— Anti-Corruption News Story Curated by Anti-Corruption Digest International Risk & Compliance News

THE Bahamas was listed among major international money laundering jurisdictions in 2018, a newly released United States Department of State report said, highlighting sources of laundered proceeds included firearms trafficking, human smuggling and tax fraud.

At the time the report was compiled, the US noted the country did not maintain official records of company beneficial ownership or require resident paying agents to tell domestic tax authorities about payments to non-residents.

The report recommended demonstrating risk-based supervision of non-bank financial institutions and ensuring timely access to adequate beneficial ownership information by addressing the anti-money laundering/combating the financing of terrorism regime.

It was also suggested that the quality of financial intelligence unit products be increased to better assist law enforcement to investigate and prosecute all types of money laundering.

The findings were detailed in the March 2019 Bureau of International Narcotics and Law Enforcement Affairs – International Narcotics Control Strategy Report Volume 2 on Money Laundering.

Countries listed alongside The Bahamas included Jamaica, Cayman Islands, Barbados, Belize, Canada, Costa Rica and China among several others.

A separate report focusing on drugs and chemical control contained a memorandum from President Donald Trump to US Secretary of State Mike Pompeo that listed this country among those considered major illicit drug transit or drug producing countries for the 2019 fiscal year.

“The Bahamas’ proximity to Florida makes the country a transit point for drugs heading to the United States,” the report said.

“Proceeds from facilitating drug transit, particularly bulk cash payments to local individuals and criminal gangs, are a key concern. Other sources of laundered proceeds include firearms trafficking, human smuggling and trafficking, and fraudulent commercial transactions, including tax fraud.

“The Bahamas is an international business and financial centre with an open economy. The high volume of large, cross-border asset transactions enhances the risk of money laundering through private banks, trust services, insurance companies, and corporate service providers. Other money laundering methodologies may include purchase of real estate and precious metals and stones.

“Current information on the extent of offshore activities is not available. At year end 2014, total assets of the banking industry were US $279.2b, approximately 44 times the country’s GDP, with 96 percent of assets in the offshore sector. There are 67 investment fund administrators holding US $134.6b under administration and 849 investment funds. Additionally, there were 105 private trust companies, 310 financial corporate service providers, 694 registered foundations and 173,907 registered International Business Companies. IBCs can be formed in one to two days.

“The Bahamas does not maintain official records of company beneficial ownership, or require resident paying agents to tell the domestic tax authorities about payments to non-residents.”

However, note was made in the report of The Bahamas passing an enhanced Financial Transactions Reporting Act strengthening know your customer rules, suspicious transaction report procedures, risk assessment obligations for financial institutions and designated non-financial businesses and professions and customer due diligence regarding beneficial owners and politically exposed persons.

In addition, the report said an enhanced Proceeds of Crime Act introduced unexplained wealth orders and non-conviction-based forfeiture, while a comprehensive anti-terrorism act addresses terrorist financing and proliferation.

The separate report on drugs said the country remained a significant transshipment point for illicit drugs bound for the US and other countries.

Source: US report names Bahamas as money laundering jurisdiction | The Tribune