(Tribune 242) -- An ex-attorney general yesterday warned that a beneficial ownership registry accessible by the public will be an “industry killer” for Bahamian financial services, and should be “resisted at all costs”.
Sean McWeeney QC, the Graham, Thompson & Company attorney and senior partner, told an anti-money laundering/counter terror financing conference that it would be “game over” for The Bahamas’ financial services industry if this nation ever “capitulates” to such a demand.
“Let’s be clear: An open, public beneficial ownership register is an industry-killer,” he said. “There is no other way to put it, and there is no way around it. I don’t care how many advantages you can count off on your fingers and toes; if we ever capitulate to that, we might as well hand in the keys at the same time. It will be game over.”
Mr McWeeney added: “I think we can live with a register of beneficial owners of companies that is accessible, on an as-needed basis, to local regulators in a controlled and properly legislated framework.
“But an open, publicly accessible register is an absolute no-no. If we consciously serve up the privacy of clients as the price for open, public beneficial ownership registers, we are finished. We will be deader than a door nail in no time flat.
“Anyone who tells you we could survive that is talking out of the back of his head. Make no mistake about it, any group that insists and demands an open public register of beneficial owners is demanding that you close up shop. It is not a demand for reform but a demand for closure. One would have to be incredibly naive or incredibly thick not to see that.”
The Government has previously pledged that a register of beneficial ownership for all corporate vehicles domiciled in the Bahamas will be private, accessible only to law enforcement and the financial services regulators, to enable them to fulfill their legal and international co-operation obligations.
K P Turnquest, the Deputy Prime Minister, previously told Tribune Business that the proposed Beneficial Ownership registry will have “the most stringent controls” when it comes to data protection and information security.
It will not be accessible to members of the general public, and he said it was “not an unreasonable guess” to suggest that the Bahamas would follow the Cayman Islands’ lead by establishing a registry that is neither ‘in the cloud’ or linked to the Internet, in a bid to eliminate the threat of hacking and/or data leaks.
However, Mr McWeeney’s comments likely allude to fears that The Bahamas and other international financial centres (IFCs) will come under ever-increasing pressure to make their beneficial ownership registries accessible to all-comers.
The UK parliament’s earlier this year passed legislation forcing the likes of the Cayman Islands, British Virgin Islands (BVI) and Bermuda, all rival IFCs and British overseas territories, to implement public registries by 2020.
Ryan Pinder, a former financial services minister, and colleague of Mr McWeeney’s at Graham, Thompson & Company, warned back in May that creating a central Beneficial Ownership Registry could “destabilise” the Bahamian financial services industry and should be shelved “for now”.
He argued that the proposal represented “a major shock” for an industry and client base already reeling from the imposition of numerous international regulatory initiatives within just a few years, and warned that the Register of Beneficial Ownership Bill 2018 would likely prove especially alarming for the high net worth Latin American clients that The Bahamas is increasingly targeting.
Mr Pinder said such clients had legitimate reasons for confidentiality, given the often-high level of crime and political instability in their home countries, and disclosure of their wealth - via hacking or data leak from a Bahamian ownership registry - could place their lives and their families in jeopardy.
The former minister urged the Government to delay the Beneficial Ownership Registry until global standards on the issue further evolved, and instead focus on complying with the European Union’s (EU) demands for ‘economic substance’ and the elimination of ‘ring fencing’.
He added that the Bahamian financial services industry could ill-afford further “shocks and challenges” until the revamping of its business model, and a clearly defined “value proposition” and growth strategy, were developed and implemented.
Mr Turnquest, though, in addressing the same anti-money laundering/counter terror financing conference earlier this week, said the Government planned to move ahead with the Register of Beneficial Ownership Bill in this parliamentary session given that it would help the Bahamas comply with international standards.
Mr McWeeney, though, yesterday argued that high-net worth individuals would stay clear of The Bahamas if their privacy cannot be assured and protected. “Open, publicly accessible registers of beneficial owners must be resisted at all costs, and the strongest possible diplomacy will have to be brought to bear to repel this threat,” he warned. “Public beneficial ownership registers represent a line in the sand that simply cannot be crossed.”