The Tribune

• EU delisting ‘sets stage’ for cross-border increase

• AG hails ‘fantastic news’ that ‘repositions’ industry

• Banks refused to process Bahamas transactions

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas’ removal from Europe’s blacklist “sets the stage” for financial services growth by eliminating the last “red flags” to doing business with this nation, a Cabinet minister said yesterday.

Senator Ryan Pinder, the attorney general, told Tribune Business that The Bahamas’ delisting by the European Union (EU) was “fantastic news” and “repositions the country in a favourable light to attract more cross-border business” given that any remaining concerns about the strength of its anti-financial crime regime have now been swept away.

Given that “any kind of cross-border business from The Bahamas”, including that with EU-headquartered banks and their branches, had potentially been impacted by the 27-nation bloc’s decision to list this country in October 2020, he described the jurisdiction’s escape as “extremely significant” given its economic model that is focused on international commerce.

Mr Pinder, confirming that the European Commission, the EU’s civil service, had taken the decision to delist The Bahamas on Friday, January 7, added that this recommendation was on Tuesday passed to the EU Parliament for it to change the law to reflect this action.

The Bahamas’ removal “comes into force thereafter”, and while “there are some administrative and bureaucratic decisions that need to happen”, the attorney general indicated it was highly unlikely that the EU will reverse course.

The EU blacklist was the last adverse anti-money laundering/counter terror financing listing to feature The Bahamas, and Mr Pinder told this newspaper on the delisting: “I think it is extremely significant.

“Not only do we have banking institutions, and other institutions and clients who may utilise The Bahamas and may be from Europe, and do business in Europe, but being on the blacklist has caused issues doing cross-border business with The Bahamas.

“From a perception point of view, it [the delisting] sets the stage to attract new business to The Bahamas. We don’t want to be on any blacklist, grey list by any multinational body. We had cross-border business issues. Banks and institutions in Europe red flag you if you are on a blacklist, especially an EU blacklist, which causes issues doing cross-border business,” he added.

“A lot of correspondent banks out there in the cross-border banking business originate in Europe or have branches in Europe. That has caused more difficulty for cross-border business when those institutions do business in Europe.”

Mr Pinder said the effects of the EU blacklisting, over perceived deficiencies in The Bahamas’ anti-money laundering and counter terror financing regime, “trickled up” through this jurisdiction’s financial system. Clients with structures involving Bahamas-domiciled entities had been forced to question if it was “really worth” having them given the difficulties it created in daily business.

“All in all, it’s fantastic news for the industry, it’s fantastic news for the jurisdiction,” the attorney general told Tribune Business of the EU delisting, “and it repositions us in a favourable light to attract more cross-border business, especially from Europe.

“We need to grow, and it’s more difficult to grow when there are constraints on you. We will keep at it, keep our nose to the wheel and do what we can to get growth for the country.” Mr Pinder pledged that his office would “have ears to the ground” to ensure The Bahamas detected any “changes with the wind” by international bodies so it avoids future “unnecessary listings”.

He added: “It’s a balancing act, being flexible and nimble enough to do business, while staying within the confines of regulatory frameworks to keep others comfortable that you are staying within their parameters.”

Tanya McCartney, the Bahamas Financial Services Board’s (BFSB) chief executive, told Tribune Business that this nation’s EU delisting would reduce the perceived risks associated with doing business with local institutions and clients. She revealed that some overseas institutions had refused to “accept or process payments” from The Bahamas because of its EU listing

Besides boosting The Bahamas’ reputation and integrity as an international financial centre (IFC), she added that it would also lessen the scrutiny EU-based institutions were applying to transactions involving their banking counterparts in this nation, thus saving local businesses time and money associated with the conduct of daily transactions.

The Bahamian financial services industry, and their local business and individual clients, rely heavily on the sector’s correspondent banking links with overseas institutions to clear and settle all international transactions. This was among the elements most impacted by the EU listing due to the enhanced due diligence being applied to transactions involving this nation.

“The delisting of The Bahamas will help to reduce the risk profile of The Bahamas as an international financial centre,” Ms McCartney said in a statement responding to Tribune Business questions, adding that correspondent banking-related “pressures” should now ease.

“It will aid in easing de-risking and correspondent banking pressures. In addition, the requirement for enhanced due diligence on transactions involving The Bahamas should be required in fewer instances. There were circumstances where financial institutions simply would not accept or process payments from The Bahamas because of our placement on the EU blacklist.

“Opening accounts for entities based here was also a challenge. We expect that these pressures will ease as a result of our delisting. The implications of blacklisting are very serious, and we congratulate the team of professionals in the Office of The Attorney General and our regulators who worked very hard to get us to this point.”

Ms McCartney, adding that the Bahamian financial services industry was “very pleased with this positive development”, affirmed that this nation was only listed by the EU in October 2020 because it remained on the ‘enhanced monitoring list’ of the Financial Action Task Force (FATF), the global standard setter on anti-money laundering and counter-terror financing issues.

COVID-19 delays meant the FATF was unable to conduct a site visit to The Bahamas, and ensure this nation had implemented all the necessary reforms to its anti-financial crime regime, in time before the EU took the decision to blacklist this nation. The move was made on the basis that The Bahamas was still on the FATF’s ‘enhanced monitoring’ list

“Our listing by the EU was predicated on our status with the FATF,” Ms McCartney said. “Since our CFATF (Caribbean Financial Action Task Force) mutual evaluation in 2016, and the report that was published in 2017, the commitment of successive governments to addressing the strategic deficiencies identified has been evidenced by the allocation of resources, making the necessary legislative amendments and collaborating with industry.

“The National Identified Risk Framework co-ordinator, Dr Cassandra Nottage, has worked assiduously to ensure that we overhauled our anti-money laundering/counter terror financing/ counter proliferation financing regime and achieved compliance on 38 of the 40 FATF recommendations.”