The Tribune

• 'No indication' of EU blacklist extension

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The attorney general yesterday said it was "impossible" for The Bahamas' to escape Financial Action Task Force (FATF) scrutiny through a "virtual" review of its compliance measures.

Carl Bethel QC, responding to Chester Cooper, the Opposition's finance spokesman and deputy leader, told Tribune Business that the global standard-setter for anti-money laundering and counter-terror financing regimes had rejected the concept of conducting 100 percent "virtual on-site visits" to jurisdictions such as The Bahamas when it met in June 2020.

Mr Cooper, in his Wednesday address to the House of Assembly, questioned why the Government had not sought to overcome COVID-19 travel-related difficulties facing the FATF inspection team by arranging a virtual on-site visit to assess whether The Bahamas had properly addressed the weaknesses in its anti-financial crime regime.

The on-site visit is the hoped-for last step in the process that will see The Bahamas escape the FATF monitoring regime, but Mr Bethel retorted: "It's impossible to do a virtual site visit." While the FATF's June meeting agreed that part of this inspection could be carried out remotely, other aspects required its examiners to travel to the jurisdiction involved.

"It can be partially virtual, and partially on-site, but they rejected totally virtual out-of-hand," Mr Bethel added of the FATF's position. He acknowledged the frustration for the Government and Bahamian financial services at the COVID-19-induced delay to the country's removal from the FATF, with dates for the on-site examination - the last step in the exit process - having continually been pushed back.

"Our target date was June," Mr Bethel said, adding that no firm date for the FATF's on-site examination has yet been set. This has wider ramifications for The Bahamas given that inclusion on the FATF scrutiny list is a key factor for the European Union (EU) in deciding whether to place this nation on its own list of "high risk" financial crime jurisdictions that is due to be released October 1.

Barbados, Botswana, Cambodia, Ghana, Jamaica, Mauritius, Mongolia, Myanmar, Nicaragua, Panama and Zimbabwe are also due to be included on the EU's list. Its publication was delayed due to COVID-19's impact on the FATF process, and the ability of countries such as The Bahamas to complete their escape, but Mr Bethel said yesterday the EU has "given no indication" of further extensions.

Mr Bethel told the Senate yesterday that the EU and its European Commission, which is effectively the 27-nation bloc's civil service, may have committed "a breach of international law" by abandoning previous commitments to engage countries on a multilateral basis before their so-called "blacklist's" publication earlier this year.

Noting that the EU is demanding higher standards and compliance than the FATF, which is the designated global body for dealing with anti-financial crime measures, Mr Bethel said changes to the Register of Beneficial Ownership Bill were driven by the 27-nation bloc's concerns.

These were that Bahamian Segregated Accounts Companies (SACs) hold separate accounts containing assets belonging to third-party owners who are not necessarily the beneficial shareholders of the company, and that locally-incorporated corporate vehicles are able to operate without a registered agent. The Act previously imposed no beneficial ownership requirements on firms without a registered agent.

Mr Bethel said the EU viewed these as creating a "loophole" for its citizens to hide their money and assets from the taxman and financial crime investigators. He added: "This is a case of a new goal post being set by a new actor which has emerged.

"Based on the mandate of its Parliament, the EU Commission has been forced to abandon the multilateral approach which was traditionally followed by its status within the FATF. The approach is now unilateral (to outright blacklist) and then to engage in bilateral discussions on the way forward. That is where The Bahamas is today."