05/11/20

BAHAMAS: New legislation criminalizes financial schemes.

As published on ewnews.com, Thursday 5 November, 2020.

NASSAU, BAHAMAS — Pyramid, Ponzi, and other financial schemes will for the first time be criminalized as “long overdue” legislation will bring non-bank financial and corporate service providers in line with international standards and best practices.

Deputy Prime Minister and Minister of Finance K Peter Turnquest lead debate yesterday on the Financial and Corporate Service Providers Bill, 2020.

The legislation will repeal and replace the Financial and Corporate Service Providers Act, 2000 and modernize the two-decade-old legal framework.

“With respect to protecting the industry and the reputation of the jurisdiction from the contagion of money laundering or abuse of terrorism financing, the Financial and Corporate Services Bill, 2020, requires licensees to comply with the Financial Transactions Reporting Act, 2018 and the Anti-Terrorism Act, 2018,” Turnquest said.

“Licensees will also be required under the Bill to have adequate financial resources and be solvent and to have adequate insurance coverage appropriate to their business operations.

“These all work to protect investors, both by increasing the likelihood that operators are financially prepared for the activities they will engage in and may add some protective measures for aggrieved consumers,” said Turnquest.

“The Bill defines for the first time certain criminal financial schemes, making The Bahamas one of the leading jurisdictions to introduce legislation to expressly criminalize this type of activity.

“These may take the form of pyramid schemes, Ponzi schemes, and advance-fee schemes, among others, and many of them have plagued unsuspecting Bahamians for generations. Further, these schemes are fundamentally detrimental to investors and the public.”

Turnquest said: “The Bill criminalizes the promotion or marketing of these financial schemes and empowers the Securities Commission to dissolve them where circumstances so warrant. It also empowers the Commission to investigate and enforce against persons engaged in financial schemes.”