The Rt. Hon. Hubert A. Ingraham
Commonwealth of The Bahamas
on the Release of the
FATF Report on Money Laundering
Listing Non-Cooperating Countries
26 June, 2000
The Bahamas is surprised and greatly disappointed to be included in a list of uncooperative jurisdictions in relation to the prevention of Money Laundering, as released by the Financial Action Task Force (FATF) on 22 June, 2000. When consideration is given to the substantial efforts and resources dedicated by The Bahamas to the fight against Money Laundering, it is clear that The Bahamas does not belong on such a list. The Bahamas is resolute in its stance against money laundering and stands firmly with the international community in its fight against drug trafficking, corruption and criminality in all its forms.
Inclusion on the FATF list associates The Bahamas with practices with which it has sought relentlessly not to be connected. The evidence of the success of The Bahamas’ efforts in this regard is that The Bahamas has not been associated with any of the numerous international money laundering problems experienced in recent years, involving other jurisdictions.
The Bahamas understands that the basis for FATF concerns relies principally on the following matters:
o IBCs which undermine the “Know Your Customer” principle;
o Trusts which admit an absence of the “Know Your Customer” principle;
o Cross Boarder Supervision – difficulty experienced by home-country banking regulators in obtaining information from The Bahamas with respect to banks established in The Bahamas as a result of Bahamian bankinglaws;
o Regulation of intermediaries – the legal authority of intermediaries – lawyers, accountants, and management companies; for example, to hold funds in “Client Accounts” the beneficial ownership of which is not required to be revealed to any central government authority;
o Provision of Information, relating to tax violations in countries with income tax regimes;
o Cooperation generally in anti-money laundering matters;
o Delays in the processing of applications for assistance under the provisions of Mutual Legal Assistance Treaties (MLATS);
o Inadequacy of resources in MLAT and/or money laundering investigations;
o Exchange of Information on tax matters.
**The Bahamas Response**
Weaknesses in the banking and regulatory systems of The Bahamas brought to light by the Commission of Enquiry in 1984 have been and continue to be systematically addressed. As criminal activity became more sophisticated, new and additional legislation and regulatory and supervisory regimes have been put in place. The enhancement of legislative, regulatory and supervisory arrangements in The Bahamas is a continuing exercise.
Thirty-five years ago, The Bahamas took the decision to pursue further economic development by the enhancement of the provision of financial services, which originated in The Bahamas in 1947. The Bahamas enshrined in its statute laws, the right to privacy of bank accounts, hence the use of the term “bank secrecy” in The Bahamas.
In 1990, in its efforts to remain competitive with other jurisdictions, and facilitate the delivery of international services, The Bahamas, not unlike a number of international centres, created a new vehicle, the International Business Company (the IBC), designed to attract offshore business, including Mutual Funds and international Investment Management business.
IBC legislation permits the incorporation of companies in The Bahamas for the conduct of business outside of The Bahamas whose shares may be transferred by delivery without a requirement that:
a)Officers and directors be required to be publicly disclosed;
b)The business in which they engage be regulated by The Bahamas;
c)The identity of the owners (shareholders)be disclosed;
The laws of The Bahamas have permitted intermediaries – lawyers, for example – to hold monies for persons in “client accounts” whose identities are not disclosed to the depository institution or any public authority.
The developed world – the United States of America, Canada, the European Union, Japan, Brazil, Venezuela and Argentina, among others – hold the very strong view that monies received from corrupt dealing by public officials, monies derived from criminal activities including drug trafficking and fraud, and monies in respect of which taxes are due and payable, are being banked in places like The Bahamas.
While the enhanced supervision and regulation of The Bahamas Financial Services Sector are matters which have been in process for a number of years, in all circumstances, the Government shall now undertake a comprehensive review of all its laws, regulations and practices to ensure that The Bahamas complies with the best practices pursued by the principal financial centres world-wide – New York, London, Geneva, Paris, Frankfurt, Madrid and Toronto.
It is anticipated that the proposed adjournment of Parliament at the end of July will now be postponed so as to accommodate consideration and adoption by Parliament of additional amendments to Bills now before Parliament including amendments to the International Business Companies Act, and the Money Laundering (Proceeds of Crime) Regulations Act. Further, additional amendments to the following legislations will be introduced in Parliament prior to the summer recess:
oInternational Business Company Act
oThe Trustee Act
oThe Bank and Trust Company Act
oThe Central Bank Act
oThe Money Laundering (Proceeds of Crime) Act
oThe Mutual Legal Assistance Act
Legislation will also be introduced to statutorily establish a Financial Intelligence Unit. It is expected that this legislation and the amendments to the referenced legislation will be adopted by Parliament by the end of August, 2000.
Immediate administrative action will be taken so as to address the systemic delays in the Ministry of Foreign Affairs and in the Office of the Attorney General as regard the processing of requests for assistance under the provisions of Mutual Legal Assistance Treaties.
The Bahamas is not willing or interested to import the proceeds of crime; The Bahamas is not willing to permit strict bank secrecy laws to assist criminals in escaping the reach of the law in their own countries; The Bahamas is not interested in denying timely and adequate responses to cross-boarder regulatory authorities; The Bahamas is not willing to permit shell companies and other instruments, devices or intermediaries to disguise the true ownership of companies established or funds held in The Bahamas; and The Bahamas is not willing to operate its financial services sector otherwise than in accordance with best practices.
The Bahamas is firm in its resolve to eradicate any opportunity for compromise of the soundness and integrity of its financial services industry.
As a consequence, The Bahamas will respond positively and promptly to the stated concerns of the FATF and the OECD. The Bahamas confidently expects that its laws, regulations and practices will enjoy the respect and confidence of the international community consistent with The Bahamas’ commitment to the highest standards in the conduct of domestic and international business.