Financial Crime World

Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Risks in The Bahamas

The Bahamas faces significant Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) risks across various sectors. This report highlights five key areas that require attention:

Money Laundering/Terrorist Financing (ML/TF) Risks

  • Financial Institutions (FIs) lack awareness on the course of action to take when designated persons or entities on Terrorist Financing Sanctions (TFS) lists are detected.
  • There is a large number of unverified facilities in the domestic banking sector that still exist from prior to the enactment of AML/CFT obligations.

Designated Non-Financial Businesses and Professions (DNFBPs)

  • DNFBPs have extensive AML/CFT policies and procedures in place, but their understanding of Terrorist Financing (TF) and Predicate Offense (PF) risks appears low.
  • There is a need for training on the updated FATF standards and obligations they impose.

Supervision

  • Licensing and registration requirements implemented by The Bahamas adequately limit the possibility for criminals to enter the financial sector.
  • However, the Central Bank faces challenges in registering lawyers, accountants, and real estate agents, and would greatly benefit from additional resources and administrative penalties for non-compliance with registration requirements.

Transparency of Legal Persons and Arrangements

  • The Bahamas is able to incorporate companies, partnerships, foundations, and executive entities.
  • However, the number of inactive entities indicates a level of ML/TF risk with legal persons and arrangements within The Bahamas, and there are challenges in demonstrating whether sanctions applied are effective, proportionate, and dissuasive.

Effectiveness

  • Financial supervisors use a risk-based approach to assess AML/CFT risks for most financial sectors.
  • However, DNFBP supervisors need to incorporate updated ML/TF risk information in guidance and provide information on ways to mitigate those risks.

Areas for Improvement

  • Enhancing proactive outreach to the financial sector on AML/CFT issues
  • Increasing administrative fines for AML/CFT breaches
  • Implementing a more tailored approach to remedial actions
  • Improving the registration of lawyers, accountants, and real estate agents