Bahamas Regulator Defends Money Laundering Controls In Wake Of Dominion Affair

by Amanda Banks, for LawAndTax-News.com, London

07 February 2006

The financial authorities in The Bahamas have been defending the jurisdiction's anti-money laundering controls and legislation after law enforcement agencies arrested the head of a Bahamas-based financial services firm, Dominion Investments for allegedly laundering more than $1 billion derived from tax evasion, drug trafficking and other crimes.

In a statement published last week addressing the ramifications of the Dominion Investments affair, the Securities Commission of The Bahamas said that the jurisdiction has an "excellent record" on combating money laundering dating back to 1987, when The Bahamas first criminalised the proceeds of drug trafficking with the enactment of the Tracing and Forfeiture of Proceeds of Drug Trafficking Act.

The Commission also stressed that The Bahamas became the first country to ratify the 1988 UN Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, and followed this up with more comprehensive anti-money laundering legislation in 1996 which increased the offences to encompass proceeds of other crimes besides drugs.

"Anti-money laundering procedures in The Bahamas are rigorous and are enforced," the Commission stated.

However, the statement added that no jurisdiction "is immune to the risk of criminal activity".

“Our task is then to limit the damage from any such activity when discovered and to establish if there are wider lessons for the future," the Commission noted.

The Commission's move to reassure the financial community that The Bahamas has adequate controls in place to combat money laundering and financial crime comes after law enforcement agencies in the United States last month arrested Martin Tremblay, President and Manager of Dominion Investments, a Bahamas-based investment services provider and financial advisor, on charges of laundering more than $1 billion in funds.

An indictment unsealed in Manhattan federal court charges that from approximately 1998 through December 2005, Tremblay used Dominion Investment accounts to receive hundreds of millions of dollars in proceeds from international narcotics trafficking, securities fraud scams, income tax evasion, mail and wire fraud schemes, and bank fraud, among other crimes.

Tremblay was then said to have laundered the illicit funds by transferring them into United States bank accounts and offshore bank accounts in Canada, the Bahamas, and elsewhere around the world.

According to the Bahamas Securities Commission, the Financial Intelligence Unit moved "swiftly" to freeze a large number of bank and securities accounts in The Bahamas associated with Mr. Tremblay shortly after the US authorities acted against Mr Tremblay.

The Commission, with the assistance of the Royal Bahamas Police Force, said it then "acted quickly" to ensure that the books and records of the company were secured and to prevent any further business being transacted.

The Commission also said that it is "very concerned" to ensure that the assets of legitimate investors of Dominion are secured and protected.

"The Commission has and will continue to liaise closely with other domestic and overseas regulators and take every available action to protect the assets of investors," the regulator explained.

If convicted, Tremblay faces a maximum sentence of 20 years’ imprisonment and a fine of twice the value of the laundered narcotics proceeds.

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