Financial Crime World

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BAHAMAS MONEY LAUNDERING: WHAT YOU NEED TO KNOW

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The Bahamas, a popular tourist destination and financial hub in the Caribbean, has been identified as a major concern for money laundering. According to experts, an estimated $179 million to $448 million is laundered every year in the country. In this article, we’ll delve into the key challenges of anti-money laundering (AML) compliance in the Bahamas, including the risks and responsibilities that organizations need to consider.

Key Risks

Trade-Based Schemes

  • The National Risk Assessment identifies trade-based schemes as a major money laundering concern in the Bahamas.
  • These schemes involve the illegal transfer of goods across borders, often through fraudulent means.

Fraud

  • Over 100 suspicious transaction reports have been filed under fraud, making it the most prevalent predicate money laundering offense in the country.

Human Trafficking and Drug Trafficking

  • The Bahamas serves as a major transit point for trafficked people and migrants attempting to enter the US.
  • Cannabis and cocaine are the most common drugs smuggled into the country.

Criminal Proceeds

The financial proceeds of these criminal activities are laundered through various means, including:

  • Real estate
  • Cash-intensive businesses
  • Shell companies

This illegal activity has significant implications for the financial stability of the country and the global economy as a whole.

AML Policy Summary

The Bahamas’ AML laws are still in their infancy, with many of them enacted recently. While the country has made progress in prevention and detection, it is weak in terms of prosecution. The lack of effective prosecution of money laundering cases is a major concern, as it allows criminals to continue operating with impunity.

Legislative Framework

In recent years, the Bahamas has overhauled its AML and financial crime regulatory framework. The country was removed from the Financial Action Task Force (FATF) grey list in 2020, thanks to significant efforts by the government to strengthen its AML regime.

Key legislation includes:

  • Proceeds of Crime Act
  • Beneficial Ownership Register Act
  • Financial Transactions Reporting Act
  • Anti-Terrorism Act

Weaknesses

Despite these efforts, there are still significant weaknesses in the Bahamas’ AML regime. These include:

  • Designated non-financial businesses and professions (DNFBPs) report suspicious transactions through a paper-based system, which hinders reporting and analysis.
  • The judicial system is slow-moving, with many cases pending for years.
  • Limited publicly available information on beneficial ownership
  • Lack of data on the effectiveness of the wider AML program

Strengths

Despite these weaknesses, the Bahamas has made significant progress in tackling financial crime. The country’s fourth round mutual evaluation in 2017 led to a raft of new laws and a clear political will to address AML issues.

Conclusion

The Bahamas’ money laundering problem is complex and multifaceted, requiring a comprehensive approach to addressing it. While the country has made progress in prevention and detection, there are still significant weaknesses that need to be addressed. By understanding the risks and responsibilities involved, organizations can better navigate the complexities of AML compliance in the Bahamas.