This nation ought to be “guarded” in any celebration of the delisting from the Financial Action Task Force’s (FATF) grey list of nations, says former attorney general Alfred Sears, who described the move as merely a pause in an “ongoing protectionist assault.”
In a statement on Friday, the FATF congratulated The Bahamas for the “significant progress” it has made in improving its Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) regime.
“The Bahamas has strengthened the effectiveness of its AML/CFT system and addressed related technical deficiencies to meet the commitments in its action plan and remedy the strategic deficiencies identified by the FATF in October 2018”.
“The FATF now delists The Bahamas from the list of Jurisdictions under Increased Monitoring. The Bahamas is therefore no longer subject to the FATF’s increased monitoring process. The Bahamas will continue to work with CFATF to improve further its AML/CFT regime.”
Sears told the Bahamas media “I think that we are really playing musical chairs in a process that is fundamentally flawed and contrary to basic principles of international law. We ought to challenge what the process [is] because it violates the fundamental principles of sovereign autonomy and it is unequally applied.
“It is only applied to non-European offshore jurisdictions and the onshore jurisdictions which are in OECD (Organisation for Economic Co-operation and Development) member countries have the same deficiencies but are not subject to the penal sanctions which are imposed on offshore jurisdictions.
On May 7, 2020 the EU announced the addition of 12 countries on its blacklist (The Bahamas, Barbados, Botswana, Cambodia, Ghana, Jamaica, Mauritius, Mongolia, Myanmar/Burma, Nicaragua, Panama and Zimbabwe) and the removal of six countries (Bosnia-Herzegovina, Ethiopia, Guyana, Lao People's Democratic Republic, Sri Lanka and Tunisia) from the same lis
The list is based on recommendations made by the Financial Action Task Force (FATF), the main standard-setting body in this field. The EU blacklist uses the FATF monitoring list as a starting point and serves as a way to hold the included countries accountable since the FATF has no enforcement ability of its own.
The consequences for the blacklisted countries could be severe. Any companies from these countries are banned from receiving new EU funding while European banks and other financial institutions must carry out more thorough checks for transactions conducted in or related to these blacklisted nations.
The former Bahamas Attorney General declared that “That is fundamentally unfair and violates international law. I believe The Bahamas and other financial centres ought to engage in a global campaign to remove anti-money laundering regulation away from the FATF and put it under international convention supervised by the UN (United Nations), of which The Bahamas is a member.”
“I think we have to see this period of dislocation in the world to influence the post-COVID global order for there to be more equity, more space and a more level playing field for offshore financial centres and former colonial nation states such as The Bahamas to be able to compete within a level playing field.
“Every time they impose a negative sanction on us, we become less competitive [and] there is a flight of portfolio investments away from The Bahamas, usually to the benefit of high-tax jurisdictions and onshore financial centres.”
In the meantime, Caribbean economist Maria Dukharan has described the EU's blacklisting of these countries as an act of racism and bullyism. Dukharan ripped into the European political and economic union, questioning their authority to impose their own methodology globally and over and above the Financial Action Task Force (FATF), which is the global intergovernmental money laundering and terrorist-financing watchdog.
She contends that this action could be considered extrajudicial in nature, given that the FATF and the OECD are the internationally recognised authorities on Anti-Money Laundering (AML)/Combating the Financing of Terrorism (CFT) and Tax policy, respectively, not the EU.
Dukharan further questioned which body or international treaty gives the EU the legal or even moral authority to impose separate AML/CFT requirements.
The Caribbean economist argues that “the consequences of being placed on these blacklists should not be underestimated, as they are of an economically existential magnitude for these developing countries”.
In October, the Caribbean Community in a statement said the community of nations “deplores the ongoing unilateral, arbitrary and non-transparent blacklisting strategy employed by the European Union (EU) against CARICOM Member States. The most recent inclusion of CARICOM States to the blacklist of alleged non-cooperative tax jurisdictions and jurisdictions identified as being deficient in the area of Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT), underscores the EU’s unwillingness to take into account the substantial progress made by CARICOM Member States at compliance with global standards.”
“Moreover, the unquestioned use of ratings from other international bodies as a determining factor in the decision to list a jurisdiction along with the absence of meaningful prior consultation with the affected States negates the spirit of partnership and multilateralism that has characterised the relationship between CARICOM and the EU. Along with the unprecedented task of staging a post-COVID-19 economic recovery, these CARICOM States now have the added burden of being subjected to the EU’s discriminatory tactics disguised as tax policy and governance,” CARICOM said.
The Caribbean Community called on the European Union to desist from this harmful practice of blacklisting small states, and instead pursue a mutually collaborative engagement towards our shared goals of effective tax governance and combatting money laundering and terrorism financing.
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