The amendment pushes the new deadline to the end of March.
Parliamentarians passed the Act in 2000 as part of a package of financial legislation in response to the blacklisting of The Bahamas by the Financial Action Task Force (FATF).
It’s another move to comply with international best standards and practices and crack down on international money laundering, government officials have said.
But former Prime Minister Hubert Ingraham raised some concerns regarding the amendment.
“Financial institutions in The Bahamas have had three years to verify the identity of persons who hold accounts with them, which expires at the end of this month,” Mr. Ingraham pointed out.
“We are now talking about what happens after that three months expires next year. The government said in their first amendment that on April 1, if an account had not been verified that the institution shall discontinue any further activity in relation to that account until the ownership was verified, which was a reasonable position. And we supported it. The government has now come along and said that may produce hardship and so ‘we want to do something else.’ This notwithstanding that what the government wanted to do the first time was the right thing to do.”
Professionals who would be directly impacted by this particular amendment include bankers, lawyers, real estate agents and others who will have to identify their clients to the relevant authorities.
Without the amendment, accounts would be sent to the Central Bank, incurring the automatic penalty associated with unverified accounts.
Minister of Financial Services and Investments Allyson Maynard-Gibson said the supervisory authority or regulators now have the ability to decide whether an inactive account with merely $5 should be frozen when compared to another more significant account.
The regulators that have the power to suspend operations on accounts that have not been verified by the end of March include the Central Bank, the Securities Commission, the Registrar of Insurance and the Compliance Commission.
There have been some concerns regarding whether the amendment would facilitate The Bahamas in being fully compliant with the Financial Action Task Force 40 recommendations on money laundering.
But Minister Gibson said, “Our advisors say – and we advance it – that all of the requirements in the 40 recommendations are being met as the supervisory authority has the ability to instruct the licensee to freeze the account.”
Mr. Ingraham said by adopting the amendment those who lead have a duty to consult and listen to advice. But he noted that there is also a time for making decisions.
“But we also have a duty to at some point in time to shut out consultation, shut out advice and in the quiet privacy of our mind and heart make decisions for which we become responsible” he said.
οΎ ”But we are not rubber stamps, robots or people who just do what others tell us because we must never be unmindful of the fact that we – the government – are the wardens. We are the regulators. There are many, many people in these industries who mean us well and will give us good advice. There are some who have their own vested interest and allow this to cloud their own advice they give to the government. And so the government has to be in a position to be able to look at all the facts and make some decisions.’
Mr. Ingraham pointed out, however, that it is the financial institution that should know its customer far better than any regulator.
“I mean no disrespect, but the Minister is the promoter of financial services in The Bahamas. That’s her job,” he said. “She is not the regulator. That is the Ministry of Finance and all the other agencies that have been designated by law.”
He said the institution is in a better position to make a determination as to whether there is a material risk in continuing an account that has not been verified.
Macushla N. Pinder, The Bahama Journal
