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Ag: We’Ll Deal With ‘Major Slippage’ In Anti-Launder Regime

THE Attorney General yesterday pledged to address the Bahamas’ “significant slippage” in the battle against financial crime through roll-out of its National Risk framework before year-end.

Carl Bethel QC told Tribune Business that implementation of this nation’s anti-money laundering strategy, as defined by the just-published National Risk Assessment (NRA), would begin before year-end.

Acknowledging that the Bahamas’ compliance with the Financial Action Task Force’s (FATF) 40 recommendations had slipped in the decade to 2017, Mr Bethel promised that the Minnis administration was “addressing every area” of weakness using the NRA as its ‘road map’. Describing the Government’s approach as “implementation, implementation, implementation”, he acknowledged that the Bahamas had not done a good job of enforcing the laws on its books -a key criticism of both domestic and international observers.

“We’ve already drafted a National Risk Strategy, which will govern the way in which we implement [the NRA framework] itself, starting immediately,” Mr Bethel told this newspaper. 

“That was my instruction to them. Even though we’ve not passed the Financial Transactions Reporting Bill, Proceeds of Crime Bill and Travellers Currency Declaration Bill, the intention is to begin as soon as possible - hopefully before the end of this year - the implementation of the strategy to roll-out the NRA framework.” The three-strong package of Bills is set to be passed by Parliament in the New Year, once consultation has occurred.

The Attorney General, meanwhile, explained that the NRA framework, and its anti-money laundering/counter terror financing regime, aim to move the Bahamas from a prescriptive, statute-based approach to Know Your Customer (KYC) due diligence to one that is more risk-based.

This means that persons with minimal risk of being involved in financial crime, such as old age pensioners, will be subjected to a lower level of KYC assessment and documentation than the likes of Politically Exposed Persons (PEPS), such as politicians and their family, friends and close associates, or persons in “high risk businesses”.

The NRA identified such “high risk businesses” as the likes of web shops, pawn brokers, dealers in precious metals and stones, and payday lenders. They all fall under the category of designated non-financial businesses and professions (DNFBPs), which the NRA report said attracted a ‘high risk’ or 0.75 out of 1 rating.

Mr Bethel said the NRA’s implementation would mandate that all regulatory agencies set “the standard for risk assessment and due diligence” in each of the industries they oversee, along with training mechanisms and protocols for supervised entities.

“It is of the highest priority,” he added of the Government’s anti-money laundering reforms. “We are moving at pace; not too fast, and seeking to get as much commercial, social and business buy-in from all sectors affected.”

Mr Bethel confirmed the deterioration in the strength of the Bahamas’ anti-money laundering and counter-terror financing defences since 2007, a development that was highlighted in a recent presentation given by Charles Littrell, inspector of banks and trust companies

He disclosed that the Bahamas was in 2007 deemed ‘compliant’ with 12 of the FATF’s 40 anti-money laundering recommendations, and ‘largely compliant’ with a further six.

Yet in 2017 this nation was rated as ‘compliant’ on only eight out of the 40 by the FATF’s Caribbean affiliate, and ‘largely compliant’ with 10 - a reversal of its ratings in the top two categories 10 years’ earlier. The Bahamas’ scores in the ‘partially compliant’ and ‘non-compliant’ categories remained broadly the same.

While the Bahamas’ performance was ahead of Jamaica’s, it stood behind the likes of the US, Canada and Singapore. Mr Littrell, in a slide entitled ‘Why no FATF progress’, suggested the Bahamas’ assessment ratings had either declined or stood still because of shifting global standards and its own inaction.

He added that the result was that “the Bahamas is in essence on probation” when it comes to its anti-money laundering and counter-terror financing regime, with another CFATF evaluation set for next year.

Mr Bethel, agreeing with this assessment, told Tribune Business: “It is what it is. We’ve slipped significantly. We are where we are. It’s unfortunate, but we are addressing every area where there has been slippage in the Bahamas over the past 10 years.

“We intend to correct, address and improve our levels of compliance and effectiveness in this area. One of the areas we received a low ranking on is implementation.”

Tribune Business revealed yesterday how the deficiencies in the Bahamas’ CFATF report have already attracted international attention, with Transparency International’s official blog carrying a posting headlined: ‘It’s official: The Bahamas has a serious money laundering problem’.

The posting highlighted the weaknesses identified in the CFATF report, such as the filing of few suspicious transactions reports (STRs) compared to the Bahamian financial services industry’s size; the weak and limited enforcement capacity of government agencies; ineffective sanctions; and virtually no money laundering-related convictions.

Lemarque Campbell, chair of Citizens for a Better Bahamas, the local Transparency International contact, told Tribune Business in a recent interview that the CTATF findings exposed “a long-standing issue” relating to this nation’s ability to effectively enforce the laws already on the statute book.

“This has been a long-standing issue over many administrations,” he said. “This [the CFATF report] shows us there’s been a lack of enforcement of actual laws, and there’s been limited capacity to ensure we’re not perceived as a jurisdiction facilitating money laundering.

“What we take from this is the Government not only needs to be committed to enforcement but increasing the capacity. When we look at local enforcement capacity, this is something that has to be taken into consideration.”

Also agreeing with this point, Mr Bethel told Tribune Business: “It’s one thing to pass laws, it’s another thing to enforce it. Laws are not self-enforcing. There has to be political will there to see the laws enforced, and then judicial and investigative capacity.

“When the investigative capacity kicks-in, we’ll see the judicial capacity build in. We are going to address it. Implementation is the mantra that guides us. We have the NRA and are starting to implement it. Implementation is the watchword for what we are doing. Our entire focus now is implementation, implementation, implementation across all the disciplines, all the areas.

“We are going to do, as we say in Bahamian-ese: ‘Our endeavour best to ensure the country will benefit from the new legislative regime, and the financial services sector and overall economy improved as a result of our efforts.”

Mr Bethel added that he was chairing the National Task Force now overseeing implementation of the NRA framework, which is meeting on a weekly basis.

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