The Tribune

By Annelia Nixon

Tribune Business Reporter

anixon@tribunemedia.net

A Cabinet minister yesterday warned that The Bahamas’ perfect compliance with the 40 recommendations set by the world’s anti-money laundering standard setter can “all be undone very quickly” as this nation prepares for its fifth round of assessments.

Senator Michael Halkitis, minister of economic affairs, told a Securities Commission conference: “In this moment, The Bahamas can speak proudly of our international accomplishments in this regard, such as our current compliance rating with the Financial Action Task Force’s (FATF) 40 recommendations, having attained a compliant or largely compliant rating with all 40 of the recommendations.

“However, we understand the temporal nature of this success and that it could all be undone very quickly.  The Financial Action Task Force assessment process, like the assessment of so many other international standard setters, is ever evolving. My colleague likes to say the goalposts keep moving, and they are designed to be progressively challenging.

“And so, therefore, we must assume that evaluators will not hesitate to revise ratings downward if they can show cause, or if we as a jurisdiction fail to prove that they have no cause to do so,” Mr Halkitis added.

“History suggests that powerful competitors would not hesitate to sentence The Bahamas to a ‘blacklist’ or a ‘grey list’ at the first opportunity without regard to the potential disruption to our nation's economy and development prospects. These blacklists have impacts beyond bringing new business, but can impact correspondent banking relationships and make it difficult or impractical for international entities to conduct business in The Bahamas.”

As The Bahamas prepares for its fifth round of mutual evaluations by the Caribbean Financial Action Task Force (CFATF), the FATF’s regional affiliate the Attorney General’s Office will engage an industry consultant and host training amid concern for mid-size and smaller financial services providers and licensees who may not have adequate resources to invest in compliance.

With the CFATF evaluations scheduled for October 2026, Ryan Pinder KC, the attorney general, said large licensees “are actually pretty good”. He added that he hopes to speak with smaller licensees to ensure they have an understanding of what is needed.

“I think that, all in all, when you look at the implementation preparedness of our industry, I think that we are actually pretty good,” Mr Pinder said. “I think we see our systems in place throughout the licensees. We see how the compliance teams and the MLRO (money laundering reporting officer) officers are working, and I think we have a rather good understanding as licensees. 

“I think where you see - I wouldn't even call it concern - but where you see areas that you want to to assist in and help facilitate, it is certainly the large licensees with large compliance teams and the resources to build that out, they're doing very well. What we want to see is the mid-size and the smaller licensees, who may not have the resources because of their size, to have a deeper bench in the compliance area, in the AML (anti-money laundering) area.

“And that's what they're doing within the scope of their services. They are adequately staffing and implementing and reviewing, and we realise that that is a compliance burden on you. It's a compliance burden on us, and it's a compliance burden on the regulator as well. And we are a small jurisdiction,” Mr Pinder added.

“We hope to be able to have open conversations and open dialogue, especially with the smaller and mid-size licensees, to make sure that's there's a complete understanding on what's expected of them, that they're operating within that understanding, and that to a certain extent, that we can kind of help along in the implementation of that. Now remember, everything is on a risk-based approach as well.”

An attendee noted that he is associated with medium and smaller financial services licensees, and inquired how the Government will assist those who are not adequately staffed or need help in other areas. Mr Pinder said the Attorney General’s Office will engage a consultant and then conduct trainings.

“Part of our our preparation plan for the fifth round of mutual evaluation is the Attorney General's Office intends on engaging kind of an industry interface consultant… to be able to kind of bridge that gap between what we're doing to prepare from a technical point of view for the mutual evaluation,” Mr Pinder said. “And then how does that translate to industry effectiveness and industry implementation, especially given the different scales, like you said, of small to large licensees, and to kind of provide that interface. 

“And then once we get some feedback, we will help with some training and some symposiums and different types of areas where we can identify that we may have gaps heading into the fifth round, to help you fill those gaps. And so you can expect that in the early New Year, from at least my office, to be able to put that in place, to have a more seamless interface between industry concerns and the hard work that my team is doing within the Office of Attorney General to prepare for the fifth round.”

As for industry concerns including the cost of AML compliance, competitiveness and the overall ease of doing business in The Bahamas, Mr Pinder said it must be thought of as “creating our distinct value proposition over our peers in the marketplace”.

“From a cost point of view, it always seems like it's a sunk cost, but it really isn't, because you have to think about it as creating our distinct value proposition over our peers in the marketplace,” Mr Pinder said.

“And so that is what the ultimate achievement is, especially in this era of ‘name and shame’ and trying to dismantle achievements by small countries like The Bahamas.

“Now, on the ease of doing business side, certainly, we've been making every effort, as I said, to create digital engagement through our licensees and our service providers, whether that be the Government centrally or managing FATF matters or ancillary business matters such as the registrar and marching towards a fully digital interface with you. And so we've been kind of upgrading and scaling some of our offerings to try to meet industry demands.”

Mr Pinder explained that while prior rounds of the mutual evaluations dealt with technical compliance, the fifth round is based on enforcement. He said the Securities Commission will conduct on-site reviews throughout the next six to nine months, and is expected to take action if non-compliance is found. 

Justice K. Neville Adderley, the Securities Commission’s chairman, noted the “possibility of The Bahamas being placed on a blacklist is entirely plausible” and urged industry participants to prioritise their responsibilities.

“Neglecting to fulfill them could significantly increase the likelihood of facing blacklisting in 2026,” he said. “The evaluation will scrutinise the robustness of our regulatory framework and examine the enforcement mechanisms to facilitate stronger compliance. Furthermore, it will assist our national co-operation to determine how holistically we address money laundering and related risk, spotlighting areas for improvement and evaluating our overall readiness to meet global expectations in combating illicit financial flows. The Commission is actively preparing for the CFATF evaluation by conducting thorough reviews of all aspects of registrants and licenses regulatory compliance.”