EU blacklists over money laundering

Attorney General Carl Bethel. (File photo)

Attorney General Carl Bethel. (File photo)


Tribune Business Editor


The Attorney General yesterday said it was "especially distressing" that Europe appears to have ignored The Bahamas' "herculean efforts" in preparing to again blacklist this nation.

Carl Bethel QC told Tribune Business it was "especially questionable" that the European Commission, the civil service for the 27-nation European Union (EU), is targeting the country for alleged deficiencies in its anti-financial crime regime when the global standard-setter on these issues had earlier this year placed The Bahamas on the path to "exit" its own oversight process.

Speaking after reports emerged yesterday that the European Commission intends to again formally blacklist The Bahamas this Thursday, Mr Bethel said the bloc seemed to be ignoring its own guidelines that a country's standing with the Financial Action Task Force (FATF) would weigh heavily in determining whether it is included on the list.

The FATF earlier this year determined The Bahamas had made sufficient progress in eliminating weaknesses in its anti-money laundering and counter-terror financing regime to warrant a "site visit" to Nassau, during which its representatives will assess how effectively this nation has implemented the necessary regulatory and legal upgrades.

That is the final stage in exiting the enhanced surveillance applied by the FATF’s International Co-operation Review Group (ICRG), and removal from its 'grey list'. Mr Bethel yesterday said the EU, which is well represented on the FATF, would have been fully aware of both The Bahamas' progress and the fact that the planned "site visit" has been postponed to a undetermined date due to COVID-19.

Voicing hope that there could be "meaningful dialogue" with the European Commission before The Bahamas is placed on any new blacklist, the attorney general added that it also appeared to have strayed from previous pledges in this regard.

Mr Bethel said the Commission, which effectively acts as the EU's civil service, had previously signalled its intent to hold "bilateral discussions" with impacted nations before they were placed on any blacklist. While he was still "double checking" with the Ministry of Foreign Affairs, he added that no formal warning or communication of Brussels' intent had been received.

The attorney general declined to describe the European Commission's reported blacklisting plan as a low blow to The Bahamas at the worst possible time, given that it threatens to further undermine the financial services industry - the economy's second largest industry - at a time when the country is taking the full brunt of COVID-19.

Arguing that The Bahamas' "good faith" efforts to enhance its anti-financial crime defences appear not to have been recognised, Mr Bethel told Tribune Business: "We must signal our disappointment that they [the EU] would indicate this intent......

"Having regard to the status of The Bahamas, which has reached such a level of compliance to warrant us beginning the exit process from this FATF ICRG review, it is especially distressing and especially questionable - in our view - that we should be placed on a blacklist in these circumstances."

He was responding after the Reuters news agency yesterday reported that The Bahamas was among 12 countries set to be named on a European Commission blacklist to be formally unveiled on Thursday.

Others set for inclusion, according to Reuters which was given an advance look at the relevant documents, include Panama, Barbados, Jamaica, Mauritius, Botswana, Cambodia, Ghana, Mongolia, Myanmar, Nicaragua and Zimbabwe.

All were said to "pose significant threats to the financial system of the [EU}", and the 27-nation bloc's financial institutions are being called upon to apply greater scrutiny and due diligence to transactions involving The Bahamas, its businesses and residents, as well as those in the other nations.

Reuters frequently appears to be given advance notice of such EU moves - possibly as part of a strategy to unnerve the nations being targeted. The blacklisting, if it comes to fruition, will threaten to increase the time and costs involved in conducting business between The Bahamas and Europe, again undermining the country's competitiveness in those markets.

While the impact on The Bahamas' vital correspondent banking relationships may not be as pronounced, given that most of this nation's international transactions clear through the US, a non-EU-member, the Commission's action will also cut across the recent changes The Bahamas made to its Investment Funds Act to secure that sector's access to European markets.

Above all, the reported European Commission action will again place an unwanted stain on The Bahamas' reputation at a time when it can least afford it. Tanya McCartney, the Bahamas Financial Services Board's (BFSB) chief executive, yesterday said she backed the attorney general's response in setting out the country's position.

In truth, the European Commission's latest blacklist represents a revised version of a similar initiative it tried to launch last year. Mandated by the EU parliament to maintain such a listing, it was forced to swiftly withdraw the previous 23-nation effort after coming under fire from its own nation-state members who challenged the criteria used to determine who should be included.

It also received a blistering riposte from the Trump administration's US Treasury Department over the inclusion of four US territories - American Samoa, Guam, Puerto Rico, and the US Virgin Islands. None of those states feature on the list shown to Reuters, but the European Commission has seemingly found the courage to come again at small independent states amid a global pandemic.

While acknowledging that the European Commission was free to determine its own conduct, Mr Bethel said yesterday: "First of all, they had indicated that they intended to have meaningful bilateral discussions with countries that they proposed to add on to their blacklist.

"I'm double checking with Foreign Affairs right now whether they'd formally informed us of this situation, and whether we'd be engaged as to what the peculiar concerns of the EU might be. The Commission had formally indicated that would be their method of approach, as opposed to throwing countries on a list. That's what they said, and what we expected would be the case."

Mr Bethel added that the European Commission had also signalled that a country's status with the FATF would be a "predicate" and key ingredient in determining whether it was included on its own list.

"Before this listing, as the EU was aware, while The Bahamas was in the process for the last two years, at the FATF plenary held in Paris earlier this year it was agreed for The Bahamas to be in the exit process," he said.

"The EU would be well aware that, if not for the COVID-19 pandemic, a site visit - including people from the EU - had been previously scheduled by the FATF to come here and assure themselves that things done over the last year to year-and-a-half were in place in The Bahamas. Unfortunately the pandemic has forced that visit to be postponed to a date that has not been fixed."

That visit was due to have taken place this month and, with the FATF's June plenary no longer being held, Mr Bethel said The Bahamas' hoped-for-confirmation of its exit from that group's monitoring will have to wait until later in 2020.

"We trust that there will be the dialogue that the European Commission themselves have suggested before this list is finalised, and the position of The Bahamas in the FATF exit process - and, in our view, on the verge of exiting - that special status should have factored into this determination," Mr Bethel told Tribune Business.

"A country like The Bahamas, which in my view has shown the utmost good faith in this process and diligently sought to address every concern about the quality of financial services and the quality of supervision, should not be placed in this position.

"It is unfortunate, and we trust respectful dialogue will take due consideration of this difference between The Bahamas and every other country on that list. That's the most diplomatic way I can frame it. It is our wish that good faith and dialogue should take the place of what could be unfair 'name calling'," he continued.

"We are merely hoping the dialogue will take place before The Bahamas is placed on any blacklist, and that dialogue will take into account the Herculean effort made over the past two years with diligence and efficiency to address any concerns from the 2017 CFATF Mutual Evaluation Report. We are satisfied we have no problems and have made enormous changes. We only wish to be engaged on the same terms."

The European Commission has yet to specify its particular concerns regarding The Bahamas' anti-financial crime regime. The 27-nation EU previously gave the country a clean bill of health for its co-operation on tax matters, which involved the elimination of so-called 'ring fencing' and requiring companies to have substance and do real business from this jurisdiction.


themessenger 4 years, 2 months ago

Damned if you do, damned if you don't, the Bahamas will never win this fight as the EU assholes keep moving the goalposts.

joeblow 4 years, 2 months ago

Pretty sure the EU has more money laundering going on than any where else. How come they don't blacklist themselves?

Proguing 4 years, 2 months ago

The Bahamas needs to put an additional 25% import tariffs on all EU goods to compensate for the loss of business this will create.

concerned799 4 years, 2 months ago

The goal posts will only just keep moving no matter what you do, at a certain point you are no longer a soverign state if all you do is follow the EU's rules.

Everything done in the past to please the EU should be reversed, if you are going to be on a black list anyway, whats the point to following thru on anything done in a failed attempt to avoid such an outcome anyway ?

Well_mudda_take_sic 4 years, 2 months ago

Is this what our most loquacious AG spends all of his time doing? Doesn't he realise and appreciate that the intelligence agencies of certain developed countries have fed the most senior officials of the EU, OECD, FATF, IMF and other such organizatiopns with highly sensitive info about the foreign bank accounts, foreign brokerage accounts, other foreign investment accounts and very valuable real estate holdings abroad (wherever located) that are tied to the super wealthy political elite and their cronies in our country?

And we can only begin to imagine what super sensitive info these information sharing organizations must have received from the intelligence agencies about the 'crooked' clientele of the few remaining 'offshore' financial institutions operating from within the Bahamas, especially the ones well known to be owned and/or controlled, for all intents and purposes, by very wealthy current or former Bahamian-American (dual) nationals through their maze of foreign corporate entities and trusts.

bogart 4 years, 2 months ago

The nations main Advisor, Supervisor and Regulator of the Banking system and safeguards is the Governor of the Bahamas Central Bank and should have replaced all these years. Amazing his silence low profile this small 7 x 21 island where activity occurs and all these tools over his years to put a stop or advosory to the nation to put a stop to this. Even Mr. Rupert Roberts a main grocery man should do a better job and impeccable sterling efforts to keep nation 'ooo of grocery items on shelves. Central Bank as supervisory and Regulator of Banks, last fiasco of KYC know your customers and other Regulation having Customers to produce bundles of receipts, utility slips, job letter, passport, NIB card and others for costomers to have bank copy and keep to contact them....and yet after some years account goes dormant and some 42,000 bank account owners cannot be found ( most likely on 7 x 21 mile island) and millions of dollars ceded over to Central Bank.

TalRussell 4 years, 2 months ago

The colony's Central Bank CB has stepped-in blocking the transferring the major banks' Dividends to its head offices, but why hasn't CB, suspended the declaration and distribution of dividends locally to help protect the capital public companies?
The local financial reporters have all gone mute on BISX...Nod once for yeah, Twice for no?

Porcupine 4 years, 2 months ago

Because no mater where you stand, or who you are related to, or in debt to, we will always look out for our "own closest" first, yes, no? Remember the saying, follow the money?

TalRussell 4 years, 2 months ago

Ma comrade Porcupine, some financial "ballparkers" figure in range thirty percent companies, won't make it over to other side hearing sounds tourists cash registers goin' cha-ching?

Baha10 4 years, 2 months ago

It is now abundantly obvious that 20 years of compliance to appease in an effort to ward off the underlying threat off loss of business was akin to not only going down a rabbit hole with no end in sight, but worse has resulted in the very loss of business nonetheless through the loss of numerous Banks that cooperation was supposed to prevent thereby leaving the second pillar of our already fragile economy devastated ... and what if we had not embarked on this journey 20 years ago, would we be any worse off today?!?

akbar 4 years, 2 months ago

The goal post move again.

genetk44 4 years, 2 months ago

Neville Chamberlin and the British people learned the hard way...appeasement never works.

themessenger 4 years, 2 months ago

"An appeaser is one who feeds a crocodile hoping it will eat him last!" Winston Churchill.

Well_mudda_take_sic 4 years, 2 months ago

And let's not forget that as a result of Brexit, the EU now 'has it in' for anything that even remotely smells British, including the Bahamas as a former British Colony. The Brits were a voice of reason within the EU, but that voice is clearly no longer at the table.

realitycheck242 4 years, 2 months ago

The EU is trying to stay relevant. They do not butter the Bahamas bread. Their collective economies will fall by 7.4% this year due to the corona virus triggering the deepest recession in EU history. To continue to pick on smaller countries like the Bahamas by blacklisting them shows that they are beginning to grasp at the little economic straws they can get their hands on. The future bright prospects in the global economy will come from the far east and not necessarily China.. .Our negotiators are simply too nice so they will continue to move the goal post.

DDK 4 years, 2 months ago

One corrupt entity going head on with another. The only problem for the Bahamas, although The EU itself is failing, they are just a tiny bit bigger 🤣

bcitizen 4 years, 2 months ago

The kyc and anti money laundering rules in the country are choking legitimate business to death. The shear costs of compliance and difficulty opening legitimate bank accounts is ridiculous. Tell them to go whistle Dixie.

tom1912 4 years, 2 months ago

Unfortunately petty money laundering regulation in the UK affect an inconvenience the average Joe citizen that Big business and Criminals along with petty drug dealers have and can afford more exotic methods to launder money. E.G. If you are a current [Chequing] account holder in the UK and want to put cash of £5000 in your account you have to prove where the money came from! If you employ a lawyer for anything you have to prove your identity bye two original methods, one photo, and your permanent address if you have only lived there for two years your previous address, the same id is required to open a bank account. If you saw the poverty in southern Italy [Part of the EU] fed on mostly by the Mafia, the Bahamas might suggest that the EU get its own house in order.

The general consensus is that most Nations/Governments are wanting cashless societies so that they can tax [ And in most cases waste the money they collect] the life out of Joe public to pay for the inflated salaries and pensions of politicians, government and QANGO staff! I'll get off my soap box now ;-)

Hoda 4 years, 2 months ago

These same rules apply here, with differences in the monetary amount that triggers you having to prove source of funds.

Well_mudda_take_sic 4 years, 2 months ago

The costly and most frustrating nonsense hindering the conduct of legitimate banking business in the UK will hopefully fade now that the UK has exited the EU. As for the last paragraph of your post, I'm sure most of us couldn't agree with you more.

BahamaPundit 4 years, 2 months ago

When, 20 years ago (wow time has flown!), the Bahamas Government first agreed to amend its banking privacy laws to comply with the new OECD anti-money laundering banking requirements and be removed from the black listing, it did so from a point of weakness. By amending its laws so quickly, it tacidly accepted that it was in the wrong and was a guilty actor. The Bahamas should never have moved to assume blame so quickly; there was no trial! The OECD never was required to clarify which international law The Bahamas broke and was, in fact, the law breaker by encroaching on the sovereignty of a sovereign nation. In other words, this entire black listing witch hunt was corrupted from the start and should never have been given the time of day by our Government, which acted like a Super Value packing boy and rushed to assist their colonial masters. It imprudently nurtured the beast that would devour it 20 years later!

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