The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas is demanding that ‘blacklisting’ countries in a bid to force them to reform their taxes and other laws be eliminated and replaced by a more co-operative approach overseen by the United Nations (UN).

The Government, in a March 15, 2024, letter submitted to the committee charged with forming the proposed UN framework convention on international tax co-operation, blasted the ‘blacklisting’ tactic employed by the likes of the European Union (EU) and Organisation for Economic Co-Operation and Development (OECD) for inflicting a “severe impact” on The Bahamas over the past two decades.

“Blacklists, which are lists of countries deemed to be non-cooperative in tax matters, have been a source of contention in international tax cooperation. The UNFCITC (UN Framework Convention on International Tax Cooperation) should aim to eliminate the use of blacklists and instead focus on promoting co-operation and transparency among countries,” the Government urged.

The Bahamas has fallen victim to multiple blacklists relating to tax, anti-money laundering and anti-terror financing concerns since the turn of the 21st century. It just last month escaped from the EU’s list of nations considered non-cooperative on tax matters only for France and The Netherlands - both EU members - to leave The Bahamas on their respective national blacklists for the whole of 2024.

“Blacklists unfairly target developing countries, often without taking into account their unique economic and social contexts,” the Government argued. “Blacklists have a severe impact on a country’s economy, discouraging foreign investment and trade.

“The listing process is subjective and biased. Countries can be placed on the blacklist without a clear explanation, with little opportunity for them to defend themselves, damaging their international reputation and credibility. Developing countries often lack capacity and the blacklisting process does not provide any support or assistance in this regard. Blacklists breach our lawful right to development.”

The Government, though, argued against the creation of public beneficial ownership registries on the basis that there are legitimate reasons for maintaining client and investor confidentiality in certain circumstances. It suggested following this nation’s model, where access to the registry is restricted to law enforcement agencies, the tax authorities and financial services regulators.

“Privacy is a crucial aspect of global financial services that must be protected at all costs. This is especially true in the context of beneficial ownership, where the disclosure of such information can have serious implications for both individuals and businesses,” the Government argued.

“While the intention behind public beneficial owner registers may be to promote transparency and combat financial crimes, there are significant drawbacks - the violation of client privacy, exposing individuals and their assets to potential risks such as identity theft, fraud, kidnapping and extortion.”

The Government’s feedback to the UN committee also warned of “potential harm to the reputation and business interests of legitimate companies and individuals who wish to keep their financial affairs confidential” while warning that the process is “costly and burdensome”.

It described alternatives as involving “centralised registers accessible only to competent authorities (law enforcement agencies, tax authorities and Financial Intelligence units)” and “strengthening existing Know Your Customer (KYC) and anti-money laundering (AML) laws that are universally applied”.