By Derek Smith Jr
As families across the world prepare to celebrate the festive season of Christmas by taking time off to spend with loved ones, equally, criminals are also preparing for the yuletide season. Criminals understand that 2020 has disrupted traditional controls normally deployed by financial institutions, designated non-financial businesses and professionals (DNFBPS), retailers, street vendors, hotels and gaming houses. The Proceeds of Crime Act, 2018 (POCA, 2018) defines “proceeds” or “proceeds of crime” as “any funds or property derived from or obtained, directly or indirectly, as a result of or in connection with the commission of any offence, including economic gains and funds or property converted or transformed, in whole in part, into other funds or property; and it is immaterial — (a) who carried out the criminal conduct; who benefited from it; whether the criminal conduct occurred before or after the passing of this Act”.
Business Standard, in an October 29, 2018 article, noted that at that time “banks had spent USD$321 billion in fines since 2008 for regulatory failings, money laundering, terrorist financing and market manipulation”.
Therefore, against the backdrop of over nine months and counting of a COVID-19 pandemic, several risks will arise.
In my June 2020 article, entitled “Beware of human trafficking ted flags”, I noted, and I reiterate today: “Financial crimes professionals and other control professionals must remain vigilant.”
I submit that as money changes hands, credit and debit cards are swiped and bartering occurs across various industries, there are proceeds of crime concerns that must be considered to avoid potential problems for institutions and individuals alike.
Consider concealment is an offence under Bahamian law
Major hotels just reopened in The Bahamas and the risk of money launderers testing their policies and procedures is likely. Control professionals must be aware of how their products and services can be used to launder money. Additionally, the general public must be aware that a person can potentially commit an offence if he or she, acting with knowledge or reasonable suspicions, conceals, disguises, converts, transfers or removes the proceeds of any crime from The Bahamas. A simple example would be: if there is knowledge of money laundering and you use the proceeds to enjoy Christmas shopping, you have possibly committed an offense of money laundering and are subject to penalties under Bahamian law.
Consider arrangements concerning proceeds of crime is an offence under Bahamian law
The conscious avoidance of the truth, otherwise known as “willful blindness”, generally is not a defense. POCA, 2018 explicitly explains that if one knows, suspects or ought to reasonably have known or suspected that he or she entered or is entering into an arrangement regarding the proceeds of crime, that person may have committed an offense of money laundering and is subject to penalties under Bahamian law. The age-old position of not seeking clarification when a doubt arises goes “out the window”. Owners of business operations and customers alike must be aware of circumstances and remain vigilant during transactions.
Consider acquisition, use and possession of proceeds of crime is an offence under Bahamian law
To merchants and real estate firms, sales are important, however, ensuring that you remain law-abiding is paramount. Training on red flags would help tremendously with the early identification of potential criminal situations that could lead to the acquisition, use and possession of the proceeds of crime. Bahamian law makes it unequivocally clear that a person who acquired or is acquiring, used or is using and possessed or possesses the proceeds of crime has committed an offence of money laundering.
In conclusion, the fight against money laundering and the actions that facilitate it, such as human trafficking, sex trafficking, smurfing and others, can create real problems. Institutions and individuals alike must be aware that concealment, arrangements concerning and acquisition, use and possession of proceeds of crime is punishable under law.
Derek Smith Jr is a Top 40 Under 40 leader; the compliance officer at Higgs & Johnson, a leading law firm in The Bahamas; and the former assistant vice president, Compliance & Money Laundering Reporting Officer (MLRO), at an international private bank. He is also a CAMS member of the Association of Certified Anti-Money Laundering Specialists (ACAMS) and an executive member of the Bahamas Association of Compliance Officers.