But, “Responsible offshore centres have a right to demand a level playing field. They should seek no more than this, and expect no less,” Sir William Allen told participants of the Eugene Dupuch Law School one-day seminar at the British Colonial Hilton.
Speaking on the topic, ‘The War against Terrorism Financing’, Sir William said that the blacklisting of The Bahamas by the Financial Action Task Force was a surprise, as its own sub-regional body had given the country a “fair and satisfactory” rating.
The former Free National Movement Government Minister of Finance, and Governor of the Central Bank, said that in November 1999, just before being listed as “non-cooperating,” The Bahamas had received a “fair and satisfactory” report from the Caribbean Financial Action Task Force (CFATF), which was established as a regional sub-body by the FATF.
The CFATF, he announced, was just as surprised as The Bahamas “when the FATF effectively rejected its report in an obviously confrontational posture, describing The Bahamas, which was clearly engaged in a process of reform as non-cooperative in its report of June 22, 2000.”
The FATF and the OECD initiatives were unfair, Sir William said, as the countries that made up these organisations were in many cases themselves not in compliance with the initiatives they imposed on the “offending” jurisdictions.
“Confidence in the commitment to fairness with respect to both the FATF and the OECD initiatives is something less than overwhelming,” he said. “This is not the most desirable foundation upon which to build a spirit of goodwill. It encourages skepticism and the inclination to see a hidden agenda behind apparently simple requests for cooperative action.”
It was critical to recognize that terrorism financing does not confine itself to any particular type of financial centre, Sir William said; thus, there was “no basis for focusing on offshore centres as a group with any greater vigour than on financial centres in other jurisdictions,” as was done with both earlier initiatives.
He also quoted a 1998 United Nations report that suggested that money launderers sometimes avoided tax havens in fear of inviting attention from international authorities.
Financial jurisdictions insisting on having a level playing field should not be seen as opposing the war against financing terrorists, but commended instead for realizing the “uselessness” of war, he said.
Unless “responsible offshore centres” have access to a “level playing field”, Sir William stated, the exercise could merely result in the shifting of illegal activities from one jurisdiction to another.
A level playing field recognizes the inherent right of states to participate in developing strategies to address global matters which affect them and which require global solutions, he stated.
The Bahamas’ commitment to fighting terror has been demonstrated and clearly shows that responsible offshore centres are willing to play by the same rules as everyone else but not on a selective basis, he said, and, “The applicability of rules must be guaranteed in all circumstances.
“The initiative to counter financing of terrorism should not be bound up in unequal criteria, which suggest another less compelling agenda…This global objective of preventing the use of our financial systems for terrorism financing is much too critical,” he maintained.
Everyone must come to the table with equal resolve and a common commitment in order to effectively wage war on those who would like to “subvert the global financial system to finance terrorism,” Sir William asserted.
He said that the traditional, “natural antagonism” between the industrial world and offshore centres was understandable, as the development of such havens could be associated in various ways to efforts aimed at avoiding certain fiscal regulations in industrial nations.
Beginning after the Second World War, the former Finance Minister related, wealthy citizens began searching for an escape from their tax obligations, and domestic financial institutions attempted to benefit from lower levels of regulatory oversight and supervision in other jurisdictions.
None of these activities have endeared offshore centres to the industrial world, he said, and therefore such jurisdictions should not be surprised that the industrial world has been galvanized into taking the action they have wanted to take for some time.
Since the early 1970’s, the larger developed countries have been seeking ways to abolish such centres, he said.
Mr. Allen suggested that in the attempt to design a strategy for the global fight against the financing of terrorism, the experience gained from two previous initiatives should be used to everyone’s benefit.
The Anti-Money Laundering initiative of the Financial Action Task Force (FATF) and the Harmful Tax Practices initiative of the Organisation for Economic Cooperation and Development (OECD), he acknowledged, are regarded by many as a process of ensuring a permanent division between the powerful industrial countries and small developing, pressure- sensitive countries.
According to Sir William, “Putting international terrorism out of business by disrupting its financing creates a unique opportunity for both sides to learn a valuable lesson from past errors.”
By Martella Matthews, The Nassau Guardian
