AG: Bahamas ‘in danger’ over money launder flaws

ATTORNEY General Carl Bethel.

ATTORNEY General Carl Bethel.


Tribune Business Editor


The Attorney General yesterday slammed deficiencies in this nation’s anti-money laundering regime as “entirely unacceptable”, warning they had put the Bahamas “in great danger”.

Carl Bethel told Tribune Business he had been so alarmed by the Caribbean Financial Action Task Force’s (CFATF) draft report on the Bahamas that he instructed his staff to begin work on addressing the flaws from early June 2017.

Emphasising that corrective action was “absolutely critical” to protect the Bahamian financial services industry’s reputation and competitiveness, Mr Bethel blasted the former Christie administration for failing to tackle known weaknesses with the necessary urgency.

He added that the Minnis administration was preparing new Proceeds of Crime and Financial Transaction Reporting Acts to deal with the most pressing concerns, which he described as the Bahamas’ ‘low’ effectiveness in six out of 11 anti-money laundering/counter terrorism financing categories.

Tribune Business revealed on Monday how the CFATF’s July 2017 Mutual Evaluation Report (MER), an assessment of this nation’s defences against financial crime, identified numerous legal and practical deficiencies in the regime.

Mr Bethel yesterday acknowledged the potential jeopardy facing the financial services industry and wider economy if these gaps were not closed immediately, especially since the CFATF is the regional affiliate of the body that ‘blacklisted’ the Bahamas in 2000.

“I don’t need to get a negative Mutual Evaluation Report to see the danger,” the Attorney General told Tribune Business. “As soon as I saw the initial report, I and all my staff saw the great danger it could put the Bahamas in if not addressed.

“From my point of view, as I told my officials, we in the Bahamas, we don’t slunk, we don’t drag our feet; we do what has to be done to preserve the name of the jurisdiction, preserve its integrity, and preserve its ability to compete. Because so long as we can compete, we will win. Let’s do what has to be done to fix this mess bequeathed to us, if you will.”

Mr Bethel acknowledged that “a bit of work was ongoing before I came in”, prior to the May 10 general election, but he argued that the former Christie administration had failed to give the necessary reforms due priority and attention.

Disclosing that he had the “impression things were just plodding along”, he told Tribune Business: “I don’t want to criticise others. but I think more urgency was needed. I hope to give it that urgency. In my view, it was not being pushed as well as it should have been.

“My colleagues in Cabinet are concerned; we all are. We are intent on doing what needs to be done to defend the Bahamas’ status as an international financial services provider,.”

The Attorney General said that when he saw the CFATF’s initial report, he asked Attorney General’s Office staff: “What have you been doing for five years?

“It was entirely unacceptable for me for the Bahamas to be rated non-compliant in many of its international obligations. When I read the initial report, I said it was unacceptable and is not going to be allowed to continue. I said there’s absolutely no way I’m going to accept it.

“I started [work] before the report was published, and will not stop until we are fully compliant in all our international obligations. We take our responsibilities very seriously.”

Mr Bethel said he and his office had begun work on legislative amendments to correct the deficiencies in the first week of June, less than a month after taking office.

“We are addressing them systematically, point by point,” he said of the CFATF’s findings. The Attorney General said priority focus was being given to the six categories where the Bahamas’ anti-money laundering/counter terror financing regime was rated as having ‘low’ effectiveness.

The CFATF, in summarising its findings on the Bahamas, said: “The main deficiencies in technical compliance are in targeted financial sanctions for terrorist financing and financing of proliferation; understanding and assessing national money laundering/terror financing risks; and developing anti-money laundering/counter terror financing national strategies, and transparency and beneficial ownership of legal persons and arrangements.

“Significant weaknesses in effectiveness are in the areas of money laundering/terror financing confiscations, investigations, prosecutions and convictions; the identification of national money laundering/terror financing risks; and development of appropriate anti-money laundering/counter terror financing strategies and proliferation financing financial sanctions.”

The chief corrective tool is “the whole new Proceeds of Crime Act that we’re about to table”, Mr Bethel said, suggesting that the legislation just required Cabinet approval before it moved forward.

“We met a draft at the bottom of the file, with large areas blacked out, and large areas ‘subject to policy’ that had not been addressed in eight months,” he said of what the former government had left.

“I took that, went with it and, in a matter of weeks, had finished it. The Proceeds of Crime Act is ready to go. We have to discuss it in Cabinet, go through the Bill, so we’re all aware of it. That process will take place in a week or so.”

The Government is also preparing a revised Financial Transactions Reporting Act, which Mr Bethel described as “a cutting edge Bill” that attempts to place the Bahamas ‘ahead of the curve’ by addressing the international community’s existing - and future - concerns.

With cyber crime, human trafficking and nuclear weapons proliferation all set to come within the definition of money laundering/terror financing offences, Mr Bethel said the Bill had “set a new category” by identifying these risks and addressing them ahead of evolving global standards.

Mr Bethel said the new Financial Transactions Reporting Act’s passage through Parliament would take longer, as it had to be sent out to the financial services industry and other private sector players for consultation.

“There are changes foreshadowed that might affect portions of industries that prior to this might not have been a focus for money laundering and terrorism financing,” he explained.

Mr Bethel said a risk-based approach to dealing with money laundering, terror financing and other forms of financial crime was also being demanded from the Bahamas.

“What they wanted from the Bahamas, and are not seeing internationally, is a mandate for risk-based financial supervision,” Mr Bethel told Tribune Business. “They want the regulators to educate licensees and providers in methods to assess accounts or transactions that may be suspicious on a risk basis.

“You look at a particular transaction: Is it a high risk money laundering situation, or does it have the potential for terrorism financing? Does it fit patterns that we’ve seen elsewhere, rather than say: ‘That’s John, someone’s given him $10 million. We know him, and can just wave it off’.

“The idea is to develop a risk-based process, so that when 2 + 2 comes across the desk, it makes 4.”


Well_mudda_take_sic 6 years, 6 months ago

This comment was removed by the site staff for violation of the usage agreement.


killemwitdakno 6 years, 6 months ago

And we should always know what other states request in each instance so they don't keep secrets on the world's security.

We're not into trafficking, dictators slaughtering their own, and nukes.

BTW, is OECD working on allowing the $13B in hurricane relief yet?


sheeprunner12 6 years, 6 months ago

If Carl Bethel wants to get rid of the "danger" ......... close down the webshops and the Numbers Mafia ring in the country ...... But if 80% of the Cabinet is answering to the Numbers Boys, then Carl has to shut his mouth and look for some other "alternative solution" ...... #corruption


bogart 6 years, 6 months ago

Ironic that on this small island where the Bahamas was the dominant offshore centre a few decadds ago and with some of the most progressive banking laws persons allowed one bank to collect the proceeds of the illegal gaming business, other banks avcepting deposots from a worker at the COB, alleged missing millions fron the Road Ttaffic area, Electricity corp finds alleged illegal from fraud and one banker chargef, millions in questionable loans impaling the public with the Rrsolve agency... costing emmergency bailout...even suing the regulator the Central Bank...but the govt picking sides and yes bailing iy out again with the peoples money and noone charged...but is not new as noone was ever hehd accountable over the decades...most baffling as to who is running the bank...bank allowed to compete with foreign banks following the rules and stringently meeting tier 1 and 2 ratios.....auditors challenged with following internatoonal rules amd revealing all vs keeping it with the people who hires them...Surely with no forensic examinations and hundreds og millions of the peoples money poured into this bank and noone doing the bank lane shuffle is incredible...the workings og the loan officers must be examined...not one bank but all banks especially where the Bahsmian customers are complaining and there seems noone can do anything even the Central Bank over the 10 dollar fee to cash a cheque and a Consumer Protection agency who are paid as a govt agency...bizzare if one has to complain on a govt agrncy or bank...onward... ....one offshore bank Mossack closing amd leaving the Bahamas snd hrn reappearing again and then files revealed, bales of drugs being captured yet there must be somewhere millions to pay for it...once illegal web shop funds now invested and in the system....AND yet noone is guilty and the pressure of the outside agencies to apply derisking and quesrion the involvement of legimate outside banks as correspondence banks must be taken seriously. Anazing politicians sit across the parliament table just cjanging sides and the same discussion still going on....imagine former PrimeMinister was implementing laws from 2000 and the politicians are still having discussions...and noone has yet been jailef except for one Bulgarian and even him is appealing.


Well_mudda_take_sic 6 years, 6 months ago

@bogart: Quite garbled and rather disjointed but nevertheless a good read. Thanks.


screwedbahamian 6 years, 6 months ago

its very difficult to graft an oak tree. if the trunk ( the people in government) are immoral and corrupt you can not have the branches ( laws) to effect change. If laws are going to work, you must have governments who are morally committed to uphold them. Short term Investors love corrupt governments, why, they know that the governments are not committed to long term results and neither are they. Only governments can bring about Investors long term meaningful investments and results, by displaying to the world that they will do business ABOVE BOARD, TRANSPARENT and ALWAY for the tangible long term betterment of the country and its people and not for the betterment of the individuals representing Governments, their family members and Lovers as have been the case for far too long in the Bahamas. To my knowledge 30 percent (%) maximum of all profits from International business are put into the local economy through salaries and in most of the cases on a short term basis. The present government must enact laws that will eradicate all perceived condoned government corruption and prosecute any and all government members of previous governments for corruption and if found guilty sent to prison and they and any immediate family members BARRED from serving in any future government of the Bahamas.


Reality_Check 6 years, 6 months ago

Carl Bethel, like his predecessor Allyson Maynard-Gibson, thinks he's a savvy politician, bright lawyer and legislator par excellence. But those of us who know him well worry a lot about his many shortcomings, including being too clever and shrewd for his own britches, and a propensity to often deal with significant issues in an underhanded haughty manner. Minnis would be wise to keep a very close eye on Bethel, as well as Symonette and D'Aguilar.


sheeprunner12 6 years, 6 months ago

Carl seems to be scared to pull the plug on Perry's Bad Boys ....... why??????


DDK 6 years, 6 months ago

Possible nefarious involvement? You gotta love politicians!


Bonefishpete 6 years, 6 months ago

Well when the Last bank closes on the family islands we all will be laundering money.


Well_mudda_take_sic 6 years, 6 months ago

A large part of the problem is how we, as a country, project ourselves to the developed countries. And in that regard the diplomat and other appointments abroad recently announced by Minnis are no better, and even be worse, than those that were made by the corrupt Christie-led PLP government. Can you just imagine someone like Sidney Collie (of all people) being appointed as our representative in Washington, D.C. "Yes", Washington D.C. is well known to have more than its fair share of sleezy diplomats and lobbyists, but did we have to increase their number by one more?!!!


TalRussell 6 years, 6 months ago

Comrades! One need only look at whom and where the focus the AG's peoples - has NOT yet to be directed?


TheMadHatter 6 years, 6 months ago

Hopefully he will include in his investigation some consideration of this issue:

An ordinary Bahamian goes into a bank and opens a savings account. The produce all of the needed documents: passport, new NIB smart card, power bill showing residential address and/or letter from cohabitant, former bank reference, employment letter, a statement of predicted levels of per month, character reference from a pastor, a statement concerning the source of any funds outside of their employment source, a letter from an aged and retired doctor concerning the exact or estimated shoe size of their paternal and maternal grandmothers.

The account is approved and opened. Copies and/or originals are kept by the bank of these documents.

Two months later THE SAME PERSON bearing the same passport and nib card, who is also personally known to bank staff enters the bank now having found that they require a checking account. Having gone thru the KYC process two months ago and being a "known customer" which is what the KYC regulations are for - they are now informed that they must produce ALL of these documents again to support their application and the bank cannot assist in any way with the copies held in their file. Basically you instantly become an unknown person without ID.

IF Mr Bethel could teach the banks not to WASTE TIME "identifying" already known customers - perhaps then they could spend time trying to uncover laundering activities. The KYC "know your custumer" regulations have been morphed into "HYC" - Harrass Your Customer.

Harrassing grandma who runs her straw shop by the boats dem aint going to stop international terrorists. BUT i guess it makes bank staff feel good for following "bank policy."

He should note therefore that banks follow "bank policy" and not the government's "KYC policy". So him changing regulations won't make any difference because banks only enforce BANK POLICY and not government policy.


DEDDIE 6 years, 6 months ago

My logic is simple.It makes no difference whether you are black listed or not, the end result is still the same. Off shore banking is non-existent. I think we would have been better off if we didn't comply.


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