The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government has united with local businessmen and financial services executives in urging the US to “look in your own backyard” before blasting The Bahamas over alleged anti-financial crime deficiencies.

Branville McCartney, the former Democratic National Alliance (DNA) leader, told Tribune Business that the US State Department was “quite frankly over-stepping into our jurisdiction” by alleging in its latest international narcotics control strategy (INCSR) report that The Bahamas “lacks... political will” to combat money laundering, fraud and other forms of financial crime.

The report also asserted, without supplying evidence or examples, that The Bahamas is viewed by fraudsters and corrupt persons as a “low risk” safe haven, but Mr McCartney and others countered that any illicit flows passing through this nation’s financial system are tiny in comparison to the multi-billion dollar sums that pass through the US, European and other major onshore financial centres.

Describing the US assertions as “a bunch of foolishness”, the Halsbury Chambers law firm chief pointed out that this nation has consistently reformed and overhauled its financial services regulatory regime in response to 25 years of pressure from the US, other G-20 member countries and their forums such as the Organisation for Economic Co-Operation and Development (OECD).

And, calling on the Government to “stand firm” and defend Bahamian laws and sovereignty from such attacks, Mr McCartney reiterated that the US needs to “take care of their own home before meddling in other countries” and look at “the man in the mirror” first.

This was echoed by Paul Moss, principal of Bahamian financial services provider, Dominion Management Services, who told Tribune Business that the US criticisms were the equivalent of “the pot calling the kettle black”.

Translating this to scripture, he cited Matthew 7:5 from the Bible, which states: “You hypocrite. First take the plank out of your own eye, and then you will see clearly to remove the speck from your brother’s eye.”

The Davis administration, in its formal response, adopted a similar stance by pointing out that the US is itself guilty of what it criticises other nations. By failing to adopt the Common Reporting Standard (CRS) embraced by many other countries for tax information exchange, while also failing to fully collect beneficial ownership information, the US has created major gaps and weaknesses in global financial regulation.

Adopting more diplomatic language, the Attorney General’s Office added that the annual US INCSR report has failed to acknowledge or give The Bahamas credit for financial regulatory reforms and achievements - including this nation being rated fully compliant with all 40 recommendations set out by the Financial Action Task Force (FATF), the global standard-setter on anti-money laundering and financial crime defences. 

Ryan Pinder KC, the attorney general himself, in an earlier response to Tribune Business questions, said the US report “can almost be a copy and paste each year” by trotting out the same assertions and themes with no recognition of any improvement by The Bahamas.

“The Bahamas is one of very few countries in the world that are 40 for 40 on the FATF recommendations,” he added. “The US has not accomplished this. This objective determination on our fight against money laundering continues to go without recognition from the US authorities.”

Mr Pinder, echoing the release later issued by his ministry, said that by not collecting beneficial ownership information on all American-domiciled corporate entities, and adopting its own, “lesser” standard for information exchange, the US is effectively undermining global standards and the battle against money laundering and other financial crimes.

This, he warned, could result in “regulatory arbitrage” where dubious actors seek to exploit the US financial system based on perceived regulatory loopholes. His ministry, in its later statement, called for international financial regulation to be applied “fairly and consistently” across all countries to achieve a “level playing field” for all.

“The Bahamas remains fully committed to upholding the highest international standards in financial regulation, anti-money laundering and tax transparency. Our compliance with all 40 recommendations of the FATF is a testament to the strength of our regulatory framework and the Government’s proactive approach in maintaining a well-regulated financial services sector,” the Attorney General’s Office said.

“Despite our demonstrated commitment, we note with concern that the US State Department’s most recent report continues to rely on language repeated nearly verbatim year after year, with little or no acknowledgement of our country’s demonstrable progress. A review of these reports over the past decade suggests a lack of substantive engagement with the significant reforms we have undertaken.

“It is also important to recognise that international financial regulation must be applied fairly and consistently. The Bahamas has fully implemented global standards, including tax information exchange mechanisms widely adopted by the international community,” it added.

“However, there remain areas where some jurisdictions, including the US, have yet to align with these global best practices - such as the full collection of beneficial ownership information and adherence to the CRS.. We encourage continued constructive dialogue to ensure that regulatory assessments accurately reflect the efforts made by jurisdictions like ours that have consistently prioritised compliance and transparency.”

Mr McCartney, meanwhile, was blunter in his reply by pointing out that a significant portion of global proceeds of crime flows through the US financial system. Suggesting that the US State Department had issued a “blanket statement” on The Bahamas, he said: “We’ve got all sorts of things in place, legal provisions dating back to 2000 and, over the years, they keep on moving the goal posts as to how we should operate.

“Our laws should really speak for themselves and be sufficient evidence. I think they’re over-stepping into our jurisdiction, quite frankly, and all around. We’re a sovereign, independent country. We have our laws in place, but to come out and say we’ve not done anything and so on and so forth, that’s false.

“They need to look in their own backyard before they come to our country and talk a bunch of foolishness. Deal with your own home first before you come here and criticise,” Mr McCartney added. “I would urge the Government to stand firm as an independent nation. Our laws are safe, our laws are strong.

“This really a bit of foolishness. They need to take care of their own house first before meddling in other countries. Stand firm, this government, this administration. Stand firm on our independence, sovereignty and laws, period. They [the US] need to take care of their own home first; the man in the mirror. Handle your own situation there.”

Mr Moss, meanwhile, described the US State Department report as akin to “political gamesmanship” and agreed that “this could be a case of ‘the pot calling the kettle black’”. He added that “the billions” in fraudulent and corruption proceeds that flow through the US financial system dwarf any that make their way to The Bahamas.

The US State Department 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. Mr Moss, though, pointed out that “there’s no barometer to measure” how well a nation is prosecuting financial crimes, and said many cases lack sufficient evidence to prosecute.

“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 co-ordination and political will to successfully adjudicate complex financial crimes.”