Lawyers Must Act As Financial Institutions

Attorney General Carl Bethel.

Attorney General Carl Bethel.


Tribune Staff Reporter


UNDER the updated Financial Transactions Reporting Act (FTRA) lawyers will be treated as "financial institutions", Attorney General Carl Bethel told the Bahamas Bar Association yesterday.

During his speech, Mr Bethel reiterated that in an evaluation the country received last summer, The Bahamas was found to be deficient in 22 out of the 40 recommendations of the Financial Action Task Force (FATF).

One requirement for The Bahamas was to bring into effect an updated FTRA. According to Mr Bethel, the FATF breaks its recommendations down to "almost microscopic suggestions that are called methodologies".

"To comply with the recommendation, you have to show that you have the methodology in place and are implementing it," he said.

"Now, how do you get the methodology in place? You have to craft laws almost with microscopic attention to these methodologies.

"That is… the process we've been at. And so today we now have an FTRA and by this evening, God willing, the House would have accepted the Senate's amendments which will…close the circle and we will have a fully compliant and acceptable [FTRA] that will meet all of the deficiencies that were identified in respect of our compliance in these aspects."

Mr Bethel explained the FTRA is based in system of compliance and due diligence, and thus will "henceforth" be the standard of conduct for all participants in financial services.

"Lawyers, accountants and other sort of professionals were never treated as financial institutions before," Mr Bethel said.

"They merely had duties of customer due diligence, making STR, Suspicious Transaction Reports, possibly. But they were never given the duties of being a financial institution. That's all changed. They are now in a category of financial institutions."

This is one "basic innovation" of the act. Mr Bethel explained to the Bar Association that as attorneys, they are "designated non-financial businesses and professions". As such, he noted that "verification is now the standard" for their field.

"Obtain and verify," he said. "Don't just give me your utility bill. I require you to go to counsel attorney in your home country, and have them say, 'I have compared this with the original and this is a genuine bill, [I've] notarised it'. That's an item of verification. You have to go that extra step."

Mr Bethel described this as "enhanced" due diligence.

Additionally, as financial institutions, lawyers are now expected to "comply and be regulated", Mr Bethel said.

"I know that there has been an issue between the Bar Association and the Compliance Commission. But unfortunately, under the new law, this must be resolved in favour of a cooperative relationship between the profession and the commission."

In this regard, major law firms will be expected to hire compliance officers. In smaller law firms, a senior partner can be nominated for this role. And in one-person law firms, the sole attorney can serve as the compliance officer.

The Attorney General also discussed the issue of lawyer-client privilege, emphatically stating that "privilege does not extend to…. facilitating the commission of a crime by a client."

"Of course, privilege can extend to, 'okay, you're in trouble, let me see how I can best frame your defence', that's a different issue."

However, "there are limits to privilege".

Mr Bethel referred to the fact Canada does not adhere to this regulation, as its Supreme Court has ruled lawyer-client privilege as "akin to an absolute right" and that "any intromission into this sacred territory violated certain articles of the Canadian Charter of Rights".

However, Mr Bethel suggested that Canada itself was "embarrassed" by the breadth of ruling, as a member of the the FATF. He added the country also is given negative ratings in this area in its mutual evaluations.

Despite this precedent, Mr Bethel underscored the reasons why The Bahamas cannot follow in Canada's footsteps.

"The Bahamas, however, I don't think we amount to a…sub-borrower in Toronto. Canada is a country with enormous natural resources, 40-50 million people, standing army, navy, Air Force; they don't need the world as much as we do.

"We have an entirely open economy. We are an integrated part of the world. And we're very small. We don't have the luxury that a Canada can enjoy.

"So we are not going to legislate, have not legislated any exemption, and it is expected that lawyer-client privilege will be kept within due bounds."

"And I hope I am well understood that anytime counsel is aware of anything untoward, it is mandated by law, and we always follow the law as lawyers, that SDRs be generated."

Mr Bethel ended his remarks by expressing "full confidence" in the legal profession in The Bahamas, and praised it for piloting this "ship of state" through "many such storms".

He added: "We get through hurricanes…. we know how to pilot the ship. Let us remember that it's not survival of the fittest, it's survival of the smartest."


Well_mudda_take_sic 5 months ago

Repost: Like Trump in the U.S., we should be telling the EU to go fly a kite. The EU persists in usurping our sovereign right to determine what is in our best interest as a nation. They do this under the ill-conceived notion that they somehow have a right to bully smaller nations like ours for their own economic benefit. For the past two decades they have been bullying us to act as an enforcement arm of their own taxing authorities, but entirely at our cost. Furthermore, they have maliciously made it impossible for our offshore financial services sector to compete with their own onshore financial services sector. Bahamian taxpayers and Bahamas-based financial institutions have been saddled with outrageous costs because of the morally reprehensible motives of the EU aimed at unfairly serving their interests to the detriment of our own. The EU countries do all of this bullying under the guise of protecting the tax bases and financial systems of their own countries from money-laundering and terrorism. But that is all poppy-cock because the main EU countries (Germany and France) are quite content to have very close economic ties and interests in common with the world's chief sponsor of money-laundering and global terrorism, namely Iran. What an utter joke! We need to start looking out for our own interests before it is too late, even if that means cozying up to a big brother like the U.S. or China. Yes indeed, it is high time the EU be told to go fly a kite whenever it behaves like a bully with no regard whatsoever for our sovereign interests and the standard of living and quality of life of the Bahamian people. Their people are no more important than ours!


Economist 5 months ago

This is the result of years of slackness by the Exchange Control Department of the Central Bank of The Bahamas in the 1980's and 1990's.

Remember lawyers like Nigel Bowe who helped launder millions of drug money for drug dealers (also Carlos Leader) and wound up being extradited to the US.

And the Banks Supervision Department that allowed Guardian Trust Company to have accounts for people like Carlos Leader. Also allowed Suisse Security Bank to do what it did right under their noses.

We are all paying the price of slack ways of the past.


Well_mudda_take_sic 5 months ago

Bullocks! What about all the money laundering and terrorism activities that take place daily within most EU countries, especially Germany and France? Why should these countries think they are in any way entitled to hold us to a higher standard? The world is threatened by their slackness.....not ours!


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