With 700 islands in the Caribbean, the Bahamas is a tropical paradise whose economies depend heavily on tourism and is one of the wealthiest countries in the Caribbean. The second most important sector of the Bahamian economy is financial services, with offshore services dominating nearly US$255.6 billion as of 2018.
The Bahamas, which is among the leading global tax heavens, often faces the risks of money laundering like other tax heavens. The FATF's list of 15 jurisdictions in 2000 included the Bahamas as a potential territory for money laundering.
After FATF identified deficiencies in the Bahamas in a Mutual Assessment Report in July 2017, the Bahamas was placed on the FATF Grey list in october 2018. However, in 2020, the Bahamas was removed from the Jurisdictions under Increased Monitoring list, i.e., the grey list, due to significant progress in improving the AML/CFT regime.
How Has a Tax Heaven Become a Money Laundering Haven?
Former Chilean dictator Augusto Pinochet used two offshore shell companies between 1994 and 2002 to launder nearly US$12 million. A Bahamas-based offshore provider was accused of laundering more than $1 billion in funding shortly after. The Bahamas, which is becoming increasingly famous as a money laundering point, was released in 2018 by the US in a report that it named the primary money laundering point. Important red flags were identified like/as; the absence of official records of beneficial ownership and no obligation for resident paying agents to tell domestic tax authorities about payments to non-residents.
According to the CFATF Mutual Assessment Report (MER) published in July 2017, significant deficiencies have been identified in the Bahamas' AML infrastructure. The Bahamas, an international financial hub, appears vulnerable to money laundering threats and has "not yet developed documented national AML/CFT policies." In October 2018, the Bahamas were added to the FATF Grey List because they were fully compliant with 8 of the 40 FATF recommendations, largely compliant with 10, partially compliant with 21, and incompatible with 1.
Exit from Grey List
Being on the Grey List, which had the effect of a wake-up call in the Bahamas, has set in motion many reforms in the field of AML/CFT and has yielded immediate positive results. In its December 2018 report, the CFATF noted the Bahamas' progress. The country was related to being fully compliant with 13 of the 40 FATF recommendations, largely compliant with 17, and partially compliant with 10.
In September 2019, Bahamian authorities announced that... that there were 40 money laundering convictions in the last four years. This was a significant improvement. Then in September 2020, they made substantial changes to the Beneficial Property Registration Act.
The Bahamas' effort to improve the AML/CFT regime has been officially recognized. According to the CFATF's MER, published in November 2021, the Bahamas are not fully compliant with 18 of the 40 recommendations and are largely compliant with 20. Moreover, with its removal from the list of EU money laundering jurisdictions in January 2022, the Bahamas demonstrated how seriously it applies AML regulations.
Anti-Money Laundering Provisions in Bahamian Law
Money laundering refers to the process by which criminals hide the source of illegally obtained money. The Bahamas provisions aim to prevent money laundering by both domestic and foreign nationals through the country's financial institutions.
Proceeds of Crime Act
This law makes the laundering, searching, seizure, and confiscation of the proceeds of crime illegal. The law requires authorities to be notified of suspicious, potential money laundering transactions that businesses and individuals face. In addition, the law allows the confiscation of money obtained from a crime.
Financial Intelligence Unit Act
Financial Intelligence Units (FIU) receive, analyze and transmit suspicious transaction reports identified by the private sector. FIUs act as intermediaries between organizations and law enforcement agencies subject to AML/CFT obligations.
Financial Transactions Reporting Act (FTRA)
FTRA requires financial institutions to report questionable transactions and verify customers' identities. Otherwise, the Compliance Commission is established to ensure compliance with the FTRA.
Financial Intelligence Regulations
These FTRA-based regulations require financial institutions to comply with record-keeping, compliance, and reporting regulations. For example, financial institutions are required to provide training to some of their employees on their money laundering laws.
The Anti-Terror Act is not only about terrorist activities. It also considers the money collected and laundered to be used in terrorist activities as a crime. Like other laws, this requires that suspicious activity to be reported to the authorities.
Sanction Scanner provides anti-money laundering solutions that help companies meet AML requirements. Companies operating in The Bahamas under AML liability can quickly and efficiently fulfill their AML needs with the solutions of Sanction Scanner.
AML Name Screening
Scan customers in over 3000 Global Sanction Lists, PEPs List and Adverse Media, updated in 15 minutes.
AML Transaction Monitoring
Monitor transactions in real-time to detect, stop and investigate suspicious transactions.
Check the receiver and sender without delay with AML Transaction Screening.
Adverse Media Screening & Monitoring
Perform Adverse Media controls via API, batch files, or the web using our Adverse Media softwares.