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Gov't Targets 75% Technical Comply On Anti-Money Launder

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE Government is targeting "at least" 75 per cent compliance with anti-money laundering 'technical' standards, the Attorney General yesterday pledging there would be no regulatory "over-reach".

Carl Bethel, in an address to the Bahamas Association of Compliance Officers (BACO), reiterated the Minnis administration's determination to address the deficiencies in the Bahamas' anti-money laundering and counter-terror financing regime.

He disclosed that the Government aims to reverse the findings of the Caribbean Financial Action Task Force's (CFATF) latest Mutual Evaluation Report on the Bahamas, which found this nation only 'partially compliant' on 21 - more than 50 per cent - of 40 'technical' standards.

While the Bahamas was deemed 'non-compliant' with just one standard, and found 'compliant' and 'largely compliant' on eight and 10 respectively, Mr Bethel said the Government planned to soon publish a summary of the long-awaited National Risk Assessment (NRA) on money laundering.

The CFATF report, which examined the Bahamas' defences against financial crime, rated this nation as in either 'moderate' or 'low' compliance with its 11 'effectiveness' ratings.

"The gaps identified by the CFATF included an incomplete national risk assessment; lack of money laundering investigations, prosecutions and convictions; lack of effective targeted sanctioning regime; identification of a large number of unverified banking facilities; low suspicious transaction reporting; anti-money laundering and counter-terror financing sanctions too limited," Mr Bethel said.

"There is a need for timely responses to international exchange of information requests; need for development and implementation of a risk-based approach by regulators for credit unions, securities industry, and designated non-financial business and professions; as well as the lack of demonstration of sufficient awareness of money laundering/terror financing risks by financial institutions and compliance officers."

The National Risk Assessment's (NRA) completion will address one deficiency, the Attorney General adding: "The NRA is due to be discussed with the Cabinet of the Bahamas within the next fortnight, with a summary version published and thereafter discussed with the wider stakeholder groups, inclusive of the private sector."

Mr Bethel said the Government's response also includes a comprehensive legislative overhaul, with the Attorney General's Office having drafted changes to the Proceeds of Crime; Financial Transactions Reporting; Travellers Currency Declaration; Customs Management Regulations; and Anti-Terrorism Acts. Bills to fight corruption and create an independent director of public prosecutions are also included in this effort.

"It is the Government's intention that the end result of the implementation of the noted action plans and the enactment of the compendium of Bills, which were reviewed to ensure that there would be no strong sense of regulatory 'over-reach', [will be that] the CFATF's 11 'effectiveness' ratings would be greatly be improved, with most falling within the substantial level of effectiveness, and the 40 'technical' ratings improved to at least 30 compliant and largely compliant positions, with no non-compliant positions," Mr Bethel said.

"Quite frankly, the Government rejects any suggestion of any strategy of foot-dragging or seeking to strategically lag behind perceived competitors in our region."

Acknowledging concerns that the Bahamian financial services industry has not grown for 15-20 years, Mr Bethel said the recently-tabled Commercial Enterprises Bill was part of the Government's strategy to address this.

The Bill introduces a 'fast-track' work permit process for targeted industries, allowing their key management and specialist personnel to enter the Bahamas and set-up operations before applying for such a permit.

Financial services leads the way among the targeted industries with reinsurance; captive insurance; investment fund administration; arbitration; wealth management; international trade and international arbitrage all included in the 'fast track' work permit sectors.

Mr Bethel said these were all relatively new segments to the Bahamian financial services sector, with the Government hoping the 'fast track' work permit process will lure firms to this nation from other jurisdictions.

"These new enterprises are not currently to be found in any significant numbers in the Bahamas," he argued. "The aim is to attract new businesses that hitherto chose other jurisdictions for their domicile. Certain rigidities, particularly in the administration of our Immigration regime, will be relaxed.

"The strategy is to tie Immigration flexibility to training and capacity building of Bahamians in areas not presently being offered in the marketplace of our financial services regime. As the saying goes: When there is food on the table, everyone can eat. I would add that where there is no food, we all starve."

Mr Bethel said data from a recent IMF report suggested that the financial services industry's GDP contribution had not grown over the past 15 years.

"As one Bahamian leader in the sector said to me just yesterday: 'We are holding on; barely'," the Attorney General recalled. "The fact is that, overall, growth in the sector has been stagnant, and has lagged far behind the growth in the domestic economy. This government is intent upon reversing this unacceptable trend in the financial sector.

"Let's be real. There are many educated and qualified young Bahamians who remain abroad after completing their studies simply because the kinds of skills that they have acquired are not located in the Bahamas. They have to stay abroad.

"Why can't we attract these businesses which are not in the Bahamas today, and provide the kinds of jobs, capacity building and opportunities for which so many young Bahamians have trained, but which today are not conducting business in the Bahamas?

"When Sol Kerzner came to the Bahamas in the early 1990s he reinvented tourism here. He did so with an almost totally foreign management. Today, 20 years later, more than 90 per cent of the management at Atlantis is Bahamian. This miracle of capacity building can be duplicated and replicated throughout our financial services sector."

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