The US State Department yesterday again issued a thinly veiled warning that the Bahamas “must steadfastly and effectively implement” reforms to its anti-money laundering regime, zeroing in on issues that kept this nation on the Financial Action Task Force (FATF) monitoring list until recently.
The annual International Narcotics Control Strategy report focused its criticism on the Bahamas’ responsiveness to international requests for assistance by foreign law enforcement and regulatory authorities, and resources devoted to the police and Attorney General’s Office to help them combat financial crime.
The US State Department’s report said: “The Bahamas should provide adequate resources to its law enforcement and prosecutorial andjudicial personnel to ensure that investigations and prosecutions are satisfactorily completed, and requests for international cooperation are efficiently processed.”
The report also recorded claims that more than 10 Internet gaming sites – a favourite target of US authorities – were operating from the Bahamas, although they were not licensed to do business here.
[B2B Editor’s Note: The sites are believed to be hosted by Secure Host, the company that manages the Cable Bahamas data-centre in Nassau. ﾠSecure Host has been involved in a number of other controversies, including the distribution of massive amounts of spam from the Bahamas. The rogue company is also guilty of cyber-squatting. ﾠSecure Host has improperly registered the domain name: bahamab2b.com (note: no “s” in bahama), in an effort to siphon traffic from the nation’s leading website.]
It added that while the Bahamas’ strengthened anti-money laundering laws had made it far more difficult for drug traffickers to deposit large sums of cash at banks, “a new trend has developed of storing extremely large quantities of cash in security vaults at properties deemed to be safe houses”.
Other money laundering methoqs commonly used by Bahamian drug dealers were the purchase of real estate, vehicles and jewellery, and washing dirty money through a web of legitimate ‘front’ companies and shell firms.
The US State Department’s report noted that the Central Bank of the Bahamas had reported in September 2005 that 95 per cent of existing, bank accounts were compliant with the Know Your Customer (KYC) provisions of the Financial Transactions Reporting Act.
“KYC requirements initially caused complaints by Bahamians who were unable to produce adequate documentation when attempting to open accounts in domestic banks,” the report said.
Absence
“The absence of house numbers on most Bahamian streets, the prevailing practice of utility companies issuing bills only in the name of landlords rather than tenants, and the scarcity of photo identification among Bahamians contribute to these documentation problems.
“The Government of the Commonwealth of the Bahamas declined banking officials’ recommendations to apply a risk-based approach to “grandfather” Bahamas-based accounts considered to be in compliance, and instead extended the compliance deadline to June 2006.”
The US State Department’s report added that the Central Bank’s decision to phase-out managed banks, who had either to establish a physical presence in the Bahamas or cease operating, was seen as having caused bank and trust company numbers to fall from 301 in 2003 to 253 in 2005.
In addition, the Bahamian Financial Intelligence Unit (FIU) had received 67 suspicious transaction reports (STRs) between January and May 2005, of which eight had been forwarded for police investigation and 55 were still being analysed.
The US still named the Bahamas as a jurisdiction of ‘primary money laundering concern’. However, this is no cause for alarm, as it is an annual labelling that reflects the size of the Bahamian financial services industry, rather than any abuse of the sector.
The US State Department added that the Bahamas was likely to become part of the US Homeland Security Department’s Container Security Initiative in 2006. The main focus of this will be Freeport Container Port.
Source: ﾠThe Tribune
