The guidelines have been specifically tweaked for various industries and professionals from lawyers, accountants and real estate brokers to corporate service providers.
The codes are based on a risk-based approach to verifying customers and stringent employee requirements.
Stephen Thompson, commission chairman told the Bahama Journal that revisions made to the original set of guidelines issued in 2002 are based on the amendments made to the Financial Transactions Reporting Act [FTRA] in the following year.
Under the act – which also created the commission – the body is mandated to issue the Codes of Practice for the purposes of providing guidance as to the duties, requirements and standards to be complied with and the procedures and best practices to be observed by financial institutions that fall under its ambit.
In revised codes issued for lawyers, the commission gave specific cautions to members of the legal fraternity.
“On a regular basis, lawyers in relation to all of their financial intermediary services should verify compliance with policies. Procedures and controls to counter money-laundering activities,” the code noted.
“Larger law firms may wish to assign this role to their Internal Audit or Compliance division. Small law practices may accomplish the same objective by introducing a regular review by management.”
A lawyer practicing in The Bahamas is designated as a financial institution for anti money laundering purposes in any case where he receives funds during the course of business for services which range from investing or making a deposit on a client’s behalf to settling real estate transactions.
Additionally, the commission implored these law firms to separate their financial intermediary services activities from those of the general law practice and to maintain separate and distinct records pertaining to the financial intermediary activities including separate financial records.
The tightening of anti money laundering and counter terrorist financing controls became especially important following the Financial Action Task Force [FATF] labeling The Bahamas as being non-cooperative in the global fight against dirty money.
Following the action taken by the FATF, the Government of The Bahamas legislated a package of financial services laws which was passed in December 2000.
The Commission has implemented a system of registration for all lawyers called to The Bahamas bar. The purpose of registration is to assist the Commission in its efforts to designate those lawyers that indicate that they do not provide financial intermediary services as “inactive” by executing a form, thereby exempting them from the requirement to submit to the annual on site examinations that are conducted.
Money laundering is the process by which criminals attempt to conceal the true origin and ownership of the proceeds of their criminal activities. Its purpose is to allow them to maintain control over those proceeds and ultimately provide a legitimate cover for the source of their income.
The methods can range from the purchase and resale of real property and luxury items to passing money through a complex international web of legitimate businesses and various corporate vehicles.
Initially, however, in the case of drug trafficking and some other serious crimes such as robbery, the proceeds usually tale the form of cash which need to enter the financial system by some means.
There are four types of on-site examinations which the Commission conducts. These are routine, follow-up, random and special. With exception of the routine examination which is conducted by duly appointed public accountants, all other examinations are carried out by the Commission’s inspection unit.
In revised codes issued for lawyers, the commission gave specific cautions to members of the legal fraternity.
“On a regular basis lawyers in relation all to their financial intermediary services should verify compliance with policies, procedures, and controls to counter money-laundering activities,” said the code.
“Larger law firms may wish to assign this role to their Internal Audit or Compliance division. Smaller law practices may accomplish the same objective by introducing a regular review by management.”
A self-assessment based on the on-site examination forms found at Appendices C and D, as appropriate, may be used to satisfy this obligation. Such periodic testing and auditing of their anti-money laundering policies, procedures and controls must take place at least once per year.
What is Required to Satisfy Verification?
9.3.1 A law firm should establish to its satisfaction that it is dealing with a legitimate person (natural, corporate or legal) and verify the identity of those persons who have authority to conduct business through any facility provided. Whenever possible, the prospective customer should be interviewed personally.
9.3.2 Subject to the exemptions and exceptions set out in sections 12 & 13 of this Code, law firms have a mandatory obligation to verify identity in the following circumstances.
By: Tameka Lundy, The Bahama Journal
