Professor Blasts FATF Attack On Bahamas

Robert Lee, Tax-news.com, London

21 February 2001

The Bahamas has been well and truly suffering at the hands of the Financial Action Task Force (FATF). Only last week, Tax-news.com reported that the FATF had called upon the Bahamas government to correct legislative deficiences it has discovered in the country's securities market, namely the Securities Act, the Mutual Funds Act and the Insurance Act.

This constitutes a real setback for the Bahamas in its campaign to get off the FATF blacklist of money laundering hotspots. But in local newpaper the Bahama Journal this week, Bahamian professor Gilbert Morris spoke out against the FATF, saying that compliance with the FATF now seems to matter very little.

Professor Morris, of George Mason University, remains resolute that the Bahamas should not cave into the demands of the FATF. The Bahama Journal reported that at a recent conference on the response of countries to the FATF initiative, Professor Morris had circulated an article in which he said that since the Bahamas acted without a back-up strategy, it now has no leverage and is subject to the will of the anti-money laundering body.

Professor Morris was quoted as saying: 'Part of the problem is in diplomatic terms, the Bahamas acted without a pretext. That is without any leverage to guarantee its concessions would have a positive result. Pretext in this sense is an invaluable tool.'

Professor Morris also told the meeting that because the FATF could make no guarantees to the Bahamas (such as a specific date for the jurisdiction's removal from the blacklist - all any blacklisted jurisdiction knows is that a decision will be reached in June), concessions should categorically not be made by the Bahamas. He stated: 'If the FATF could not guarantee anything, such as removal from the blacklist with a specific timetable, then there is no point in even considering their demands since they would have shown that their policy is run by the seat of their pants.'

Professor Morris said that he would have dealt with the whole blacklisting issue differently from how the government has in fact responded. Notably, he said that the Bahamas should have enlisted help from allies such as the US, which meant pressure could have been put on the FATF to deal with the jurisdiction in a manner "proper to the nation's dignity and sovereignty." In reality, it is unlikely that the US would have gone this far. After all, the US has been on its own anti-money laundering crusade in the past year, issuing reports and advisories left, right and centre.

However, Professor Morris maintains the Bahamas could have utilised friends in high places: 'Perhaps the Bahamas would have been in the position to reject the FATF demands outright - with the backing of powerful friends in corporate America, in the Florida business community and in the American government,' he said. He added: 'One certainly gives nothing to agencies who offer no pretext for one's government's concessions to its proposals. Now the Bahamas has been overtaken in prestige by relative newcomers to a sector we once dominated.'

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