The shenanigans over the recent OECD and FATF reports on harmful tax havens and jurisdictions deemed to facilitate money laundering look set to continue for quite some time, and not surprisingly either, as the affected jurisdictions have been rocked by the blacklists and, latterly, by an ensuing set of advisories issued by the US warning its financial institutions to take care when engaging in transactions with a number of offshore financial centres. One such jurisdiction to see the potential damage which these reports could do to its financial services sector is the Bahamas, and last week the Official Opposition Progressive Liberal Party (PLP) spoke out on the government's response to a situation it feels could develop into a financial crisis.
According to the PLP, the government had some indication months ago that the Bahamas was under international scrutiny. Leader Perry Christie said 'As far back as the Gulf Union Bank failure, we had expressed our fears that the financial services sector was not being efficiently regulated and that the existing regime was inadequate to protect the integrity of our financial system. It was against this backdrop and as a consequence of our concerns that we raised a series of questions in Parliament as far back as last October intended to avert, if possible, what happened.'
Whilst the PLP has decided to present a united front with the government on how best to deal with the challenges facing the Bahamas, Mr Christie said at last week's press conference that the PLP had not been consulted as far as Prime Minister Hubert Ingraham's talks with key players in the financial services sector were concerned. Mr Christie said 'We ask again that the government of the Bahamas broaden its approach to this matter by ensuring that there is full understanding of what is involved so that they can accept no less than full support from the entire country when it comes to dealing with the outside world.'
There is no doubt that the Bahamas is under international pressure to put right deficiencies in the regulatory and legislative regime relating to the financial services sector and the Prime Minister has said that the government will make legislative changes by the end of the summer to bring the Bahamas in line with internationally accepted practices. However, the issuance of the US advisories is particularly worrying for the Bahamas - the US has issued only two such advisories in recent years: one against the Seychelles in 1996 and another against Antigua and Barbuda in 1999. Mr Christie has called the current situation a national crisis with profound implications for the nation's second largest industry - financial services accounts for approximately 15 per cent of the gross domestic product and the sector employs over 4,000 people.
Continuing his criticism of the government, Mr Christie said 'The government seems not to appreciate that in matters of national interests to the outside world, the OECD countries ought to know that every Bahamian is concerned about what happens to the Bahamas and that all of us must stand together to ensure that the final result does not result in irreparable harm to the Bahamas and to Bahamians.'
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