Financial Crime World

The Bahamas’ Financial Sector at Risk: Domestic Market Susceptible to Money Laundering and Terrorism Financing

The Bahamas’ domestic market has been identified as highly susceptible to money laundering (ML) and terrorism financing (TF) risks. The country’s attractiveness to criminals wishing to pawn stolen goods has made it a prime target for illegal activities.

High-Risk Sectors Identified

Several sectors in the Bahamian economy have been identified as high-risk areas for ML/TF activity. These include:

  • Jewelers and other businesses dealing in precious stones, due to their international exposure
  • Casinos and gaming houses, with large volume cross-border transactions characterizing these businesses
  • The real estate sector, particularly with high-value property sales to international buyers

On the other hand, the accounting profession has been deemed to have a low/ negligible level of ML/TF risk, as Bahamian firms limit their services to internal auditing assignments.

The legal profession is highly exposed to criminal exploitation, providing a range of services susceptible to being used in money laundering activities. The sector’s role in numerous transactions domestically and internationally makes it a high-risk area for ML/TF activity.

Non-Profit Organizations Need Supervision

The non-profit organization (NPO) sector has not had an appropriate supervisory framework developed to date, with the majority of registered NPOs being Bahamian-based and restricted to carrying out business within the country. However, there is no reported financing of terrorism through these organizations.

Addressing ML/TF Risks

To combat these risks, action is being considered on six key tracks:

  • Developing comprehensive risk-based supervisory frameworks for regulatory agencies
  • Enhancing the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regime
  • Improving domestic cooperation and coordination
  • Strengthening sanctions, intelligence, and enforcement
  • Ensuring an efficient and effective system for international cooperation
  • Raising AML/CFT awareness among stakeholders and the general public

The Bahamas has enacted various legislation to combat ML and TF, including:

  • The Anti-Terrorism Act, 2004
  • The Prevention of Bribery Act, 2010
  • All regulators have issued legally enforceable AML/CFT guidance for financial services and designated non-financial business sectors

The Government is an active member of the United Nations and operationalizes Security Council resolutions on terrorist-related activities and sanctions.

Conclusion

The Bahamas’ financial sector faces significant risks from ML/TF activities, with several high-risk sectors identified. Addressing these risks requires a comprehensive approach, including developing risk-based supervisory frameworks, enhancing the AML/CFT regime, and improving domestic cooperation and coordination. The Government is committed to combating financial crime and ensuring the effectiveness of its legal and institutional framework.