Bahamas Anti-Money Laundering Laws Undermined By Court Ruling

by Amanda Banks, Tax-News.com, London

30 November 2001

A court ruling in the Bahamas earlier this week has meant that in future, government regulators will be forced to apply to the Supreme Court for permission to freeze the accounts of individuals and organisations suspected of money laundering activities.

According to an Associated Press report, lawyers for the Financial Clearing Corp., which had its assets frozen in January of this year over allegations that the company was connected with criminal activity, argued that the power to freeze accounts should be left to the jurisdiction's judicial system, and not to a financial police unit. The company further argued that the law which allowed government regulators to freeze its accounts violates constitutional articles which protect against deprivation of property without compensation.

There are fears that this new ruling could seriously undermine the efforts made by the jurisdiction over the past year to combat money laundering and terrorist financing. The law in question was passed last year in an effort, which eventually proved successful, to secure removal from the FATF list of 'uncooperative' countries in the fight against money laundering.

However, regulators now fear that as a result of this ruling, the lengthy process for obtaining permission to freeze assets will allow companies under suspicion plenty of time to pull their money out of the jurisdiction before investigations can begin.

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