Last Updated: 09/09/2008
CENTRAL AUTHORITY FOR REPORTING
The Bahamas Compliance Commission, which is an essential part of the jurisdiction’s rigorous anti-money laundering efforts, is a supervisory body for non-traditional groups of financial institutions such as lawyers, accountants and other professionals where institutions hold funds on behalf of clients. The work of the Compliance Commission is closely coordinated with the Inspector of Financial and Corporate Service Providers who regulates persons providing corporate management and other services.
The Bahamas’ Financial Intelligence Unit (FIU) is a member of The Egmont Group of Financial Intelligence Units. It is a key component of rigorous anti-money laundering framework in The Bahamas. FIU is the responsible agency for receiving, analyzing, and disseminating suspicious transaction reports.
ARE LAWYERS COVERED BY MONEY LAUNDERING LEGISLATION?
Yes, according to the Financial Transactions Reporting Act, 2000(FTRA) and its further amendments (2001, 2002 and 2003), a lawyer practicing in The Bahamas is designated as a financial institution for anti money laundering purposes in any case where he receives funds during the course of business for services which range from investing or making a deposit on a client's behalf to settling real estate transactions.
NAME LAWS REGARDING ANTI-MONEY LAUNDERING PROCEDURES
The Banks and Trust Companies Regulation Act, 2000;
The Central Bank of The Bahamas Act, 2000;
The Proceeds of Crime Act, 2000, sections 40 to 45 of which contain the money laundering offences. They loosely follow the British mantra of concealing, disguising, converting, transferring and removing;
The Financial and Corporate Service Providers Act, 2000;
The International Business Companies Act, 2000;
The Evidence Act, 2000;
The Criminal Justice Act, 2000;
The Anti-Terrorism Act, 2004;
IN ADDITION TO THESE LAWS, IS THERE ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS CURRENTLY IN PLACE?
Compliance Commission of the Bahamas: Anti-money Laundering Handbook and Code of Practice for Lawyers (2006)
Compliance Commission of the Bahamas: First Draft Anti-money Laundering Handbook and Code of Practice for Lawyers (2002)
"The Compliance Commission of the Bahamas amended the jurisdiction's anti-money laundering guidance on behalf of lawyers, accountants, estate agents and corporate service providers, pursuant to the FTRA.
The latest revision of the islands' "best practice" notes gives specific advice to the legal profession. Lawyers in the Bahamas are counted as financial institutions for AML purposes when they receive funds on behalf of a client. As such, they are legally required to report suspicious transactions. The Compliance Commission has advised law firms to separate financial intermediary services provided for clients from the rest of their activities. The commission also wants lawyers to keep "separate and distinct" records of any financial transactions that they carry out for their clients." 1
UNDER WHAT CIRCUMSTANCES IS A LAWYER UNDER THE OBLIGATION TO REPORT?
According to Section 2, Subsection (1) of the FTRA, a counsel and attorney is considered as a financial institution but only to the extent that they receive funds in the course of that person’s business -
- For the purposes of deposit or investment,
- For the purpose of settling real estate transactions; or
- To be held in a client account;
Consequently, in the cases aforementioned attorneys have to comply with the anti money-laundering legislation of the Bahamas and therefore report when they know, suspect or have reasonable grounds to suspect that the transaction or proposed transaction involves proceeds of criminal conduct as defined in the Proceeds of Crime Act, 2000, or any offence under the Proceeds of Crime Act, 2000 or an attempt to avoid the enforcement of any provision of the Proceeds of Crime Act, 2000 (FTRA, Section 14) .
However, Section 17 of the FTRA sets forth that the obligation to report does not override legal professional privilege so long as the privileged communication is not made or brought into existence for the purpose of committing or furthering the commission of some illegal or wrongful act and is :
- Confidential and passing between two lawyers in their professional capacities whether directly, or indirectly through agents of either;
- Legal advice communicated to a client; or
- Is brought into existence for the purpose of giving or obtaining legal advice or assistance;
Information held by lawyers which relates wholly or partly to the receipts, payments, income, expenditure or financial transactions of a specified person (whether a counsel and attorney, his or her client or any other person), is not considered privileged if it is contained in, or comprises the whole or part of, any book, account, statement or other record prepared or kept by the counsel and attorney in connection with a client's account.
If an attorney act as a financial institution, he/she will have the following responsibilities:
Recordkeeping of client’s transactions.
Reporting of suspicious transactions.
Educating and training staff (money laundering activity awareness)
An attorney that fails to comply with the anti-money laundering provisions, will be prosecuted according to Sections 40-45 of the Proceeds of Crime Act, 2000.
CLIENTS IDENTIFICATION AND VERIFICATION
The "know your customer" (KYC) rules are found in the Financial Transactions Reporting Act and the Regulation. There are three main situations in which a general duty to verify the identity of a customer or client arises.
- Verification of a new client must take place before he is allowed to establish a facility or be added to an existing facility as the case may be.
- Verification of identity must be carried out on any third party on whose behalf a transaction over $10,000 is being conducted through an account/facility of an intermediary, before the transaction is permitted.
- Verification of a customer, other than a client operating through his own account/ facility, must take place before such customer is allowed to conduct a cash transaction of $10,000 or more, whether on his own behalf or for someone else. If the customer is acting for someone else in such a transaction then that person's identity must also be verified before the transaction is permitted to take place.
A facility holder is a person with whom there is a client type relationship and for whom a professional service is being rendered (a facility), consistent with the business activities set out in the definition of financial institution under section 3 of Financial Transactions Reporting Act.
There are several exemptions to these general rules. These exemptions either relieve a financial institution (including attorneys) of the obligation to verify identity in certain circumstances or permit a financial institution to rely on a verification which has been carried out by another financial institution concerned with the transaction.
The evidence to be obtained where a duty to verify identity exists is found in the Financial Transactions Reporting Regulations.
For the identification of the customer is necessary to provide certified documentation and it is advised a personal interview.
LAWYERS PROSECUTED FOR MONEY LAUNDERING OFFENCES
No information available.
- Helen O'Gorman, “Bahamas inspection body revises 'best practice' for gatekeepers”, 02 Aug 2006, www.complinet.com.