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Significant Progress Made by Bahamas In Addressing Deficiencies in the Financial Services Sector

NASSAU, The Bahamas — The Bahamas has made progressive strives in meeting compliancy targets in the financial services sector. This, according to Attorney-General and Minister of Legal Affairs, the Hon. L. Ryan Pinder, places the country in a top ranking position in the industry despite its small size and diversity of external threats. Mr. Pinder was addressing the fourth Anti-Money Laundering Conference, on Wednesday, 25th January. The two-day event was held at Margaritaville Resort.  The conference brought together researchers, practitioners and policy-makers in the financial services sector.

“The Bahamas has placed tremendous efforts over the last seven (7) years (2015 – 2022) in addressing strategic AML/CFT/CFP deficiencies. Progress was made each year with introduction of enhanced legislation and attendant regulations (e.g. POCA, 2018, FTRA 2018, ATA, 2018), supervisory and enforcement AML/CFT/CFP regimes, and increased engagement with the professional stakeholders,” said Mr. Pinder. “These efforts and supporting evidence were assessed by CFATF and FATF International Cooperation Review Group, leading to The Bahamas being delisted from the FATF Grey List on 18 December, 2020. This was followed up with the significant achievement obtained on the 22 December 2022 with the publication of the Bahamas’ CFATF Follow-up report announcing that the country had obtained compliant or largely compliant ratings with 40 of the 40 FATF Recommendations.”

Consequently, Mr. Pinder said that the country became the 2nd jurisdiction in the Caribbean and the Americas to attain such a position and only the 6th in the FATF’s Global Network of 206 jurisdictions.  “Of note – only one European country has achieved this perfect rating under FATF standards, despite the misconceptions that originate from that part of the world of countries such as ours,” he emphasized.

He said that, notwithstanding  the noted achievements, The Bahamas while attending and tackling the FATF/CFATF matters, was also urgently addressing matters with the European Union’s Director General of Financial Stability, Financial Services and Capital Markets Union regarding the country’s AML Blacklisting. “Our efforts paid off as the country was delisted from the EU’s AML Blacklisting on the 7th January 2022,” he said. 

He also discussed the current issues regarding FTX Digital Limited, which recently, placed the Bahamas in the spotlight internationally. “As the FTX Digital Limited is a hot button current issue, The Bahamas would like to advise that the Digital Assets and Registered Exchanges Act (DARE) was passed into law in December 2020. The provisions of this legislation allowed for the country to take swift action to place the company into provisional liquidation as warranted in November 2022. The operations are being dealt with in confines of the insolvency laws of The Bahamas with the assets under the control of court appointed liquidators and the regulator, the Securities Commission of The Bahamas.”

Further, he pointed out some of the legislative moves that have been taken to enhance the sector. “Of note – the DARE Act and the guidance and rules of the Securities Commission of The Bahamas allowed The Bahamas to become compliant with Recommendation 15 of the FATF as it pertains to Virtual Asset Service Providers.  Recommendation 15 requires that VASPs be regulated for anti-money laundering and countering the financing of terrorism (AML/CFT) purposes, that they be licensed or registered, and subject to effective systems for monitoring or supervision.   I think it appropriate to mention that The Bahamas is one of the few, if not one of the first countries in the world to be fully compliant with Recommendation 15 as it pertains to Virtual Asset Service Providers.”

He reiterated the government’s commitment to working with all international partners to maintain the AML/CFT/CFP regime on par with international agreed measures to safeguard the global financial system.  

Mr. Pinder challenged the stakeholders to continue the standards of the sector. “For AML/CFT/CFP purpose, the FATF is the recognized body internationally that sets the standards for every country to comply with.  I can speak first hand, the requirements are robust, the obligations on countries are significant and we like other countries do what we need to do to comply at the fullest levels.  A challenge arises when other institutions, organizations or multilateral bodies try to represent themselves as international standard setting bodies, prescribing standards that are different from those of the recognized bodies.  I implore on institutions like the FATF, reaffirm yourself as the only standard setting body and do not let other, in certain instances, rogue organizations supplant your standards.”

In addition, he took a moment to suggest topics for further consideration by the stakeholders during their two days of deliberations.

“What is the true cost benefit analysis for countries such as mine to arbitrary and unilateral blacklists.  What does it achieve?  We all strive to be compliant, the world economy dictates we must be to participate.  So, assuming that, what is the utility of blacklists in light of the extraordinary economic damage it implores on us small developing countries.  We make up the vast majority of blacklisted countries, former colonies of European imperialists.  Of the 65 jurisdictions gray-listed or blacklisted by FATF from 2010 to 2020, none are in the Group of 7 industrialized nations while only two, Argentina and Turkey, are in the Group of 20. The vast majority hail from the Global South, and 28 rank in the bottom half of economic output as measured by GDP.  We must look at this much closer and have objective research demonstrate the point that blacklists have lacked objectivity and fairness and have devastated at times economies of small developing states in our hemisphere with questionable global benefit.”

He concluded by leaving the participants with some more food for thought.  “To continue the example, after the Paradise papers, the EU’s code of conduct group blacklisted 17 countries.  Not one European country was listed; they all got a free pass.  In February 2019, The EU published an updated version of their AML/CFT list.  Again, not a single European country was listed.  In 2022, the EU identified jurisdictions with strategic deficiencies in their AML/CFT regimes that pose significant threats to the financial system.  Why is not a single EU member country or their most influential trading partners listed?  Again, I suggest a research study of these arbitrary actions and the cost / benefit analysis.  I know that a paper was prepared last year that discusses this discrimination, we should take it further and assess the damage done to our countries versus the global benefit achieved.  I suspect I know where that analysis will fall,” he said. 

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