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Financial Rules To Be Examined

Compliance, regulations and taxation are high on the agenda of the Annual Global Fall Workshop on International Financial Services set to open this morning a the British Colonial Hilton Hotel.

The workshop, being sponsored by The Landfall Centre,

will also focus on trade, finance, and the future of private banking and the controversial USA Patriot Act, 2001.

Economist Dr. Gilbert Morris from Landfall Centre told The Guardian that the Act is “a major concern” for the country’s Financial Services Industry.

Last Tuesday, Prime Minister Perry Christie strongly urged the Bahamas Institute of Chartered Accountants at its annual seminar to become familiar with the rules and proposed rules of this Act as the implementation of these rules could have a profound effect on financial services in The Bahamas.

“In a nutshell it presents significant challenges not only for accountants but also for all financial services professionals,” the prime minister had said.

Discussions are going on among the United States Internal Revenue Service (IRS), the Federal Reserves Banks, Federal Deposit Insurance Corporation, the US Customs, and the FBI, to examine what sort of regulations would be implemented for corresponding bank accounts and to prevent US brokers and US financial services institutions dealing with shell banks in The Bahamas.

“Our goal is to say, rather than running away in fear, let’s invite them here, let them see who we are, let them see what we do, let them see the quality of our people and the style of our business. That we are not sitting on a boat with dreadlocks and a cell phone transferring money around the world. We have institutions here,” Dr. Morris said.

“The more familiar they become with us, the more difficult it is to undertake policies which may injure us.”

Among the presenters are Dr. Morris, Samantha Pelosi of FinCEN (IRS) and Freida Wynne from Bank America in Chicago. They will be speaking on the duties of Qualified Intermediaries under the Patriot Act.

“It is a very important question for bankers, and we seem to be the first ones anywhere to have raised the question last summer,” Dr. Morris said.

In response to the OECD initiatives, the United States through the US Patriot Act 2001 brought pressure to bear on the financial services industry and by extension auditors, accountants and compliance officers.

The proposed rules dealing with correspondent banking, will add new regulations to the current US Bank Secrecy Act, thereby imposing additional due diligence for the correspondent bank such as:

* Enhanced scrutiny of correspondent accountants and respondent banks;

* A determination of whether the foreign (respondent) bank maintains its own correspondent bank accounts for other foreign banks; and,

* Identification of certain owners of the foreign bank.

According to Mr. Morris, “It (Patriot Act) was significant partly because of its difference from OECD initiatives.

The OECD initiative was an initiative to force information exchange between countries, even those that were not a member of the OECD, he said.

“The OECD,” he continued, “is an agency acting like a country by contacting countries and acting like it can negotiate with countries on its own. “When we argued against the OECD that was part of our argument that only countries can make treaties with each other.”

When the Patriot Act was implemented, he said that it was not imposed on institutions outside the United States. Rather, it was

forced on American financial institutions and what they said was, “that this rule applies to you and if you do business with anybody overseas who does not meet the requirements of this Act, then you shall be liable either criminally or civilly.”

According to Dr. Morris, the Act is “brilliant” because The Bahamas is not in the position to say “the US is interfering with our affairs because they are imposing it on their own institutions and then those institutions would say to us that I can’t deal with you unless you meet these requirements or I would go to prison.

“Americans get exactly what they want without interfering with countries.”

These actions, said Dr. Morris, are no different from those carried out by Central Bank of The Bahamas, which mandates the conditions under which Bahamian banks can do business overseas.


By Lindsay Thompson, The Nassau Guardian

Posted in Headlines

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