The United States Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has issued an advisory informing U.S. financial institutions of updates to the Financial Action Task Force’s (FATF) list of jurisdictions with strategic AML/CFT (anti-money laundering/combating the financing of terrorism) deficiencies – which includes The Bahamas – and warning these institutions about how their obligations and risk-based approaches with respect to these jurisdictions may be impacted.
“U.S. financial institutions should consider the risks associated with the AML/CFT deficiencies of the jurisdictions identified (The Bahamas, Botswana, Cambodia, Ghana, Iceland, Mongolia, Pakistan, Panama, Syria, Trinidad and Tobago, Yemen and Zimbabwe),” the U.S. treasury department stated in its advisory, released on November 14.
“Covered financial institutions should ensure that their due diligence programs, which address correspondent accounts maintained for FFIs (foreign financial institutions), include appropriate, specific, risk-based and where necessary, enhanced policies, procedures and controls that are reasonably designed to detect and report known or suspected money laundering activity conducted through or involving any correspondent account established, maintained, administered or managed in the United States.”
The U.S. treasury department noted, however, that such measures to adhere to the obligations between U.S.-based financial institutions and FFIs should not go so far as to hinder business relationships.
“Such reasonable steps should not, however, put into question a financial institution’s ability to maintain or otherwise continue appropriate relationships with customers or other financial institutions and should not be used as the basis to engage in wholesale or indiscriminate de-risking of any class of customers or financial institutions,” the advisory states.
In its October review of compliance with AML/CFT standards, the FATF listed The Bahamas as a jurisdiction with strategic deficiencies. The Bahamas has been on the list since 2018.
The FATF pointed to The Bahamas’ efforts to improve its AML/CFT regime, including instituting a protocol and case management system to further enhance international cooperation; initiating risk-based supervision of non-bank financial institutions; and further implementing the recent beneficial ownership law.
The FATF noted, “The Bahamas should continue to work on implementing its action plan to address its strategic deficiencies, including by demonstrating that authorities are investigating and prosecuting all types of money laundering, including complex ML (money laundering) cases, standalone money laundering and cases involving proceeds of foreign offenses, including foreign tax crimes; and increasing the identification, tracing and freezing or restraining of assets and to present cases linked with foreign offenses and standalone ML cases.”