DPM: IMF to take more active role in developing anti-money laundering, counter-terrorism financing reforms

Deputy Prime and Minister of Finance, Peter Turnquest.

Deputy Prime Minister and Minister of Finance Peter Turnquest recently called on the International Monetary Fund (IMF) to take a more active role in developing objective, fact-based assessments of anti-money laundering and counter-terrorism financing reforms in Caribbean jurisdictions.

During a breakfast meeting on October 14 with IMF Managing Director Christine Lagarde and Deputy Managing Director Tao Zhang, Turnquest stressed that The Bahamas, as with other countries in the region, continue to be discredited due to negative perceptions and historical biases that do not reflect the current strength of local regulatory regimes.

“We need the Fund through its own independent research, and leveraging of the integrity of the Financial Sector Assessment Program (FSAP) to bring more rigorous evidence to bear on the benchmarked quality of our regulatory regimes. This intervention must give more credence to the risk-based approach,” said Turnquest.

Two of the key research priorities: independently quantifying the economic and fiscal costs posed by international financial services regimes in the region particularly to the European Union and countries in the Organisation for Economic Co-operation and Development (OECD); quantifying how the returns to the OECD and EU from their emphasis on our jurisdictions line up with the costs they continue to impose on us relative to the tax base and financial crimes base which they seek to impact.

The Bahamas shares the international goal of combating money laundering, terrorism financing, and other illicit activities that could exploit weakly regulated financial centers. Over the years, it has made significant strides to keep up with the international benchmarks for transparency and cooperation in tax matters, and continues to do so. However, as long as the risk-profile of the jurisdiction is perceived as static it will continue to pose the ongoing threat of eroding correspondent banking relationships (CBR), which are extremely important to the financial system and global trading.

Turnquest called on the IMF to use its capabilities to play a more defined role and add value to this space, including perhaps, playing an advisory role on related matters through the FSAP process.

 “The weight of the IMF should be brought to bear on more objective, fact-based assessments of our progress on AML/CFT reforms; on more quantification of the unintended or indeed intended consequences of changing or widening scopes of international tax cooperation initiatives, on CBR outcomes and our economic diversification aspirations,” said the minister

He referenced anecdotal evidence that suggests the imbalance of international pressure on the Caribbean region is creating growth opportunities for IFCs in other larger countries to thrive. This anecdotal evidence cannot be ignored, said Turnquest, especially as the IMF’s has published advice recommending that countries in the region consider, in the extreme, exiting the field as IFC.

“The call for Caribbean economies to diversify and to become more resilient must consider, more, the consequences, that black and grey lists have on access to correspondent banking, and how being on any list can, in an unintended fashion, undermine our jurisdictions’ efforts to attract foreign investments that promote diversity and resilience,” he said.