Majority compliance in FATF re-rating

Majority compliance in FATF re-rating
FATF Plenary in session

AG: Major step forward for financial services sector

NASSAU, BAHAMAS – The Financial Action Task Force (FATF) yesterday re-evaluated The Bahamas’ compliance with its anti-money laundering and counter-terrorist financing requirements and found the country compliant with the majority of its recommendations.

The re-evaluation and increased compliance ratings are expected to stave off any sanctions from the international financial regulatory body.

In its 1st Enhanced Follow-up Report & Technical Compliance Re-rating, the FATF re-rated The Bahamas on 13 of its 40 international requirements.

See full FATF December report

The organization said a re-rating is given when sufficient progress has been made.

The report shows the country has complied with 14 requirements and largely complied with 16 requirements.

The FATF said The Bahamas has partially complied with the remaining 10 requirements.

There are four compliance ratings: compliant; largely compliance; partially compliant and non-compliant.

“Overall, The Bahamas has made good progress in addressing the technical compliance deficiencies identified in its mutual evaluation report (MER) and has been re-rated on thirteen recommendations,” the FATF said.

The report also analyses the country’s progress in implementing each requirement.

The FATF said its report, however, does not address what progress has been made to improve effectiveness. It said a later follow-up assessment will analyze progress on this, and could result in another re-rating of immediate outcomes at that time.

“The Bahamas will remain in enhanced follow-up on the basis that it had a low or moderate level of effectiveness for seven or more of the 11 effectiveness outcomes,” the FATF said.

Attorney General Carl Bethel.

Attorney General Carl Bethel called the upgrade a “major step forward” for the financial services sector in The Bahamas.

In a statement yesterday, Bethel said the re-rating places The Bahamas at same level of technical adherence to the FATF 40 as the United States of America, which is also compliant with 30 of the 40 recommendations.

He expressed confidence in The Bahamas’ ability to demonstrate to the international community the quality of its legal framework and its financial services sector.

“Together, if we can all continue to work, we will eventually be successful in removing any blemish on the quality of our legal and supervisory framework, and preserve the reputations of The Bahamas as a clean, effective, low-risk, and compliant international financial services jurisdiction for the benefit of global commerce and every Bahamian,” Bethel said.

However, he said to achieve this there is much work to be done.

He noted that The Bahamas must improve the implementation of the 11 immediate outcomes as part of an action plan the government agreed to with the FATF.

In May, the FATF rated The Bahamas as compliant with 9 requirements; largely compliant with 9 requirements; partially compliant with 21 requirements and non-compliant with one requirement.

The Bahamas was rated non-compliant on deficiencies related to not having a competent authority identified with specific responsibility over the United National Security Council resolutions, which includes freezing assets mechanisms.

The FATF yesterday re-rated The Bahamas on that requirement to partially compliant.

It said The Bahamas addressed some of the deficiencies in its Anti-Terrorism Act, which makes the attorney general the competent authority to propose names to the UNSC, and for the police commissioner to investigate on the instruction of the AG’s Office.

However, the FATF said there were still “outstanding deficiencies” that it expects to be addressed once the Anti-Terrorism Act regulations come into full effect.

Legislative response

Prime Minister Dr. Hubert Minnis and this Cabinet walk to the House of Assembly.

Earlier this month, Parliament passed a compendium of financial sector bills to meet the FATF and Organization for Economic Co-operation and Development (OECD) requirements.

The bills included, the Penal Code (Amendment) Bill, Removal of Preferential Exemptions Bill, the Commercial Entities (Substance Requirements) Bill, the Register of Beneficial Ownership Bill and the Non-Profit Organizations Bill.

The Penal Code (Amendment) Bill makes it a crime to willfully defraud the government.

The Removal of Preferential Exemptions Bill removed preferential tax regimes for certain categories of companies or entities that are not afforded to domestic companies and entities.

The Commercial Entities (Substance Requirements) Bill required companies that engage in certain categories of business in The Bahamas, namely financial services, shipping and distribution, to demonstrate substantial economic presence within The Bahamas and that they are engaged in legitimate business.

The Register of Beneficial Ownership Bill seeks to create a database of ownership records of all entities registered in The Bahamas.

The NPO Bill seeks to regulate NPOs and required these organizations to register and provide financial statements, the identities of its members, as well as report donation of $50,000 or more, among other things.

The latter of the bills was temporarily shelved in the Senate to allow for further review and consultation with civil society organization.

It is expected to be debated in January, 2019.

The government said the legislation represented another plank in The Bahamas’ tax transparency regime and will aide in preserving the country’s position as a significant global financial services center.