Less than half of the "Know-Your-Customer" (KYC) forms required from bank-account holders under new financial laws have been verified, Parliamentarians were told on Wednesday.
As financial institutions have been requesting information from their account holders under the Financial Transactions Reporting Act 2000, Parliamentary Secretary in the Ministry of Finance, Mr. Michael Halkitis, said that since the Act was instituted, only 229,011 out of a total of 538,851 have been verified.
The government therefore, he said, wants to again extend the period allowed to financial institutions for the verification of their customers' identities, from December 31, 2002 to December 31, 2003, to enable financial institutions to comply with all the requirements of the Act.
According to Mr. Halkitis, under the Act, if financial institutions are unable to verify the identity of facility holders within the specified time period, they would have to assign such accounts to the Central Bank of The Bahamas.
"We are presently faced with the proposition whereby we would be sending more than half of these accounts to the Central Bank," said Mr. Halkitis, who was giving his communication on a Bill for an Act to amend the Financial Transactions Reporting Act 2000.
If amended, the period of time that financial institutions presently have to verify identities of their account holders will be extended beyond December 31, 2001 for another 12 months.
This expiry date was previously extended, according to Mr. Halkitis, on December 17, 2001, from December 31, 2001 to June 30, 2002, but on June 27, 2002, the date was again extended to December 31, 2002.
Mr. Halkitis said that the extension is by no means a "backing out" on the government's commitment to ensure that a well-regulated jurisdiction is maintained.
He said further that the government has been advised by certain international agencies that the customer identification process should be extended on "Bahamian dollar" accounts and consider introducing a risk-based approach to resolving other outstanding accounts.
Mr. Halkitis further stated that "no right thinking person" would argue against proper regulation, legislation and having a legitimate financial centre. He said the legislation will regulate the financial services industry and is not a partisan matter, but is in the best interest of all Bahamians.
As the government moves toward streamlining the various financial regulations in an effort to make them more "user friendly," he continued, a "risk-based" approach should be adopted. He said that banks should be focused on those accounts that are more likely to be used for money laundering purposes, rather than on those with less than $1,000 in the bank.
"So instead of harassing the pensioner that goes in to cash a national insurance pension at the bank, maybe we can focus more on this risk-based approach," he said.
Under the Financial Transactions Reporting Act, financial institutions are required to verify the identity of facility holders according to regulations. These include the name, address, telephone and fax number of the account holder, as well as the account holder's date and place of birth, employer and a copy of a passport, drivers licence, voters card or national insurance card.
Mr. Halkitis said that financial institutions needed to employ more personnel, such as the hiring of compliance officers to meet the massive paper- work requirements mandated by the Financial Transactions Reporting Act.
The Financial Transactions Reporting Act came into existence following the Bahamas being blacklisted in June 2000 by the Financial Action Task Force (FATF). The Bahamas was included among 14 other countries on the list of jurisdictions deemed to be "uncooperative" in the fight against money laundering.
By Tamara McKenzie, The Nassau Guardian
