Bahamas Delegation To US Will Attempt Advisory Damage Limitation

Mike Godfrey, Tax-news.com, New York

26 July 2000

Bahamas Prime Minister visits US in attempt to re-instate island’s reputation

In response to the FATF's labelling of the Bahamas as a disreputable tax haven over money-laundering issues, which incurred a US Treasury Advisory, Prime Minister Hubert A Ingraham has embarked upon a 12-day mission to meet with government and banking representatives in the United States and Canada in an attempt to restore the Island’s reputation and remove the Bahamas’ name from the OECD blacklist.

The delegation, comprising prominent government officials including Finance Minister Sir William Allen, Director of Legal Affairs Rhonda Bain and Central Bank Governor Julian Francis, began the series of discussions in Washington DC on 24 July where the delegation met with the Secretary to the Treasury Lawrence Summers and Attorney-General Janet Reno.

In his quest to restore the Bahamas’ image as a reputable jurisdiction, and remove its name from the list of 35 tax havens deemed harmful by the OECD, Ingraham asserted that it is the Government’s objective to ‘bolster the acceptance and respect of the wider financial community for our sector, to come to terms with the recommendations of the OECD, to cause the removal of the Bahamas' name from the FATF blacklist and the withdrawal of the US Advisory in the shortest possible time’. In order to reach these aims it is likely that Ingraham will endeavour to moderate bank secrecy by enforcing a system of transparency and accountability, introducing legislation that will legally oblige banks in the Bahamas to ‘open-up’ and disclose details on all US citizens who hold accounts. This has attracted controversy on the island as members of the financial services sector fear such disclosure will deter potential investors.

However, Ingraham maintained that The Bahamas is standing firm in its fight against money laundering and corruption. He accepts that, in the past, loopholes in Bahamas law have allowed intermediaries such as lawyers and financiers to hold client accounts without disclosing their identities and details: ‘My Government accepts the legitimacy of a number of deficiencies identified in the FATF Report on the Bahamas, particularly as they relate to weaknesses in the regulatory supervision of financial institutions and non-financial institutions such as legal and accounting firms and management companies, in their conduct of financial transactions’.

Already the Bahamas government has implemented legislation in its attempt to address the Financial Action Task Force allegations: amendments to the Money Laundering (Proceeds of Crime Act) will come into force this year as well as the Currency Declaration Act, which requires that details are made available of cash or investment transfers, entering or departing the island, in excess of $10 000.

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