What's Happening

The Bahamas was removed from the European Commission’s List of Third-country Jurisdictions which have strategic deficiencies in their AML/CFT Regimes (AML Blacklist). This decision was finalized on January 7^th, 2022, after The Bahamas was assessed under the European Commission’s revised methodology for identifying high-risk third countries in the last quarter of 2021.

 The FATF de-listed The Bahamas from the list of Jurisdictions under Increased Monitoring in December 2020 after the country addressed the strategic deficiencies identified by the FATF. However, in April 2021, the European Commission identified deficiencies that the jurisdiction needed to address to meet the Commission’s required standards. According to a release by the Council of the European Union on January 10^th, 2022, “The Bahamas has implemented measures which are sufficiently comprehensive and that meet the necessary requirements to consider that strategic deficiencies identified under article 9 of the Directive (EU) 2015/849 have been removed”. The measures taken by The Bahamas have strengthened its AML/CFT framework and focused on the transparency of its beneficial ownership regime. The European Commission stated that it will continue to work in collaboration with the FATF and CFATF to monitor the development of The Bahamas’ AML/CFT regime.

In addition to The Bahamas, The European Commission concluded that Botswana, Ghana, Iraq and Mauritius no longer have strategic deficiencies in their AML/CFT regime. In its Official Journal on February 21^st, 2022, the EU noted that these countries have “strengthened the effectiveness of their AML/CFT regimes and addressed related technical deficiencies to meet the commitments in their action plans regarding the strategic deficiencies that the FATF identified as well as the Commission’s additional benchmarks or concerns”.

The Financial Action Task Force (FATF) adopted amendments to Recommendation 24 and its Interpretive Note on March 4^th, 2022. These changes will require countries to prevent the misuse of legal persons for money laundering (ML) or terrorist financing (TF) and to ensure that there is adequate, accurate and up-to-date information on the beneficial ownership (BO) and control of legal persons.

The FATF stated that the amendments were necessary as legal persons were significantly misused for ML, TF, and for proliferation financing (PF) in several jurisdictions. Generally, Mutual Evaluations by the FATF have indicated that there are insufficient levels of effectiveness in combating the misuse of legal persons for ML and TF purposes in the global network. FATF further noted that these improved standards are a critical initial step that must be done in tandem with constructive and sustained efforts to effectively implement the new standards and respond to risks relating to the abuse of legal persons.

Recommendation 24 now requires a multi-pronged approach where a combination of different mechanisms can be utilized for the collection of BO information to ensure it is available to competent authorities (CAs) in a timely manner. Countries should require companies to obtain and hold adequate, accurate and up-to-date information on their own BO and make such information available to CAs in a timely manner. Countries should also require BO information to be held by a public authority or body functioning as BO registry or may use an alternative mechanism if such a mechanism also provides efficient access to adequate, accurate and up-to-date BO information by CAs. Furthermore, jurisdictions should apply any additional supplementary measures that are necessary to ensure the determination of BO of a company. Such measures include holding BO information obtained by regulated financial institutions and professionals or held by regulators or in stock exchanges.

The revisions to Recommendation 24 will require countries to follow a risk-based approach and consider the risks of legal persons in their countries. They must assess and address the risks posed by legal persons, both created in their countries and foreign-created legal persons which have sufficient links with their country. Moreover, the amendments specify that access to information by CAs should be timely, and information should be adequate for identifying the beneficial owner, accurate (based on verification) and up-to-date. Jurisdictions must ensure that public authorities have access to the BO information of legal persons in the course of public procurement. Finally, the changes include stronger controls to prevent the misuse of bearer shares and nominee arrangements, including prohibiting the issuance of new bearer shares and bearer share warrants, conversion or immobilisation of the existing ones, and more robust transparency requirements for nominee arrangements.

The FATF is conducting a parallel review of Recommendation 25 (beneficial ownership of legal arrangements) to ensure consistent and suitably tailored BO standards and efficient implementation. As part of a phased approach, the FATF will begin assessing jurisdictions for implementation of the revised requirements at the start of the Fifth Round of Mutual Evaluations. This would give countries adequate time to put the necessary domestic measures in place. The FATF stated that it will continue to work with the global network to provide the necessary technical assistance and training to assist countries to meet the current standards, raise awareness of the new obligations, enhance understanding of registries and alternative mechanisms, and improve effectiveness of their implementation. More information on the revision process and amendments to Recommendation 24 are available on the FATF website.

An investigation conducted in 2020 by the Public Prosecutor of the Attorney General's Office of Curaçao, Sint Maarten and Bonaire, Sint Eustatius and Saba (OM) working in the Anti-Corruption taskforce (TBO) has resulted in a Bank operating locally to be sanctioned according to the sanctioning regime and legislation in force in the jurisdiction. The terms of the settlement included the following sanctions:  a fine of 200,000 Netherlands Antillean guilders (NAf.) against the Bank and a publication of a press release by the OM. As stated in the press release , the mentioned sanctions encourage more reporting of unusual transactions by the Bank to the Financial Intelligence Unit (FIU).

In 2015, the OM had seized an account in the Bank following an international request for legal assistance. The account holder was the subject of a criminal investigation abroad, and the balance in the account was estimated at NAf 1 million at the time. A subsequent investigation in 2020 disclosed that the Bank paid the balance to the account holder without the seizure being lifted. The OM launched a criminal investigation against the Bank since withdrawal of assets from a seizure is a criminal offense. Further inquiries showed that  the Bank also did not notify the FIU in a timely manner. Financial institutions are obliged to report financial transactions where there are grounds to believe that these may be connected to money laundering (ML) or  terrorist financing (TF) under the National Ordinance on the Reporting of Unusual Transactions. Failure to comply with this obligation is a criminal offence.

In close cooperation with the requesting country, it was possible for the OM to seize the amount again, this time abroad. A foreign Court of First Instance has since convicted the account holder for ML. The OM stated that after both the Prosecution and the Bank became aware of the criminally culpable act of withdrawal from seizure, the Bank employed an external party to conduct an internal investigation. The result of the investigation was described in a report, which has been shared with the OM. The OM noted that “the report reveals a thorough investigation and also describes the measures already taken and those to be taken to prevent the described wrongdoings. The report also describes the failure to report unusual transactions to the FIU in a timely manner. The thoroughness of the investigation, its promptness, and the internal measures were all grounds for the OM to offer a settlement”.

On March 31^st, 2021, the ECCB launched the pilot of its digital currency called ‘DCash’, which is a blockchain based, digital version of the Eastern Caribbean (EC) dollar. The DCash pilot seeks to create greater financial inclusion in the Eastern Caribbean Countries Union (ECCU) as well as increase economic growth and business opportunities. The pilot will run for 12 months and will initially include four countries: Antigua and Barbuda, Grenada, St Kitts and Nevis and St Lucia. The pilot will subsequently be extended to other eastern Caribbean countries with the anticipation that these will join by September 2021.

According to a release by ECCB Governor Mr. Timothy Antoine, DCash is aimed at establishing safer, cheaper and faster payment systems for all persons except “illicit actors”. In expanding each of the benefits of the new digital currency, the Governor noted that digital cash cannot be stolen and facilitates contactless method of payments, which adheres to COVID-19 protocols. Furthermore, the ECCB “has been careful to embed AML/CFT protocols in the DCash design and to incorporate industry standards and best practices as it relates to cybersecurity…and data privacy.” Payments and transfers are completed instantly and there is no cost for persons using DCash to carry out transactions. Additionally, the Governor stated that utilizing the DCash app would offer users better financial management.

Individuals can access DCash through the official App, the DCash Wallet, and conduct financial transactions using their smart devices. DCash can be obtained from participating commercial banks, credit unions or other authorised institutions.