The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas’ financial services regulatory regime had largely addressed all previously-identified deficiencies just before international watchdogs subjected it to its latest anti-money laundering assessment in late 2015.

The Caribbean Financial Task Force (CFATF), the regional affiliate of the body that ‘blacklisted’ the Bahamas in 2000, said this nation had enacted sufficient reforms to enable it to “exit” the ‘follow-up’ reporting process stemming from its third anti-money laundering review.

This meant the Bahamas received a timely boost just prior to the same organisation, the CFATF, undertaking its fourth evaluation of this nation’s anti-money laundering and anti-terror financing defences in late 2015.

The results of the so-called ‘fourth evaluation’, which took place between November 30 and December 11, 2015, are now awaited by the Government, financial services regulators and the industry.

However, the CFATF report confirming the Bahamas’ exit from the ‘third evaluation’ process, issued the same month, also revealed that this nation chose not to put off dealing with previously outstanding issues, which it could have combined with the latest assessment.

“Countries that are within six months of their onsite [fourth evaluation] could request that [the CFATF] agree to have their outstanding third round mutual evaluation issues dealt with in their fourth round assessment,” the report said.

“The Bahamas opted not to make this request at the May 2015 plenary, preferring to address its primary outstanding deficiency and exit the third round follow-up process before its fourth round assessment.”

This it successfully accomplished, with the CFATF’s November 2015 report stating: “The Bahamas has made progress in addressing the deficiencies in its non-core and key recommendations that were rated partially compliant/non-compliant to the extent that the remaining outstanding recommendations are all at a substantial level of compliance...

“The Bahamas’ application for removal from the follow-up process is based on its compliance with the core and key recommendations that were rated partially compliant/non-compliant.”

Detailing some of the prior deficiencies, the CFATF report said concern had existed over whether suspicious transaction reporting (STR) had taken root in non-bank institutions, given that they accounted for just 9 per cent of all such reports.

“This deficiency was based on a review of statistics that were provided by The Bahamas for the period 2001-2004, showing the number of STRs that were filed by reporting entities,” the CFATF said.

“The examiners were of the view that the figures for the non-banking sectors, which represented 9 per cent of the total STRs submitted to the FIU (Financial Intelligence Unit) over the period, raised the issue as to whether there was effective implementation of STR measures by those sectors.

“The Bahamas addressed the deficiency by increasing the amount of training that was being provided to the non-bank sector with regard to suspicious transaction reporting. Over the years since the evaluation, training on this subject has been provided by the Financial Intelligence Unit and the Compliance Commission.”

The CFATF report also described how Bahamian financial services regulators, with the exception of the Central Bank, had all been under-staffed, impacting their ability to adequately regulate and supervise their licensees.

“In an effort to address this noted deficiency, the Bahamas significantly increased the staff level at the Securities Commission of The Bahamas from 38 employees in 2006 to approximately 70 employees in June 2014,” the CFATF said.

“Provisions were made in the budget for the Office of the Attorney General to add 18 new attorneys, and there has been an ongoing drive to recruit both senior and junior attorneys.

“The Compliance Commission has increased its staff complement from six persons in 2006 to eight persons as of October 2015, when one examiner and two other staff were hired.

“The staff hired as an examiner is an attorney, and this has been done with the expectation that the Compliance Commission will increase its enforcement capabilities. The Insurance Commission has a total staff complement of 28. The deficiency has been fully addressed.”