U.S. queries Bahamas financial crime pursuit

Attorney General Carl Bethel. (File photo)

Attorney General Carl Bethel. (File photo)

• Challenges will to prosecute and report

• AG: Bahamas ‘poses no threat’ to US

• Disputes laundering prosecution data


Tribune Business Editor


The attorney general yesterday declared that The Bahamas had largely received “a fair assessment” even though the US questioned this nation’s commitment to prosecuting financial crime.

Carl Bethel QC told Tribune Business he was especially pleased that the Biden administration’s just-published International Narcotics Control Strategy Report (INCSR) had determined that the Bahamian financial system “poses no threat” of providing a gateway for laundered proceeds from drug trafficking and other crimes to enter the US.

Pointing out that the likes of Spain, and regional rivals such as Barbados and the Dominican Republic, were rated as presenting such dangers, Mr Bethel said he anticipated The Bahamas will receive any even more favourable assessment from the US next year as it will have made further progress in implementing its latest anti-financial crime reforms.

Arguing that no nation was likely to completely escape criticism due to the “interrogatory” nature of the US report, Mr Bethel said the only two areas where he challenged its assertions were the data it provided on money laundering prosecutions in The Bahamas plus its failure to acknowledge such cases were interrupted/delayed last year due to COVID-19 related lockdowns.

And he voiced confidence that this nation had made sufficient progress such that “we’ll never see a day when people point fingers in our face” again over alleged structural deficiencies in The Bahamas anti-money laundering and counter terror financing regime.

However, the US report appeared to do just that in specific areas. In particular, it questioned whether The Bahamas has the will and commitment to put its newly-enacted reforms into practice and see money laundering offences through to actual prosecution and conviction in the courts.

It reiterated previous complaints that the number of suspicious transactions reports (STRs) presented to the Financial Intelligence Unit (FIU) for analysis remains too low, given the size of the Bahamian financial services industry and volume of business it handles, while also repeating concerns over the money laundering risks presented by the domestic (web shop) gaming industry.

“International experts have stated The Bahamas should continue to work on demonstrating that authorities are investigating and prosecuting all types of money laundering, including cases involving virtual currencies, stand-alone money laundering and proceeds of foreign offenses such as tax crimes,” the US report said.

“Despite significant legal and regulatory progress to-date, in 2020, the number of money laundering prosecutions and convictions dropped by 12 percent, on top of a 67 percent drop in 2019, which may indicate a lack of commitment to prosecutions.” That, if correct would represent a near-71 percent drop in prosecutions over a two-year period.

However, the US report continued: “There is strong political will to pass legislation related to strengthening the anti-money laundering/counter terror financing regime, and The Bahamas has implemented a strategic action plan to correct noted deficiencies. However, effective implementation of enhanced regulations and co-operation continues to pose challenges.

“The number of filed STRs continues to be low when compared to the size and scope of the financial sector. As of October 30, 2020, the FIU received 461 STRs for sectors encompassing $400bn in assets, up slightly from 454 in 2019. In addition, the volume of sales generated in the domestic gaming sector in relation to GDP per capita remains an area of concern.”

Mr Bethel, in response, said it was impossible to completely eliminate all risks associated with activities such as online gaming and digital transactions. However, he noted that the US report had correctly acknowledged that web shop gaming and the digital Bahamian currency, the Sand Dollar, are both restricted to Bahamian citizens and residents only.

“I think that it is, broadly speaking, a fair assessment. The report is positive about The Bahamas and, most particularly, that we don’t pose a money laundering or terror financing threat to the US economy,” the attorney general told this newspaper. “They note that having regard to the volume of business done in the international financial sector, they feel there should be an increase in the number of STRs.”

Pointing out that the data showed “a marginal” year-over-year increase for 2020, Mr Bethel said the volume of STRs dealt with would increase as the FIU “strengthens the quality of its work and analysis”. He added that the Unit had just hired an additional analyst in Sam Wilkinson, while its new data and reporting system would allow it to address STRs electronically in “real time” with the filing institution.

“At the end of the day, we have gone through a very vigorous reform process which they [the US] have commended in the report,” Mr Bethel added. “We are in the early implementation stages. We have ramped up our efforts with the Register of Beneficial Ownership Act, and we are working assiduously with the non-profits in terms of their registration and beneficial ownership information.

“It is an evolving process. I anticipate that when they view the successes and progress made this year, we’ll get a more positive assessment. What we won’t get from an interrogatory process like this is that everything is wonderful. The Bahamas cannot escape the same stringencies of examination that are applied to all.

“We have to take it in our stride, and put our shoulders to the wheel and continue to press forward at a very high standard.” Mr Bethel added that there was “the strongest political commitment to ensuring any vulnerabilities in the country’s anti-financial crime defences were eliminated “so no one can point their finger in the face of The Bahamas” again.

Nevertheless, the US report stands in sharp contrast to the findings that enabled The Bahamas to earlier this year exit the Financial Action Task Force’s (FATF) enhanced scrutiny initiative. Mr Bethel disputed the money laundering prosecutions data in the US report, while also arguing that it failed to allow for the disruption caused by COVID-19’s impact on the court system and progress of cases.

He subsequently disclosed data to Tribune Business showing that the number of persons charged with money laundering increased slightly last year, rising to 58 from 51 in 2019. And, for 2021 to-date, some 22 persons are facing such charges.

The attorney general’s figures showed 25 persons were prosecuted for money laundering in 2020, compared to 20 the prior year, with another nine prosecutions begun this year. However, seven persons were convicted for money laundering-related offences last year compared to 20 the year before.

Since the Caribbean Financial Task Force’s (CFATF) 2014 inspection that triggered the FATF process, Mr Bethel’s data showed some 224 persons have been charged for money laundering-related offences with 106 prosecutions and 61 convictions.

“As things pick up steam in the courts, the prosecutors are fully sensitised to enhance the breadth and scope of attention on financial crimes, including increasing money laundering prosecutions where a money laundering component is found,” Mr Bethel told Tribune Business. “The prosecutors, led by the director of public prosecutions, are extremely assiduous in this right now.”

With the Government’s Identified Risk Framework Steering Committee continuing to meet weekly, the attorney general added: “We’ll stay on top of these issues, and issues as they emerge, so The Bahamas will never every be left behind and people will point fingers in our faces.......

“We are determined to do everything in our power to stay ahead of the game and not be in a position where any country or institution will have any justifiable reason to blacklist or grey list The Bahamas going forward.”

The US report, meanwhile, again singled out the risks posed by the money transmission sector and web shop gaming. “Money transmission businesses are vulnerable due to the substantial number of small transactions, high numbers of one-off and non-resident customers, and usage by undocumented migrants,” it added.

“The Bahamas faces money laundering challenges related to the online gaming sector, including ‘web shops’ (hybrid online gaming houses) which are restricted to citizens and residents of The Bahamas.

“As reported by the Central Bank, The Bahamas generated $299m in casino gross revenues (January to March 2020) and $2.3bn in online gaming sales (January to October 2020) in a country with an overall population of less than 400,000, and in which pandemic-induced unemployment increased from an estimated 10 percent to 40 percent.”

It is unclear where the US obtained its web shop gaming figures. The findings also stand in stark contrast to a Gaming Board assessment released in February 2019, which said a one-month study had “debunked the myth” that web shops are vulnerable to financial crime and pose a significant risk to The Bahamas’ integrity.

Crystal Knowles, the gaming regulator’s chief counsel, said research showed that the average patron transaction of $60 - and account balance of just $5 - were “far too small” to suggest the sector was being exploited for illicit financial activities.

Writing in The Bahamas’ first-ever anti-money laundering and counter terror financing annual report, she argued that long-standing fears that the domestic gaming industry could be open to such abuses were “unfounded”.


tribanon 2 years, 8 months ago

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


bogart 2 years, 8 months ago

Isn't it still a co-founder of the major web shop, and partner of Mr. Bastian, a Mr. Adrian Fox a "fugative" and wanted by a US Court after all these years ???


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