Bahamas Tax Haven Criticized for Poor Money Laundering Protections

Global Anti-Money Laundering Body Issues Scathing Report on Bahamas

A highly critical report has been published by the Financial Action Task Force (FATF), a global anti-money laundering body, highlighting the Bahamas’ failure to effectively combat financial crime. The report reveals that the Bahamian banking sector is at high risk of money laundering, despite being one of the world’s largest offshore banking centers.

Key Findings of the Report

• The Bahamas scores poorly on 11 key effectiveness measures, with six areas receiving a “low” rating and five scoring only “moderate”.
• The country’s private banking and trust company sectors are particularly high-risk, with limited law enforcement capacity and inadequate sanctions being imposed.
• Financial institutions in the Bahamas file few suspicious transaction reports, despite being required to do so when encountering suspicious transactions.

Government’s Own Risk Assessment Draft Admits to High Money Laundering Risk

The Bahamian government’s own risk assessment draft admits to the high risk of money laundering in these sectors. The report highlights a lack of judicial action against dirty money, with no convictions for money laundering or foreign tax evasion recorded during the review period.

Experts Warn of Serious Implications for Bahamas’ Status as Global Tax Haven

Anti-corruption activists and experts warn that a country with an offshore sector as large as Colombia’s economy cannot afford to play down its role in facilitating illicit financial flows. The report is set to be debated by international authorities, with implications for the Bahamas’ status as a global tax haven.

Summary of Recommendations

• Improve law enforcement capacity and impose adequate sanctions on high-risk sectors.
• Enhance judicial action against dirty money.
• Increase the number of suspicious transaction reports filed by financial institutions.