20/10/20

BAHAMAS: Jurisdiction strengthens beneficial ownership rules to satisfy FATF.

As published on internationalinvestment.net, Monday 19 October, 2020.

The Bahamas has added an amendment to its Register Beneficial Ownership Act that brings segregated accounts companies (SACs) and non-profit organisations (NPOs) limited by shares under the Act's explicit scope.

Deputy prime minister and minister of Finance K Peter Turnquest led the debate on the amendments that passed by Parliament.

Turnquest told the House of Assembly it was important to expressly state that SACs were included in the legislation, given that their intrinsic operation could be viewed as a vulnerability to the Bahamas' anti-money laundering (AML) framework with respect to the identification of beneficial owners.

This caused FATF to take the view that SACs are a weakness in the jurisdiction's AML regime, contravening its key recommendation that no person is able to hide their identity through the use of a Bahamian entity. That difficulty had to be remedied if the jurisdiction were to escape from FATF's list of countries under enhanced scrutiny, because of strategic AML deficiencies.

Turnquest said the Register of Beneficial Ownership Act is "another weapon in our arsenal to counter the narrative that The Bahamas' financial services industry operates outside of the regulatory bounds accepted by the international financial community".

The Register of Beneficial Ownership Bill 2018, was passed in the House of Assembly in December 2018.

The legislation mandates the creation and maintenance of a database containing beneficial ownership details for all corporate and legal entities registered in The Bahamas.

However, it only permits a search of this database by a "designated person", upon the request of an "authority" listed in the Bill.

Turnquest told Parliament there was was consultation and consensus on the provisions of the Bill with the country's key financial services stakeholders,

"There is unanimous agreement that the Bill, once passed, will bolster our efforts to be removed from the FATF ICRG process," he said.

"Due to Covid-19 related travel restrictions, FATF has not been able to conduct the in-country assessment of our AML/CFT regime, which is the last hurdle to being removed from the FATF List of Countries with Strategic AML/CFT deficiencies."

Turnquest said: "Removal from the FATF list has been cited by the EU as a requirement for them to not include The Bahamas in the impending EU AML/CFT List of Third Countries."

FATF assessors are currently unable to conduct an on-site visit to the Bahamas because of the Covid-19 pandemic. This led to the Bahamas being included on the European Commission's proposed list of high-risk money laundering jurisdictions in May 2020. The European Union delayed formal revision of its blacklist until October 2020 because of Covid-19, but that extension has now almost expired.