'Blacklist Over - But We Must Be Wary Of More Eu Pressure'

Dion Foulkes, Minister of Labour.

Photo: Lionel Smith

Dion Foulkes, Minister of Labour. Photo: Lionel Smith


Deputy Chief Reporter


SENATOR Dion Foulkes yesterday forecast the country would soon face more pressures from the European Union and should be ready to act quickly to avoid further reputational damage.

On Friday, Finance Minister K Peter Turnquest announced the Bahamas had been removed from the European Union's "blacklist" of non-cooperative jurisdictions for tax purposes based on "excellent coordination" with a technical working group, assembled by the government to address the scenario.

The country was moved to Annex 2, commonly referred to as the grey list, and has until the end of 2018 to fulfil its commitments.

In December 2017, the country agreed to join the Base Erosion and Profit Shifting (BEPS) initiative but was blacklisted in March 2018.

According to Mr Foulkes, who is also Labour Minister, the Europeans are using their collective economic and financial strength to compel compliance with their initiatives.

These are designed to recover any taxes which might be lost to their ministries of finance, due to the operations of tax havens and offshore financial services centres, he said.

"Many Bahamians justifiably ask why do we accept such unrestrained exercise of extraterritorial power by the EU; why do we comply? The short answer is that 'we must comply'," Mr Foulkes said in the Senate yesterday. Senators are now on the second reading and committal of the Multi-National Entities Financial Reporting Bill 2018.

"Just as when the USA implemented the Foreign Accounts Tax Compliance Act (FATCA) in 2014, the whole world was forced to implement the automatic exchange of tax information on all US citizens who held bank accounts either in their own names or in a company registered in a foreign country. The untrammelled power and financial strength of the USA was enough to compel all to comply.

"The PLP, who were in government at that time, duly complied along with the rest of the world. Because failure to comply would have resulted in the imposition of harsh 'counter-measures' by the US, and the loss of the ability to utilise international wire transferring mechanisms such as the SWIFT system which is controlled by the US.

"For any country, the loss of such privileges and the imposition of economic sanctions would have had a disastrous impact, much more so on a small and open economy such as The Bahamas, where more than 90 percent of our tourists come from the USA.

"The Europeans have similar powers as the USA in the financial services arena. Hence, a blacklisting could easily have resulted in the loss of correspondent banking relations, where banks abroad - and particularly in Europe - could easily have decided to take "de-risking measures" by shutting off commercial relations with banks and financial institutions located in The Bahamas, on the basis that The Bahamas is a 'risky jurisdiction'."

He continued: "If correspondent banks in Europe were to stop taking deposits of money or payments made from The Bahamas, the effect would be exactly the same as if we were cut off from the SWIFT system by the USA; namely, that money could not go out of or come into The Bahamas by a wire transfer.

"Business would come to a screeching halt and the economic damage would be devastating and long-lasting. These are the harsh realities of today's world. It is all about tax collection. Period."

Regarding the Multi-National Entities Financial Reporting Bill 2018, Mr Foulkes said the legislation imposes what is called "Country by Country" reporting requirements on entities registered or incorporated in The Bahamas that are "constituent entities" in a Multi-National Entities (MNE) international business structure. If the head office of the MNE or parent is a company in The Bahamas then it must report.

He told the Senate this Bill enjoys wide support from the financial services sector because it is designed to have a very limited impact, meaning it applies only to MNE entities in The Bahamas which are a part of the Companies Structure of a Multinational Corporation such as IBM, EXXON, Google and others, which earns an Annual Gross Turnover in excess of $850 million.

So a Bahamian company or Parent Company which is a part of a MNE or transnational Company which earns gross turnover of less than $850m each year would be entirely unaffected by this law, Mr Foulkes said.


Well_mudda_take_sic 1 year, 8 months ago

What this arse Foulkes, Minnis and the other cabinet members will not tell you is that the real bees buzzing around in the bonnet of global financial regulators when it comes to how they view the Bahamas, are the money laundering and other criminal enterprises run by the racketeering numbers bosses like Sebas Bastian and Craig Flowers. Unless the Minnis-led government soon moves to repeal the web shop legislation in its entirety in order to completely shut down the web shops and their related money laundering enterprises, global financial regulators will begin taking steps to shut the Bahamas off from the international banking system no matter what else Minnis and his buffoons may try to do to appease them. And that's the sum total of the harsh reality we now face as a nation. Developed countries have no respect whatsoever for lesser developed countries that blatantly condone criminal enterprises by foolishly passing fallacious legislation to somehow make their illegal activities legal. The real world rightfully has little patience for such nonsense.


OldFort2012 1 year, 8 months ago

I am not saying that you are right or wrong, I am saying that I am highly dubious of your claims until you offer some evidence.

International regulators, imho, have never even heard of the web shops and have no idea or opinion of them, one way or another. As far as they are concerned , they are simple gaming industries, like casinos or sports betting firms. In addition, they are tiny by world standards. They are so tiny, they only register on a rock such as this one. Anywhere else, the amounts of money involved are so small as to be irrelevant.

As long as Bahamians offer proof that all they do is some domestic harm, no one is going to give a shit. We can kill ourselves as much as we like, just as long as we don't spread our viruses to civilised countries.

So, some proof of what you endlessly repeat, please? Or is it that a lie endlessly repeated becomes the truth?


Well_mudda_take_sic 1 year, 8 months ago

Excerpt from IMF Working Paper published last year:

Various characteristics of the Caribbean economies make them more vulnerable to perceptions of potential AML/CFT risks. For example, many Caribbean countries tend to transact a higher than average volume of remittances per capita (Figure 1). Money or value transfer services can be a channel through which banks face exposure to AML/CFT violations owing to the large number of cash transactions (often in relatively small amounts per transactions), which makes due diligence more challenging. Another common feature of several Caribbean economies is the presence of cash-intensive casino operations and/or on-line gambling. In some cases, regulation and supervision of both money or value transfer services and gaming operations are less established than for the banking system and, as a result, may elicit concerns from correspondent banks. Several Caribbean jurisdictions also offer offshore services, which are sometimes perceived to be higher-risk businesses.

The IMF is obviously very tactful and polite in dealing with such matters in order to keep the right 'doors' to our country open to them - hence their use of the word "perceptions". But it is nevertheless all too easy to read between the lines here. Our web shops are now clearly on the radar screen of global financial regulators and the international banking community.


killemwitdakno 1 year, 8 months ago

Let me guess, the VAT hike is what we traded? Where's Fred Mitchell when you need him?


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