The Tribune

By NEIL HARTNELL 

Tribune Business Editor 

nhartnell@tribunemedia.net

THE US government is asserting that The Bahamas “lacks... political will” to fully crack down on financial crime with this nation representing a “low risk” haven for fraudsters and corrupt individuals.

The State Department, unveiling its annual international narcotics control

strategy report for 2025, critcised the lack of prosecutions and convictions for money laundering and other financial-related crimes while acknowledging that Bahamian regulators had “imposed” almost $220m in so-called administrative penalties on licensed financial institutions in 2024 for legal and supervisory breaches.

Suggesting that many of these penalties are in “settlement negotiations” between licensee and regulator, the report also asserted that Bahamian law enforcement agencies and prosecutors are too timid to use all the tools available to them in pursuing complex financial crimes and seizing assets that are the proceeds of criminal activities.

The State Department report’s contents will likely further raise the temperature in US-Bahamas relations following the Trump administration’s threat to revoke visas for foreign government politicians and officials involved with bringing Cuban workers - including doctors nurses

and teachers - to work in this nation.

“While The Bahamas makes efforts to improve its money laundering/terrorist financing enforcement capabilities, its investigations often do not result in prosecutions or convictions. Improved inter-institutional co-ordination and strong political will are necessary to defend its financial institutions from criminal intrusions,” the US report said.

Acknowledging that The Bahamas’ 700-island geography leaves it “vulnerable to firearms trafficking, drug trafficking and migrant smuggling,” the State Department signalled its belief that the authorities are not doing sufficient to prosecute financial crimes and seize assets, such as real estate and cash, that may have been derived from such illicit activities.

“The Bahamas suffers from domestic fraud schemes and transnational criminal activities. A limited number of asset seizures and financial prosecutions have resulted in a vulnerable banking system, gaming industry, virtual currencies and luxury real estate market,” the US report argued.

“The lack of convictions and asset forfeiture make The Bahamas a low-risk base of operations for many sophisticated fraudsters, including corrupt actors. Despite extensive training and improved investigative and prosecutorial abilities, Bahamian law enforcement and prosecutors are hesitant to investigate and prosecute complex financial crimes and seize real property and assets derived from illicit activities.

“When authorities pursue cases, an accepted ‘culture of adjournments’ delays adjudications for years. The Bahamas lacks strong inter-institutional coordination and political will to successfully adjudicate complex financial crimes.”

The picture presented by the US State Department report contrasts sharply with The Bahamas’ own financial crime risk assessment, released in December 2024, which said the dangers were mitigated by robust anti-money laundering, Know Your Customer (KYC) and other due diligence defences implemented by an international bank and trust company sector holding $121.6bn in assets at year-end 2022.

“The quality of the anti-money laundering and counter terror financing controls in the international banking sector has been assessed as strong,” the Bahamas’ own report asserted.

“The legislative framework is comprehensive, and monitoring of operations is ongoing via a risk-based anti money laundering supervisory framework which requires appropriate customer due diligence, mandatory ongoing training, effective compliance systems and suspicious transactions monitoring and reporting by financial institutions.”

Although the industry is exposed to what is deemed to be “medium to high” money laundering and other financial crime risks due to the nature of the business it undertakes, such as international transactions, cross-border transfer flows and non-resident customers, “where there may be financial opportunities for financial crime to launder proceeds of crimes – such as fraud or corruption”, the actual threat has been minimised.

The US State Department, though, has taken a different view. “In 2024, authorities imposed almost $220m in administrative penalties, which remain under negotiation for settlement. Law enforcement confiscated over $2m in assets and restrained $1m in suspected illegal cash proceeds,” its report said.

“The Royal Bahamian Police Force Financial Crimes Investigative Branch reported a 20 percent increase in the number of cases/prosecutions in 2024 with 34 individuals charged and six convicted. The Government approved a national cyber security strategy in 2024. The Bahamas began drafting new cyber crime legislation. However, currently the only Bahamian law that addresses cyber crime directly is the Computer Misuse Act 2003....

“The Bahamas suffers from domestic fraud schemes and transnational criminal activities. A limited number of asset seizures and financial prosecutions have resulted in a vulnerable banking system, gaming industry, virtual currencies and luxury real estate market.” It is unclear what the $220m in penalties relate to, as a fine of such scale was levied by the Securities Commission against the FTX crypto exchange.

Elsewhere, the US asserted that Bahamian prosecutors “do not adequately use the Proceeds of Crime Act to seize and forfeit assets”, while identifying both the real estate and construction sectors - said to have contributed $2bn and $634m, respectively, to economic output as “susceptible to money laundering”. No examples, though, were provided to back-up and of these assertions.

Combining The Bahamas’ casino and web shop gaming industry into one, the US State Department report said that, together, they generated almost $415m in gross receipts from January to September 2024 along with $49m in taxes to the Government.

And the “90 percent effectiveness rate for client screening, and a 93 percent rate for transaction screening” achieved by the Central Bank’s licensees won praise from the US State Department which said the results showed Bahamian financial institutions can accurately identify persons subject to international sanctions.

The report added that there had been “renewed interest from the Government of The Bahamas in advancing anti-corruption initiatives” following last November’s charges brought against the Lynden Pindling International Airport’s (LPIA) top police officer and other law enforcement agents in New York’s southern district over alleged drug-related corruption.

It did not seem to give The Bahamas credit for passing the Independent Commission of Investigations Bill and Protected Disclosures Bill, both of which are designed to protect whistleblowers and strengthen anti-corruption defences. It is likely the report was written before both Bills reached Parliament.

“While the Government has generally established anti-corruption laws effectively, laws to combat corruption by public officials have been inconsistently applied,” the US State Department report said. “The Government has stalled full implementation of anti- corruption legislation that would accelerate efforts to enhance transparency and accountability.

“The November southern district of New York indictment renewed interest from the Government of The Bahamas in advancing anti-corruption initiatives. The Bahamas would benefit from a more robust enforcement of rules to prevent conflicts of interest related to public procurement activities.

“There are allegations that government contracts have been directed to political supporters, isolated reports of officials accepting small-scale ‘bribes of convenience’, and favourable treatment given to wealthy or politically connected individuals. The bribery of a government official is a criminal act carrying a fine of up to $10,000, a prison term of up to four years, or both.”

The report added: “Bahamian authorities prefer civil recovery of transnational criminal organisation illicit assets to disrupt criminal enterprises. Its lower evidentiary threshold leads to more successful outcomes, and the seizures disrupt the transnational criminal organisation networks....

“The United States and The Bahamas have a strong partnership in counter-narcotics enforcement.... Success will require more dedicated Bahamian drug enforcement resources, better Bahamian operational co-ordination between its police and Defence forces, increased focus on countering corruption, and stronger prosecutions leading to convictions.”