The Central Bank of The Bahamas (CBOB) revealed yesterday that 100 percent of the financial firms engaged in a shadow shopping exercise were compliant with anti-money laundering (AML) regulations in The Bahamas.
In a first, CBOB engaged specialist firm Evaluasi - which is comprised of some of the world's leading AML researchers - to conduct "shadow shopping" activities with 50 Bahamian internationally active public banks and trust companies.
Only 16 institutions - representing 75 percent of the industry - responded to the email solicitations, the bank said.
In its final report on its interaction with Bahamian financial institutions, Evaluasi said it found no non-compliance.
"First, Bahamian banks and trusts are not particularly receptive to unsolicited approaches from clients unknown to them. Only 33 of 238 (14 percent) of solicitations generated a response from the targeted institutions. Only 16 of 50 institutions responded to any of the inquiries. Furthermore, none of the responses from the banks and trust companies supervised by The Central Bank of The Bahamas indicated any willingness to engage in illicit or dubious activities. No response offered anonymous or illegal access to financial services. All email conversations either ended with KYC [know your customer] compliant demands from the financial institution, or petered out such that the bank no longer pursued the client. No financial institution showed interest in dubious financial dealings," the researchers said.
"There was no discernible pattern among responses, other than respondents tended to respond more often to trust enquiries than banking enquiries. This is consistent with the most common business model among the Bahamian institutions subject to shadow shopping."
The Bahamas has continued to face pressure from international financial regulators regarding its anti-money laundering/countering the financing of terrorism (AML/CFT) regime and as a result, has placed tremendous efforts over the last several years in addressing strategic AML/CFT deficiencies.
In January 2022, this jurisdiction was delisted from the European Unions' AML blacklist.
The CBOB noted that the results of the study were consistent with a 2020 multi-country exercise conducted by the same researchers, in which The Bahamas was one of only four jurisdictions that recorded a perfect compliance result.
"This shadow shopping exercise demonstrates that the Central Bank will take a more proactive and more holistic approach to assessing the state of AML compliance within this jurisdiction, supplemental to its traditional supervisory tools. We want our industry to demonstrate exemplary AML compliance, which in this instance they have done," Central Bank Governor John Rolle said in a press release accompanied with the release of the report.
"This is not to say that our supervised institutions are perfect in an AML compliance sense, but this and many other findings suggest that Bahamian banks and trust companies are among the stronger groups globally when it comes to avoiding new clients who cannot demonstrate clean sources of funds."
Evaluasi noted, however, that the study was not an exhaustive examination of compliance and regulatory processes in The Bahamas, and some implications must be considered.
"Our results provide evidence that financial entities in The Bahamas are following the KYC and AML regulations in the context of unsolicited approaches by unknown customers. These results come with the caveats that bank behavior may be different with known or established customers, and that 34 of the 50 contacted institutions never responded to our enquiries," the researchers said.
"The apparent resilience of the Bahamian financial system to illicit finance warrants further examination, including shadow shopping that simulates known customers or that employs forms of initial contact other than email. The CBOB and other financial regulators may wish to explore how and why this resilience emerged and how they can replicate or build on successes to ensure the continuing robust and effective regulation of the financial sector."
The post Central Bank: Firms in shadow shopping exercise AML compliant appeared first on The Nassau Guardian.The post Central Bank: Firms in shadow shopping exercise AML compliant appeared first on The Nassau Guardian.
Click here to read more at The Nassau Guardian
