“I would have though that the passing of the laws, the implementation of the laws, the strengthening of the regulatory institutions, the processing of suspicious transactions reports, the prosecutions of persons who are alleged to have violated the law is how you measure political will,” he continued.

“It’s an absurdity. This is an absurd measure because what you [the FATF] are now doing is applying subjective criteria that are not published and not verifiable. This is why we need to put this process into a mechanism that is more objective-based, transparent and fair.

“We’re moving towards a much more unstable global environment for small countries. We need to push for multilateral regulatory frameworks that are based on norms of universalism. That’s why convening a global forum for the purposes of prescribing international conventions on anti-money laundering is part and parcel of the solution.”

The Bahamas is now deemed by the FATF to have satisfactorily addressed seven key areas detailed in its October 2018 action plan, including ensuring that its regulatory authorities have access to information on all beneficial owners of locally-domiciled corporate vehicles through the Register of Beneficial Ownership Act.

The supervision of non-bank financial institutions has also been stepped up, and international co-operation improved via the installation of a new case management system in the Attorney General’s Office. The Financial Intelligence Unit’s (FIU) output is also said to have improved to enable law enforcement agencies to better investigate money laundering and other suspected financial crimes.

The Bahamas has also had to show that all types of money laundering are being investigated and prosecuted, and that confiscation proceedings are initiated and concluded for all types of money laundering cases.

Mr Sears acknowledged the importance of escaping the FATF list, not least because it influenced the US and UK Treasuries to warn their own financial systems to apply increased due diligence to transactions involving or originating from The Bahamas.

Besides increasing the costs and time associated with such transactions for Bahamas-based residents and investors, the ex-attorney general added it also endangered the correspondent links this nation’s banks enjoy with foreign counterparts and which they rely upon to clear all financial dealings.

Yet he reiterated: “How could a team from this ad-hoc body in Paris visit The Bahamas and assess political will? Is this separate and apart from compliance with the FATF’s own 40 recommendations? This ad-hoc body is not being asked to justify what it means by political will. Where’s the accountability? Where’s the transparency?

“If it was under the UN we know there is a process. As a signatory to a convention you have standing to challenge something at the International Court of Justice.... Come on, how could this group put you on the list, say you are substantially compliant, but put you under cross-examination to determine if you have political will?

“What is the reliable set of criteria?” Mr Sears added. “Will the team visiting include persons from other IFCs or only from OECD countries? What role will the CFATF play? These are relevant questions, and I hope the Government will not be so intimidated that it does not ask to have a process that has some indica of transparency, fairness and equality of application.

“When you are not prepared to fight for sovereignty you forfeit the right to have it. Challenging and insisting on a fair process does not mean we are complacent and soft on money laundering.. It cannot be an act of sacrilege. We are safeguarding a critical asset of the state which is the second largest sector.”

Mr Sears argued that “tactically, the Bahamas ought to insist” that the FATF review team be comprised of officials from CFATF states and its IFC peers, rather than exclusively feature representatives from its high-tax onshore competitors who wish to see this nation driven from the financial services industry.