By NEIL HARTNELL
TRIBUNE Business Editor
nhartnell@tribunemedia.net
THE BAHAMAS yesterday made critical reforms to its anti-terrorism law just days before this and other anti-financial crime defences are tested by international examiners to ensure they meet global standards.
Kwasi Thompson, the Opposition’s finance spokesman, told Tribune Business he understands the deficiency that the Anti-Terrorism (Amendment) Bill 2006 seeks to address would likely have been raised by Caribbean Financial Action Task Force (CFATF) examiners when they begin their two-week inspection of The Bahamas this Monday.
The CFATF team’s visit, which will last from October 19-30, is part of the fifth round mutual evaluation of The Bahamas’ anti-financial crime regime and defences, including counter-terror financing, and the east Grand Bahama MP says it is critical this nation “puts ourselves in the best possible light” to maintain its existing 100 percent compliance with international standards.
Prime Minister Philip Davis KC, speaking earlier on the Bill in the House of Assembly, said the reforms will “close a gap between what The Bahamas has committed to internationally and what our [existing] law is able to deliver” when it comes to immediately freezing the assets of, and cutting-off access to the financial system for, persons on United Nations (UN) sanctions lists.
Such persons and entities are typically sanctioned for alleged involvement in terrorism, or breaching nuclear non-proliferation rules set by the international community, but Mr Davis said the present gaps in the Anti-Terrrorism Act created “real risk” for The Bahamas because they fail to capture all UN Security Council resolutions designating such violators.
He added that The Bahamas’ law needed to be updated to “follow the [UN] regime as it evolves”, and said failing to do so would risk this nation and its financial services sector potentially being hit with sanctions and penalties by the Financial Action Task Force (FATF), the CFATF parent and global standard-setter for anti-money laundering and counter-terror financing.
Mr Davis said The Bahamas had felt the consequences when it was ‘grey listed’ by the FATF, which resulted in global correspondent banks - which provide the gateway for all local financial transactions to access the global banking system - applying greater scrutiny to the movement of funds, increasing time and costs globally.
“In financial services, credibility functions as capital. It is accumulated slowly, through consistent conduct, and it can be drawn down quickly,” Mr Davis said.
“Recommendation seven of the FATF standards requires every jurisdiction to implement targeted financial sanctions on proliferation financing fully and without delay. Since October 2020, recommendation one has required countries and private institutions to assess their proliferation financing risk.
“Immediate outcome 11 tests effectiveness: Whether assets are in fact identified and frozen, and whether the private sector understands its obligations. As a member of the Caribbean Financial Action Task Force, The Bahamas will be assessed on all three.”
Mr Davis added: “A deficiency in our core definition would be recorded, and it would be read closely by every correspondent bank and counter-party that does business with us.
“We know the cost of such findings. After The Bahamas was grey listed in 2018, correspondent banks reassessed their exposure, compliance costs rose across the sector, and those costs were ultimately borne by Bahamian households and businesses.
“It took sustained effort across administrations to secure our removal in December 2020. Financial services remain one of the two pillars of our economy. Protecting the credibility of the sector protects the jobs and incomes that depend on it.”
Mr Thompson, speaking in the House of Assembly during the Anti-Terrorism Bill debate, said: “My understanding is this issue may be raised in the evaluation this month. We need to make sure we have done what we need to do when complying.
“When they come to evaluate, The Bahamas must be put in the best light with respect to the CFATF evaluation” and retain its perfect score of 100 percent compliance with the FATF’s 40 core anti-financial crime recommendations.
Speaking to Tribune Business, Mr Thompson added: “That is what I have been informed of: That it’s in anticipation of the evaluation; to make sure these things are in order for the evaluation. The Bahamas needs to do what is required to ensure the evaluation goes well.
“If this is what they anticipate will be discussed, they want to ensure these things are in order for the evaluation. It’s extremely important for The Bahamas to ensure it continues to operate as a well-regulated jurisdiction. It’s unfortunate that the international community continues to change the goal posts.
“However, we want to operate in the international community and so we have to make sure we conduct ourselves in the best possible light. The Bahamas is a well-regulated jurisdiction, and we have to continue to prove we are a well-regulated jurisdiction.”
Speaking in the House of Assembly, Mr Thompson voiced concerns about the Anti-Terrorism Bill reforms being made retroactive to August 2019 since the Bahamian constitution prevents laws being changed to “criminalise” actions that occurred in the past.
While acknowledging that the Prime Minister had asserted this was not the intent, the east Grand Bahama MP nevertheless questioned if this would protect public officials from past actions that may have been illegal, and what the impact that would have on any aggrieved party.
Mr Thompson also raised issues of consistency, noting that while the Act’s reforms cover two separate UN security council resolutions, the Securities Commission had seemingly recently contradicted this by informing its licensees that one “is no longer the operative sanctions framework”.