Mar 6, 2011 - 5:50:19 PM

http://www.thebahamasweekly.com/publish/bis-news-updates/Compliance_Commission_checks_money_laundering14771.shtml

Nassau, Bahamas - From blacklisting a decade ago, financial services in The Bahamas has rebounded to sound footing thanks to the diligence of the nation’s compliance regimes. 

They are responsible for ensuring a clean industry, free from abuse by money launderers.

Stephen Anthony Thompson, BSc MBA, CAMS, Inspector at the Compliance Commission, reflected on the outcome of events that almost derailed The Bahamas’ burgeoning financial services industry. 

“If there is one positive thing coming out of the blacklisting,” he said, “it is that now all regulators are working together to make sure that nobody will be able to perform those criminal activities without being captured.” 

A Certified Anti-Money Laundering Specialist (CAMS), Mr. Thompson serves as liaison between the Commission and regional and international bodies, and participates as part of The Bahamas’ delegation to the Caribbean Financial Action Task Force plenary. 

He assisted in strengthening The Bahamas’ regulatory regime which led to its delisting and removal from the Financial Action Task Force’s monitoring list. 

Lawyers, accountants, real estate agents, and credit unions had been of special concern to the monitoring agencies. The Compliance Commission addresses those concerns. 

Created by section 39 of the Financial Transactions Recording Act, the Compliance Commission is the financial services’ regulatory body with responsibility for the non-banking sector - those institutions not regulated by the Central Bank of The Bahamas, the Securities Commission, or the Insurance Commission. 

It is an independent statutory body within the portfolio of the Minister of Finance. It has three commissioners – Philip Stubbs (chairman), Rowena Bethel (executive commissioner), former banker Oswald Munnings. 

Mr. Thompson is responsible for the Commission’s daily function. 

Those institutions that fall within the purview of the Compliance Commission are now required to submit to an on site examination. 

“The only way we are able to know what they do is for us to go into their business and check to see whether or not they have policies and procedures to prevent people from laundering money and to ensure that they are in effect,” said Mr. Thompson. 

In 2000, The Bahamas’ financial services industry was negatively rated by the monitoring international community. 

There were three main areas of concern, he recalled. The Financial Action Task Force (FATF) said The Bahamas was not doing sufficient to fight money laundering; the Financial Stability Forum said that because of the size of the financial services sector in The Bahamas, the regulatory structure was not as strong as it should have been; and the Organisation of Economic Cooperation and Development (OECD) said that The Bahamas was a tax haven. 

In response, the Government passed 11 pieces of legislation to strengthen the financial services sector. One was the Financial Transactions Recording Act which addressed the view that a certain group was being left unregulated. 

“Worldwide it was believed that because the banks strengthened their processes,” he said, “people started looking at other ways of getting their money cleaned up. 

“And so there came the avenues of real estate brokers, accountants, lawyers, credit unions…and that is why the Compliance Commission was created, to look after that group,” said Mr. Thompson. 

He was convinced that some of the criticism levelled against The Bahamas leading to blacklisting were not justifiable. 

“The main criticism in The Bahamas was that not sufficient persons were sure about how we were regulating financial institutions,” he said. 

“Because they would have interviewed and spoken to different people, they got different stories, and the truth about it, I am not sure they were able to make sense of how we were regulating. I truly believe that we were regulating. 

“However because we were not able to defend ourselves and give them a proper story as to how we were regulating, they stepped away and said ‘Those people, either they don’t know what they are doing, or they are involved in criminal activity’. 

“I do not think there was much money laundering going on. However because of the way the regulators operated, almost in silence, we were not sure what the others were doing. 

“So, what the blacklisting really did was to bring to bear the importance of regulators working together.” 

As there are hundreds of financial institutions to be supervised, the law allows the Commission to appoint independent auditors to act as its agents. It has been using public accountants licensed by the Bahamas Institute of Chartered Accountants (BICA). 

Last week the Commission and  (BICA) brought into effect a memorandum of understanding crystallising the administrative protocols between them. 

The main features of the document are: 

The Commission will advise BICA of each of those accountants who request to be its agents.

BICA will ensure that persons who want to act as agents of the Commission get the requisite training. The Commission has training seminars each year for accountants and only those that attend them will be appointed agents.

Participation in the Commission’s anti-money laundering seminars will be equivalent to BICA’s continuing professional education hours accountants need each year.

The Compliance Commission will be a part of BICA’s annual Accountants Week.

The Compliance Commission then issues letters of appointment to accountants who qualify authorising them to act as its agents. 

And, as the financial services industry grows, compliance to financial services regulations is opening a new field of vocation. More Bahamians are becoming certified anti-money laundering specialists.