The Tribune

By FAY SIMMONS

Tribune Business Reporter

jsimmons@tribunemedia.net

The Financial Intelligence Unit (FIU) yesterday said it has received evidence of unscrupulous individuals exploiting The Bahamas for terror financing purposes using digital assets and crypto currencies.

Joann Creary, the FIU’s legal counsel, told the Bahamas Institute of Chartered Accountants (BICA) conference that the nature of suspicious transaction reports (STRs) has shifted from those primarily linked to drug trafficking to individuals involved in using crypto currencies for terrorism financing purposes.

“In the early 2000s we received a lot of STRs that centred around the drug trafficking trade at the time. However, we have now moved into a world where we are seeing STRS being received from our crypto currency institutions,” said Ms Creary.

“We are seeing information that is closely related to individuals possibly using the jurisdiction when it comes to terrorist financing. So all of these concepts were not concepts that we are used to dealing with. However, with the advances of all types of technology, and the fact that we do boast that we are a part of the bigger financial world, of course we are going to see things that we would have not normally seen in the past.”

Ms Creary said the FIU is also received a number of fraud-related reports and has been taking extra measures to prevent cyber attacks. “We are also seeing a lot of STRs relative to fraudulent activities,” she added.

“And, of course, one of the major things that we have been discussing and looking at most recently is how to make sure that we can protect the FIU against any sort of cyber attack, because we have seen it most recently in some of the other foreign FIUs.

“So we have to make sure that, yet again, with our technology, we are keeping up-to-date because, as most of you can appreciate, the information that we have in our system, there might be a lot of people trying to get their hands on that information.”

Ms Creary said the FIU Act 2023 enhanced the agency’s legal framework to address evolving financial crimes, including those involving crypto currencies and cyber security threats. Key changes included expanding the types of disclosable transactions, enhancing domestic co-operation with other regulatory and law enforcement agencies, and increasing freeze order durations to 14 days.

She explained that the FIU always had the power to put a three or five-day hold on accounts under investigation, but now can extend that for up to 14 days to allow more time to undertake investigations.

“We’ve always had the power to freeze accounts. However, we had a three-day freeze and a five-day freeze. The importance of our freeze orders is that it assists law enforcement if they need to get a permanent freeze order on any account, where there is some issue or that individual may be a relative or have proceeds of crime,” she said.

“Law enforcement always found that the timeframe that we can freeze an account was not sufficient for them in order to go to court and get a permanent freeze order. As a result, we have now amended the legislation, and we can now freeze an account up to a period of 14 days.”

The FIU also improved its e-filing portal, Case Connect, to streamline processes and better co-ordinate with financial institutions and law enforcement. The updates aim to align with global standards and ensure effective analysis and dissemination of financial intelligence.

Ms Creary said the agency can now issue compliance notices to financial institutions under the new legislation. A compliance notice is issued when financial institutions fail to produce information requested by the FIU in 14 business days. Institutions that fail to comply will incur an administrative penalty not exceeding $1,000 per day until they do.

“We now can issue a compliance notice to our financial institutions, so if a financial institution receives a production order and they fail within the 14 working day period to, of course, provide us with that information, we can now send you a compliance notice,” said Ms Creary.

“That compliance notice would outline the failure of the financial institution. And, of course, we’re going to give you some additional time in order to provide us with that information. If, however, you fail to provide us with the information within the timeframe noted in your compliance notice, you are now subjected to an administrative penalty.

“The director may order the financial institution to pay the Financial Intelligence Unit a penalty not exceeding $1,000 for every day from the date the financial institution was required to comply with the compliance notice to the date the financial institution rectifies the non-compliance.”

Ms Creary said since the practice was adopted she has issued three compliance notices, and the institutions responded to those notices and provided the information within hours.

“I’ve issued, very minimally, three compliance notices so far, and I would have issued those notices on the day, and a couple hours later, we were in receipt of the information,” she added.

“So I can say that right now, so far, we do think that this ability is going to assist us in ensuring that the information that is needed for us to continue our function will be gathered on a timely basis.”