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Bahamas Won't See 'Major Upturn' Over Anti-Crime Regime

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Global standard-setters are unlikely to grant The Bahamas "much improvement" despite major efforts to improve its anti-financial crime and terror financing regime, a local regulator has warned.

Charles Littrell, the Central Bank's inspector of banks and trust companies, told the Nassau Conference that the Financial Action Task Force (FATF) was unlikely to upgrade the effectiveness of The Bahamas' anti-money laundering regime by much despite improvements made over the past year.

With The Bahamas faring "worse than average" for effectiveness on a chart comparing the FATF mutual evaluation results for 50 countries, Mr Littrell said: "We are in the middle of a re-evaluation process, and we have hopes that our technical compliance rating will improve.

"Our expectation is that the FATF will not cede much improvement in the Bahamian effectiveness ratings, despite our significant efforts in this area over the past year or so." The re-evaluation follows last year's report by the FATF's Caribbean affiliate, which identified numerous legal and practical deficiencies in this nation's regulatory defences against financial crime.

In particular, the Bahamas' was found to have 'low' effectiveness in six out of 11 anti-money laundering/counter terrorism financing categories.

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."

Mr Littrell said the FATF/CFATF mutual evaluation report was "the single most important international signal" about the strength of a nation's anti-money laundering/counter terror financing regime, and its commitment to combating these ills.

Yet he added that the mutual evaluation report's methodology was "deeply problematic", and identified "fundamental policy shortcomings" linked to the absence of objective standards against which The Bahamas and other states can be held.

This, Mr Littrell explained, made it difficult for The Bahamas to show it was improving in managing anti-money laundering/counter terror financing risks. "We are being assessed against opinions mainly formed by large state representatives about small states, and those opinions don't necessarily have any empirical backing," he added.

To improve risk perceptions of The Bahamas, especially among correspondent banks which transact business with institutions in this nation, Mr Littrell said the Central Bank planned to improve information flows and transparency by producing a series of annual publications on the anti-money laundering/counter terror financing regime.

Following this, he added: "By early 2019, we intend to launch, again with substantial input from other regulators and agencies, a national website serving as a central archive and news source for matters relating to Bahamian anti-money laundering/counter terror financing risk.

"In combination with the annual publication, The Bahamas will offer comprehensive and easily accessible information on local money laundering and financial crime issues. By increasing the information available, and lowering the search costs, we are making it easier for correspondent banks and other stakeholders to assess the risks of engaging in The Bahamas."

Yet he warned: "I wish to emphasise that both the annual publication and the website will feature any negative as well as the substantial positive news. They are reference documents, not advertising venues. Ideally our progress will be smooth and un-newsworthy, but from time to time the statistical inevitability is that The Bahamas will need to report on something gone wrong. Please strive to minimize this necessity.

"We start from the happy position that, by and large, Bahamian financial institutions are reasonably well managed from a risk perspective. But 'reasonably well managed' is not going to be enough in an increasingly unstable and competitive world."

"We start from the happy position that, by and large, Bahamian financial institutions are reasonably well managed from a risk perspective. But "reasonably well managed" is not going to be enough in an increasingly unstable and competitive world.

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