The Tribune

By NEIL HARTNELL Tribune Business Editor THE US government has again urged the Bahamas to strengthen its anti-terror financing laws and make membership of organised criminal gangs a criminal offence, according to a recently-released US State Department report. The annual 2012 International Narcotics Control Strategy Report (INCSR), which details efforts by world governments to fight the illegal drug trade and associated money laundering, largely repeated prior US criticisms of the Bahamas' financial regulatory system, such as the resources provided to supervisors and the absence of a public registry detailing all beneficial owners of Bahamian-domiciled entities. Indeed, many of the weaknesses identified appeared to be those fingered in the third mutual evaluation report on the Bahamas' financial regulatory infrastructure, which was conducted by the Caribbean Financial Action Task Force (CFATF) in 2007. Given that this report is some five years old, it is quite possible the US State Department may have relied on inaccurate, outdated information, given that the Bahamas has had every opportunity to correct these deficiencies. That could not be confirmed, though, as John Delaney, the attorney general, did not return Tribune Business's phone calls. Summing up its assessment of the Bahamas' weaknesses, the INCSR report said: "The Government of the Commonwealth of the Bahamas should provide adequate resources to its law enforcement, judicial and prosecutorial bodies in order to enforce existing legislation and safeguard the financial system from possible abuses. "The Bahamas should continue to enhance its anti-money laundering/counter-terrorist financing regime by implementing the National Strategy on the Prevention of Money Laundering; by ensuring full compliance with United Nations Security Council Resolutions (UNSCRs) 1267 and 1373; criminalising participation in an organised criminal group; tightening the currency transaction reporting system; and by implementing a system to collect and analyse information on the cross border transportation of currency. "It should also ensure there is a public registry of the beneficial owners of all entities licensed in its offshore financial centre." When it came to the latter requirement, countless Bahamian government and private sector officials have repeatedly pointed out - via Tribune Business - that no such list is required, as the relevant regulators are always able to obtain beneficial ownership information on Bahamas-domiciled entities from their registered agents when required. The absence of legislation criminalising organised gang membership harkens back to the Palermo Convention, and the Bahamas' failure - at least up to 2007 - to sign on to this. It was noted by the CFATF report, which said: "The Bahamas has not ratified the Palermo Convention and should move to do. "The Bahamas should also move to criminalise a person's participation in an organised criminal group as required by the Convention, and to extend the existing measures to cover this type of offence." Both the UNSCRs mentioned, 1267 and 1273, relate to the freezing of alleged terrorist assets. Referring to the Bahamas' Anti-Terrorism Act (ATA), the CFATF report of 2007 said: "The ATA does not fully implement the requirements of UNSCRs 1267 and 1373, particularly as they relate to the freezing of the funds or assets of terrorists. "The ATA does not comply with UNSCR 1267 because the court may order freezing upon reasonable belief that a person is involved in terrorist activities, but cannot order freezing solely on the basis of a designation by the UN Al Qa'ida and Taliban Sanctions Committee," that report said. "The ATA does not fully implement UNSCR 1373 insofar as the Bahamian authorities may not in all cases effect the freezing of terrorist funds without delay as required by UNSCR 1373, because of the separate procedural requirements of the ATA in respect to listing and freezing applications.. "The requirements in the ATA for reciprocity as a pre-condition for effecting freezing of assets may not constitute '...the greatest measure of assistance ...' as contemplated by paragraph 2(f) of the Security Council Resolution." The other US concerns, relating to cross-border currency transportation, were also raised in the same five year-old CFATF report. The INCSR said the Bahamas Drug Enforcement Unit (DEU) arrested more than 80 persons on drug-related offences, and seized $938,521 in cash, during 2011. "Money laundering trends include the purchase of real estate, large vehicles and jewellery, as well as the processing of money through a complex web of legitimate businesses and international business companies (IBCs) registered in the offshore financial sector," the INCSR report said. "Drug traffickers and other criminal organisations take advantage of the large number of IBCs and offshore banks registered in the Bahamas to launder significant sums of money despite strict know-your-customer (KYC) and transaction reporting requirements." Noting that the Freeport Container Port remained a major transit point for illegal drugs, the US State Department added: "The majority of cocaine seized in recent years has been concealed in containerised cargo transiting the Freeport Container Port on the island of Grand Bahama. "DEA believes that Colombian traffickers are utilising containerized cargo as a means to thwart the efforts of law enforcement officials in the Bahamas. Approximately three metric tons of cocaine have been seized at the Freeport Container Port since 2007. Nevertheless, the amounts seized from containers have diminished in recent years, including 2011."