by
Dr. Peter D. Maynard[1]
The Commonwealth of The Bahamas is an independent, sovereign nation, consisting of 700 islands (35 of which are permanently inhabited) and 2,400 cays and rocks, extending in a south-easterly direction from Florida to Haiti. The archipelago covers some 233,000 square kilometres of the Atlantic Ocean, but have a total land area of 13,940 square kilometres, which is larger than the island of Trinidad but smaller than the state of Connecticut. Some of the islands are barely 65 kilometres from the United States or Cuba. It obtained its independence from Britain in 1973, and before that, was internally self governed for a considerable period. At the same time, The Bahamas is a member of the Commonwealth, and recognizes the Queen as its head of state, with her representative being the Governor General, who is appointed by the Bahamas government.
That political independence is considered one of its strengths, as an international financial centre, in contrast to the colonies, territories and dependencies elsewhere, which continue to be under the control of a metropolitan colonial power. Therefore, one does not have particularly to concern oneself with the consequences of membership of the European Union (EU) and other possible conflicts of interest, which arise because of the colonial power’s control and international relations.
The Bahamas has been a well-established, highly respected and sophisticated, international financial centre for more than sixty years, built on the common law, political stability, tax neutrality, a thorough regulatory environment, a modern infrastructure, excellent communications, and proximity to North America. It is one of the oldest, continuous parliamentary democracies in the Western Hemisphere. Having been the landfall of Columbus in the New World in 1492, the Bahamas saw the permanent convening of its Parliament in 1729, after two centuries of colonial upheaval. The courts and the justice system are very highly regarded; they have applied the common law and developed a jurisprudence which has maintained the integrity of the nation’s livelihood in financial services. Financial services are the next most important economic sector after tourism. Throughout its history, The Bahamas has had no taxes on sales, income, companies, capital gains, inheritance,
and other fields common in the metropolitan countries, which may be a legitimate disincentive for investment from abroad. Custom duties are the most important source of government revenues. Therefore, The Bahamas has served, and continues to serve, as a tax neutral platform for international business.
The Bahamas is a member of the major international organizations, ranging from the United Nations to the Basle Committee. In response to the attack on certain international financial centres by the Organization for Economic Cooperation and Development(OECD), the Financial Action Task Force (FATF), and the Financial Stability Forum (FSF),[2] The Bahamas has become one of the most highly regulated, anti money laundering jurisdictions. By the end of 2000, it put in place a new financial architecture, even though a sophisticated anti money laundering regime was already in effect. A new government was been elected on May 2, 2002. The previous administration’s mishandling of the financial services sector was undoubtedly a factor in the outcome of the election. Under the heading “rescuing the economy,” the new government promised in its platform to establish a Financial Services Consultative Forum to seek opinions and develop strategies to reposition The Bahamas to better meet the needs of international financial markets. It also promised to review and amend the new financial legislation in order to remove all unconstitutional features, and to streamline the paperwork requirements applicable under the new financial architecture. Indeed, the government created and appointed a new cabinet minister in charge of financial services and investments, and pledged to increase the budget for financial services promotions. This chapter is divided into eight parts: the background; the legislation; money laundering; the financial architecture; disclosure and tipping off; enforcement; restraint and confiscation; and the conclusion.
1. Background
An anti money laundering statute, modeled on the legislation of developed countries, such as the UK, Canada and Australia, was in operation in The Bahamas since 1996. Indeed, The Bahamas was the first signatory of the 1988 UN convention on psychotropic substances.[3] Moreover, the banks and trust companies adopted a voluntary code of conduct since 1985, containing wide, up to date due diligence and Know Your Customer rules. Both the anti money laundering law and the code of conduct complemented the statute governing the tracing and forfeiture of the proceeds of drug trafficking of 1986, a comprehensive penal code and criminal procedure code of even older vintage, a dangerous drugs act and a prevention of bribery act. Did the statutes work? There were no successful prosecutions under the former anti money laundering statute of 1996, but not for want of trying. However, a number of defendants were found guilty of associated offences such as drugs offences, fraud and bribery.[4] This paucity of money laundering convictions was not peculiar to The Bahamas, but was of general application to municipal jurisdictions as well, where the success rate was and is extremely low. More often than not, because of the difficulties of proof, convictions were obtained instead on fraud and other predicate offences.
What are big issues at the moment? The big issues in 2002 are the constitutionality of the barrage of anti money legislation, adopted by the end of 2000 under pressure from the OECD and associated organizations, and the declaration of commitment to the OECD requirements and the impact upon the financial sector. These are touched on below.
How has The Bahamas fared in FATF reviews? The Bahamas was removed from the FATF blacklist in June 2001. Even before the blacklist, the Caribbean FATF promoted a process of mutual evaluation among the countries in the region. Even before being placed on the blacklist, The Bahamas had undergone a favorable CFATF mutual evaluation in 1997. There was considerable dissatisfaction about the variance between the FATF and the CFATF findings.
What reforms were in the pipeline? The perceived money laundering vulnerabilities and typologies are reflected in the reforms introduced by the new legislation discussed below.
2. Legislation
Eleven new anti money laundering statutes were enacted by the end of 2000, and were amended by August and September 2001. With extensive regulations and orders (shown in footnotes) and also with other related statutes, the new financial architecture consists of the following principal statutes:
a. Proceeds of Crime Act, 2000 (44 of 2000);[5]
b. Evidence (Proceedings in Other Jurisdictions) Act, 2000 (14 of 2000);
c. Evidence (Proceedings in Other Jurisdictions) (Amendment) Act, 2000 (33 of 2000);
d. Central Bank of The Bahamas (Amendment) Act, 2000 (37 of 2000);[6]
e. Banks and Trust Companies Regulation (Amendment) Act, 2000 (38 of 2000);[7]
f. Financial Intelligence Unit Act (39 of 2000), including the Financial Intelligence Unit (Amendment) Act 2001 (20 of 2001);[8]
g. Financial Transactions Reporting Act, 2000 (40 of 2000), including the Financial Transactions Reporting (Amendment) Act 2001 (17 of 2001);[9]
h. Financial and Corporate Service Providers Act, 2000(41 of 2000), including the Financial and Corporate Service Providers (Amendment) Act 2001 (18 of 2001);[10]
i. Criminal Justice (International Cooperation) Act, 2000 (42 of 2000);[11]
j. Dangerous Drugs Act 2000 (43 of 2000); and
k. International Business Companies Act, 2000, including the International Business Companies (Amendment) Act 2001 (19 of 2001).
3. Money Laundering
Part V of the Proceeds of Crime Act, 2000 (44 of 2000) contains the key money laundering offences, in Sections 40 to 44, namely, concealing, transferring or dealing with the proceeds of criminal conduct; assisting another to retain proceeds of criminal conduct; acquisition, possession, or use of proceeds of criminal conduct; failure to disclose knowledge or suspicion of money laundering; and tipping off.
Paragraphs (1) and (2) of Section 40 set out the actus reus of offences of concealing, transferring or dealing with the proceeds of criminal conduct. The language is comprehensive.
Section 40 reads as follows:
“40.(1) A person is guilty of an offence of money laundering
(a) uses, transfers, sends or delivers to any person or place any property which, in whole or in part directly or indirectly represents his proceeds of criminal conduct; or
(b) disposes, converts, alters or otherwise deals with in any manner and by any means that property, with the intent to conceal or disguise such property.
(2) A person is guilty of an offence of money laundering if, knowing, suspecting or having reasonable grounds to suspect that any property in whole or in part directly or indirectly represents, another person’s proceeds of criminal conduct, he-
(a) uses, transfers, sends or delivers to any person or place that property; or
(b) disposes of or otherwise deals with in any manner by any means that property, with the intent to conceal or disguise such property.
(3) In this section the references to concealing or disguising any property include references to concealing or disguising its nature, source, location, disposition, movement or ownership or any rights with respect to it.”
The common mens rea is the intent to conceal or disguise property. But, an additional ingredient in the mens rea under Section 40 (2) is knowing, suspecting or having reasonable grounds to suspect that any property in whole or in part directly or indirectly represents, another person’s proceeds of criminal conduct.
Assisting is covered in Section 41(1), which states:
“41.(1) Subject to subsection (3), a person is guilty of an offence if he enters into or is otherwise concerned in an arrangement whereby-
(a) the retention or control by or on behalf of another person (“A”) of A’s proceeds of criminal conduct is facilitated (whether by concealment, removal from the jurisdiction, transfer to nominees or otherwise); or
(b) A’s proceeds of criminal conduct-
(i) are used to secure that funds are placed at A’s disposal; or
(ii) are used for A’s benefit to acquire property, and he knows, suspects, or has reasonable grounds to suspect that A is a person who is or has been engaged in or has benefitted from criminal conduct.”
Acquisition of criminal proceeds is dealt with in Section 42 (1). That paragraph reads as follows:
“42(1) A person is guilty of an offence if , knowing, suspecting or having reasonable grounds to suspect that any property is, or in whole or in part directly or indirectly represents, another person’s proceeds of criminal conduct, he acquires or uses that property or has been of it.”
In addition, the offence of failure to disclose knowledge or suspicion of money laundering is set out in Section 43(2). A person is guilty of an offence if he fails to disclose to the Financial Intelligence Unit (FIU) or to a police officer, as soon as reasonably practicable, his knowledge or suspicion that another person is engaged in money laundering. This provision is the basis for the suspicious transaction reporting system directed by the FIU.
Paragraphs (1) and (2) of Section 44 deal with the offence of tipping off. The Section reads in relevant part as follows:
“ 44(1). A person is guilty of an offence if-
(a) he knows, suspects or has been reasonable grounds to suspect that a police officer is acting, or is proposing to act, in connection with an investigation which is being, or is about to be, conducted into money laundering; and
(b) he discloses to any other person information or any other matter which is likely to prejudice that investigation.
(2) A person is guilty of an offence if-
(a) he knows, suspects or has reasonable grounds to suspect that a disclosure has been made to a police officer or to, an appropriate person under section 41, 42 or 43; and
(b) he discloses to any other person information or any other matter which is likely to prejudice any investigation which might be conducted following such a disclosure.”
Section 45 of the Act provides for penalties. A person found guilty of a money laundering offence shall be liable on summary conviction to imprisonment for five years or a fine of $100,000 or both and, on conviction on information, imprisonment for twenty years or an unlimited fine or both. A person found guilty of not disclosing the knowledge or suspicion of money laundering or tipping off shall be liable on summary conviction to imprisonment for three years or a fine of $50,000 or both and, on conviction on information, to imprisonment for ten years or an unlimited fine or both.
Defences are set out in some of the above Sections. For example, it is a defence under Section 41(3) for the accused to prove that he did not know, suspect or have reasonable grounds to suspect that the arrangement related to any person’s proceeds of criminal conduct. Additional defences are set out in that Section and other Sections, as well as provisions purporting to safeguard legal professional privilege.[12]
Do tipping off provisions conflict with principles governing liability for knowing assistance? No. The leading cases on dishonest assistance[13] suggest that, where a third party dishonestly assists a trustee to commit a breach of trust, the third party is liable to the beneficiary for the loss, even if the third party has not received any trust property and the trustee has not actually been dishonest. Therefore, there is no conflict with tipping off, as provided in the Bahamian legislation.
Does The Bahamas have an all crimes money laundering offence? Yes. The offences governed by the Proceeds of Crime Act, 2000, and set out in its Schedule include: (a) an offence under the Prevention of Bribery Act, Chapter 81; (b) an offence under section 40, 41, or 42 of this Act (money laundering); (c) an offence which may be tried on information in The Bahamas other than a drug trafficking offence; (d) an offence committed anywhere that, if it had occurred in The Bahamas, would constitute an offence in The Bahamas as set out in this Schedule.
What crimes are predicate offences for money laundering purposes? In the Schedule as indicated above, money laundering offences are referred to in paragraph (b). However, a comprehensive range of predicate offences is covered in (a), (c), and (d). The limitation is that the offence is to be mutual or reciprocal as suggested by the language of (d).
Is foreign corruption a predicate offence? The Bahamas is a party to the relevant international and regional conventions and resolutions. But, there is no specific offence of foreign (or local) corruption. However, applying paragraph (d) of the Schedule, it is likely that such an offence would be caught under bribery, stealing, fraud or related offences. Therefore, such an offence would qualify as a predicate offence.
Is foreign tax evasion a predicate offence? Under international law, The Bahamas is not required to enforce the tax and revenue laws of other countries. The Bahamas has not entered into treaties with other countries, except the Tax Information Exchange Agreement (TIEA) with the United States, concluded on January 25, 2002, which creates an obligation to assist the US in obtaining tax information which may be the foundation of a charge in the US of tax evasion. In any event, tax evasion is frequently accompanied by a charge of fraud or a related offence which is reciprocal, and which would fall into paragraph (d) of the Schedule.
How is terrorism defined? The Bahamas is a party to UN and other multilateral anti terrorism conventions and resolutions. It has participated in the drafting of them over the years. But, prior to September 11, 2001, as elsewhere, this was not the most pressing issue on the national legislative agenda. Since then, an executive order to facilitate the freezing of assets of terrorists and their associates was issued. Banking records were examined to determine whether any accounts belong to any individual or organization included in the list provided by the Government of the United States of America. No accounts in the names of such individuals or organizations were found. Also, it is noteworthy that new anti terrorism legislation is being considered by the Parliament of the Bahamas.
Does the predicate offence have to be proved to a criminal or civil standard of proof? The criminal standard of proof would apply to the predicate offences, as it would apply to all offences in The Bahamas.
Does The Bahamas have a suspicion based reporting system or a transaction based reporting system (or hybrid between the two)? The reporting system is suspicion based. Transaction based systems are regarded as even more costly and ineffective than suspicion based systems.
What is the definition of suspicious? Is the definition of suspicion objective or subjective and what is a suspicious transaction for these purposes? There is no definition of suspicious in the legislation. It is intended to have its ordinary meaning, and is subjective. However, due diligence and Know Your Customer rules have been in place for a considerable time. Also, voluminous manuals of suspicious transaction and anti money guidelines have been issued by the FIU containing examples of suspicious transactions. A transaction, as defined in Section 2 of the Financial Transactions Reporting Act, 2000,
“(a) means any deposit, withdrawal, exchange or transfer of funds (in whatever currency denominated), whether (i) in cash, (ii) by cheque payment order or other instrument, or (iii) by electronic or other non-physical means; and
(b) without limiting the generality of its foregoing, includes any payment made in satisfaction, in whole or in part, or any contractual or other legal obligation;
but does not include any of the following – (c) the placing of any bet; (d) participation in any game of change defined in the Lotteries and Gaming Act; (e) any transaction that is exempted from the provisions of this Act by or under regulations made under section 42 (sic).” It is Section 50 that empowers the minister to make regulations.
The suspicious transaction and anti money guidelines have been issued to each of the following groups: banks and trust companies, financial service providers, cooperative societies, the insurance sector, the securities industry, and licensed casino operators. They contain copious examples of suspicious transactions, and are designed to be used as a reference and as a training tool.
For additional guidance, the prescribed form of a suspicious transaction report (STR) is set out in the Second Schedule of the Financial Transactions Reporting Act, 2000. The details to be included in that report are set out in that form and in Section 14 of that Act.
Is disclosure mandatory in relation to all offences? Yes. Is there an obligation to maintain anti money laundering procedures? Yes. These procedures apply to all financial institutions. Under Section 3(1) of the Financial Transactions Reporting Act, 2000, a financial institution means:
“(a) bank or trust company, being a bank or trust company licensed under the Banks and Trust Companies Regulation Act, 2000;
(b) a company carrying on life assurance business as defined in section 2 of the Insurance Act;
(c) a co-operative society registered under the Co-operative Societies Act;
(d) a friendly society enroled under the Friendly Societies Act;
(e) a licensed casino operator within the meaning of the Lotteries and Gaming Act;
(f) a broker-dealer within the meaning of section 2 of the Securities Industry Act;
(g) a real estate broker, but only to the extent that the real estate broker receives funds in the course of the person’s business for the purpose of settling real estate transactions;
(h) a trustee or administration manager of investment manager of a superannuation scheme;
(i) a mutual fund administrator or operator of a mutual fund within the meaning of the Mutual Funds Act, 1995;
(j) any person whose business consists of any of the following: (i) borrowing or lending or investing money, (ii) administering or managing funds on behalf of other persons, (iii) acting as trustee in respect of funds of other persons, (iv) dealing in life assurance policies, (v) providing financial services that involve the transfer or exchange of funds, including (without limitation) services relating to financial leasing, money transmissions, credit cards, debts cards, treasure certificates, bankers draft and other means of payment, financial guarantees, trading for account of others (in money market instruments, foreign exchange, interest and index instruments, transferable securities and futures), participation in securities issues, portfolio management, safekeeping of cash and liquid securities, investments related insurance and money changing; but not including the provision of financial services that consist solely of the provision of financial advice;
(k) a counsel and attorney, but only to the extent that the counsel and attorney receives funds in the course of that person’s business (i) for the purposes of deposit or investment, (ii) for the purpose of settling real estate transactions; or (iii) to be held in a client account;
(1) an accountant, but only to the extent that the accountant receives funds in the course of that person’s business for the purpose of deposit or investment.”
4. Financial Architecture
The following is an overview of these eleven principal statutes which make up the new anti money laundering financial architecture. All took effect on December 29, 2000, except (b) and (c) which came into force in mid-2000.
(a) Proceeds of Crime Act (44 of 2000)
The keystone anti money laundering statute is the Proceeds of Crime Act (44 of 2000). But, it should be read with the other 10 statutes which make up the new financial architecture and with related statutes.
The Act consists of seven parts: preliminary, confiscation orders, enforcement of confiscation orders, information gathering powers, money laundering, seizure of cash, and miscellaneous and supplemental. It contains 64 sections and a Schedule.
1. Preliminary
Section 1 of the Act provides for the short title. Section 2 provides for the commencement date and the application of the new legislation. This Act shall apply to all property, whether or not situate in The Bahamas.
Sections 3 of the Act provides for the interpretation of several expressions used in the legislation, such as drug trafficking, drug trafficking offence, and proceeds of criminal conduct. As for what is a relevant offence under the Act, Section 3 refers to the Schedule which sets out a relevant offence as follows: (a) an offence under the Prevention of Bribery Act, Chapter 81; (b) an offence under section 40, 41, or 42 of this Act (money laundering); (c) an offence which may be tried on information in The Bahamas other than a drug trafficking offence; (d) an offence committed anywhere that, if it had occurred in The Bahamas, would constitute an offence in The Bahamas as set out in this Schedule. Section 4 defines property and realisable property.
Section 5 of the Act makes provisions for the valuation of property which shall be the market value of the property taking into consideration any amount required to discharge an incumbrance.
Section 6 of the Act provides retroactively that a gift is caught by the legislation. A gift is caught if it was made by the defendant at any time since the beginning of the period of six years ending when the proceedings were instituted or when an application for a charging or restraint order is made; or if it was made by the defendant at any time and was a gift of property received by the defendant in connection with drug trafficking carried on by him or another person, or which property in whole or in part directly or indirectly represented in the defendant’s hands property received by him in that connection.
Section 7 of the Act provides for the definition of other terms used in the legislation including “items subject to legal privilege.” Attorney-client communications in respect of legal advice to the client, and communications between attorney and client and any other person in connection with or in contemplation and for the purpose of legal proceedings. But, privilege does not apply if the communications are not in the possession of a person entitled to possession of them. Items resulting from criminal conduct or held with the intention of furthering a criminal purpose are not subject to legal privilege, and legal privilege does not extend to information regarding the identity address of the client or principal.
“Money laundering” is defined as doing an act (a) which constitutes an offence under section 40, 41 or 42, or (b) which would constitute such as offence if done in The Bahamas. For these purposes, having possession of any property is taken to be doing an act in relation to it.
Section 8 of the Act provides for the institution of proceedings and conclusion of proceedings by the conviction, discontinuance, acquittal, quashing of the conviction or the satisfaction of the confiscation order proceedings under the legislation.
2. Confiscation Orders
Sections 9 to 22 provide for confiscation orders. They may only be made by a court. Before a confiscation order is made, the court shall first determine whether the defendant has benefitted from drug trafficking or from the relevant offence. A person benefits from drug trafficking or a relevant offence if he obtains property as a result of or in connection with its commission or if he derives a pecuniary benefit as a result of or in connection with its commission. A confiscation order may not be obtained from any court before which a defendant has been convicted. Provision is made for the assessing the proceeds of crime and for obtaining the confiscation order, including the protection of third party rights. The Court is given the power to set aside any conveyancing or transfer of the property that occurred after the seizure of the property, unless the conveyance or transfer was for valuable consideration to a person acting in good faith and without notice. Provision is also made for a confiscation order where a defendant has absconded and where an absconder has been acquitted, and for the cancellation of a confiscation order.
Section 16 provides for the reconsideration of the case and allows the Attorney General on application to the court to introduce evidence which was not previously available but which he believes would lead the court to determine that the defendant had benefitted from drug trafficking or any relevant offence. Under Section 17, the assessment of the proceeds of criminal conduct may be revised where the Attorney General is of the opinion that the real value of the defendant’s proceeds of drug trafficking or benefit from any relevant offence was greater than their assessed value. At the same time, Section 18 enables the court to take into consideration any payment or other reward received by the defendant and or any property obtained by the defendant after the date of conviction. Application under section 16 or 17 for reconsideration of the confiscation order may be made up to a period of six years after conviction of the defendant.
On the one hand, Section 19 provides for an increase in realisable property where the amount which a person is ordered to pay under a confiscation order is less than the amount assessed to be his proceeds of drug trafficking or benefit from relevant offences. With a certificate to that effect issued by a court giving its reasons, the Attorney General or the receiver may apply for an increase in the amount to be recovered under the confiscation order, and an increase in the term of imprisonment. On the other hand, according to Section 20, where the realisable property is inadequate to pay the amount remaining under a confiscation order, the court issues a certificate. Then, the defendant or the receiver may apply to the court which made the order, for a reduction of the amount to be recovered under the order, and for a shorter term of imprisonment in default. Any person appearing to the court to be likely to be affected may appear and make representations.
Section 22 provides for the variation of a confiscation order made against an absconder when the defendant ceases to be an absconder. He may apply for a variation. A person who held realisable property may apply for compensation, if the court is satisfied he has suffered loss as a result of the making of the confiscation order. The application for variation may not be entertained if it is made more than six months after the making of the confiscation order.
3. Enforcement of Confiscation Orders
Sections 23 to 34 deal with the enforcement of a confiscation order. A defendant who is unable to pay any amount under a confiscation order is subject to a term of imprisonment in default under Section 23 up to 5 years. Section 24 provides for interest on unpaid sums, which is treated as an amount to be recovered under the order and is equivalent to the rate applying to judgment debts.
Sections 25, 26, 27 and 28 provide for cases in which restraint and charging orders may be made. It is noteworthy that a receiver may be appointed under Section 26(6) to take possession of realisable property and to manage or otherwise deal with the property in accordance with the court’s directions.
Sections 29, 30, 31 and 32 of the Act provide for the realisation of property. Under Section 29(2), the court also has the power to appoint a receiver in respect of realisable property. The court may empower the receiver to realise any realisable property in such manner as the court may direct. Any amount due in respect of the remuneration and expenses of a receiver shall be paid out of the Consolidated Fund or the Confiscated Assets Fund.
Section 33 of the Act provides the procedure where a person who holds realisable property is adjudged bankrupt for the purposes of the Bankruptcy Act. Section 34 of the Act provides the procedure when realisable property is held by a company, and an order for the winding up of the company has been made, or a resolution has been passed by the company for the voluntary winding up of that company. A confiscation order may be obtained not only from from the Supreme Court, but also from a Magistrate’s Court under Section 34(6).
4. Information Gathering Powers
Sections 35, 36 and 37 of the Act provide for the investigation of offences under the legislation and the powers of police officers in obtaining information for the purposes of any prosecutions. A police officer of the rank of inspector or above may obtain a production order from a Magistrate’s Court to have access to any material in respect of which an offence has been committed.
Section 38 of the Act provides for disclosure of information by Government Departments for purposes of investigating an offence under the Act. A “Government Department” is defined under Section 38(11) to include a government corporation or any other statutory body, or such other bodies as the minister responsible for the police may prescribe. Such a disclosure is not to be treated as a breach of the Banks and Trust Companies Regulation Act, 2000, the Central Bank of The Bahamas Act, 2000, or otherwise. It also is not to give rise to civil liability.
Section 39 of the Act provides for a monitoring order to be obtained by a police officer of or above the rank of an inspector, on an ex parte application to a Judge in chambers, where there is reasonable cause to believe that a person has committed an offence under this Act.
5. Money Laundering
Sections 40 to 44 of the Act provide for the offences relating to money laundering. Those offences are concealing or transferring proceeds of criminal conduct; assisting another to retain proceeds of criminal conduct; acquisition, possession, or use of proceeds of criminal conduct; disclosure of knowledge or suspicion of money laundering; and tipping off. They are discussed above.
Section 45 of the Act provides for the penalties for money laundering. A person found guilty of a money laundering offence shall be liable on summary conviction to imprisonment for five years or a fine of $100,000 or both and on conviction on information for twenty years or an unlimited fine or both. A person found guilty of not disclosing the knowledge or suspicion of money laundering or tipping off shall be liable on summary conviction to imprisonment for three years of a fine of $50,000 or both and on conviction on information to imprisonment for ten years or an unlimited fine or both.
6. Seizure of Cash
Section 46 of the Act provides for the seizure and detention of cash that may represent the proceeds of criminal conduct or that is intended to be used in any criminal conduct.
Section 47 of the Act provides for the forfeiture of any cash seized under Section 46. Section 48 of the Act provides for holding of such cash.
7. Miscellaneous & Supplemental
Section 49 of the Act provides for the enforcement of external confiscation orders for the purpose of recovering property or the value of such property obtained in connection with drug trafficking or any offence which would if committed in The Bahamas be triable on indictment; or to deprive any person of any pecuniary advantage obtained.
Section 50 of the Act provides for the registration of an external confiscation order by the Supreme Court. Section 51 of the Act provides for the admission in evidence of the terms of a corresponding law in force in a country outside The Bahamas. Sections 52 and 53 of the Act provide for the establishment and administration of a Confiscated Assets Fund. The Fund shall consist of all proceeds of criminal conduct recovered under a confiscation order, cash forfeited under Part VI of the Act any money forfeited under section 33 of the Dangerous Drugs Act, 2000, and money paid to the Government of The Bahamas by a foreign jurisdiction in respect of confiscated assets.
Section 54 of the Act provides for an offence committed by a body corporate. Section 55 of the Act provides for police officers to arrest without warrant a person who has committed an offence under this Act. In addition, the same power is also given to a customs officer in relation to the seizure of money under Section 46.
Section 56 of the Act provides for police officers not to disclose any information obtained pursuant to this Act except when lawfully required to do so by a court of law. Section 57 of the Act provides for compensation to a person where an investigation is begun against that person for a drug trafficking or relevant offence and no proceedings are instituted against that person; proceedings are instituted and do not result in a conviction; or where a conviction has been quashed or a pardon has been given in respect of the conviction. The amount of compensation shall be such as the court thinks just in all the circumstances of the case and in any case shall not exceed $100,000.
Section 58 of the Act provides for the payment of costs in relation to any proceedings under the Act. The costs shall be limited to a kind that is normally recoverable by a successful party in civil proceedings. Such costs shall be paid out of the Consolidated Fund or the Confiscated Assets Fund.
Section 59 of the Act provides for the standard of proof to be used in proceedings for an offence under the Act. Section 60 of the Act provides for appeals of a decision of a court in proceedings under the Act to lie to the Court of Appeal.
Section 61 of the Act provides for the Minister of Finance to make regulations in relation to Part V and for the Minister responsible for the Police to make regulations in any other case. Section 62 of the Act applies the provisions of this Act to the Crown.
Section 63 of the Act provides for the repeal of the Tracing and Forfeiture of the Proceeds of Drug Trafficking Act and the Money Laundering Proceeds of Crime Act. Section 64 of the Act provides for the continuing operation of any regulations and orders made under the Tracing and Forfeiture of the Proceeds of Drug Trafficking Act and the Money Laundering Proceeds of Crime Act.
(b) Evidence (Proceedings in Other Jurisdictions) Act, 2000 (14 of 2000)
(c) Evidence (Proceedings in Other Jurisdictions) (Amendment) Act, 2000 (33 of 2000)
It is best to take these two Acts together, as they relate to the same subject matter. The Evidence (Proceedings in Other Jurisdictions) Act, 2000 (14 of 2000) consists of eleven Sections. It repeals the Foreign Tribunals Evidence Act, 1856, of the UK as it applies to The Bahamas, and further enables the Supreme Court to assist a foreign court in obtaining evidence in The Bahamas.[14]
Under Section 3, an application is made by the requesting court to the Supreme Court. The Supreme Court Registrar sends the document to the Attorney General, who makes an application to the Supreme Court and takes other necessary steps to give effect to the request. According to Section 6, a witness cannot be required to give any evidence which he could not be compelled to give in civil proceedings in (a) The Bahamas or (b) the jurisdiction of the requesting court. The witness cannot rely on (b) unless his claim to be exempt from giving evidence is supported by a statement in the request or conceded by the applicant. Such support or concession is most unlikely. But, the matter may be referred to the requesting court, and, if it upholds the witness’s claim, the evidence shall not be transmitted to it.
The Rules Committee of the Supreme Court considered how to deal with such a claim and made appropriate rules on January 3, 2001.[15] Accordingly, where the claim to be exempt is not supported or conceded, the examiner may, if he thinks fit, require the witness to give the evidence. If he does not, the applicant may make an ex parte application to the court and the court may require the witness to give the evidence. If the evidence is taken, it is contained in a document separate from the remainder of the deposition. The examiner sends to the Registrar a signed statement setting out the claim and the ground. The Registrar sends that statement and a request to determine the claim to the foreign court or tribunal. If the claim is rejected by the foreign court or tribunal, the separate document is sent to that court. If it is upheld, the Registrar sends the document to the witness. In any case, he informs the parties of the foreign court’s determination.
So far so good. Under Section 4, the Supreme Court was to be satisfied that (a) the application is made in pursuance of a request issued by or on behalf of a foreign court or tribunal, and (b) the evidence is for the purposes of civil proceedings which have been instituted before the requesting court. But, that subparagraph (b) of Section 4 has been replaced by No. 33 of 2000, which introduces language which is susceptible to be used for fishing expeditions. The amendment is that the evidence is to be obtained for the purposes of civil proceedings which “either have been instituted before the requesting court or whose institution before that court is contemplated and for which investigations have commenced.” Therefore, under the Act as amended, it is only necessary to show that starting proceedings is “contemplated” and “investigations” have begun.
The amendment Act also, in its Section 4, introduces similar language for criminal proceedings. Any witness’s testimony and the production of any document may be obtained at the request of any foreign court or tribunal in relation to any criminal matter which is either pending in a foreign court or tribunal or “for which investigations have commenced in that foreign state.” The criminal evidence is to be obtained in like manner as the civil evidence. Further, the principal Act is to be construed as if the term “civil matter” included a civil matter, and “cause” included a criminal proceeding. This provision does not apply in a criminal matter of a political character.
(d) The Central Bank of The Bahamas Act, 2000 (37 of 2000)
This Act seeks to repeal and re-enact the Central Bank of The Bahamas Act, Ch. 321 to bring the legislation governing the Central Bank into line with the requirements of other financial regulatory authorities. It clarifies and expands the powers of the Bank to respond to requests from overseas regulatory authorities for information that they need to perform their own functions, whilst at the same time attempting to preserve the ability of the Bank to decide whether the information should be provided and, if so, under what conditions.
The provisions of the Act remains substantially the same as in the previous Act except where indicated below. The Act consists of 11 parts and a schedule: Preliminary; Establishment and Functions of The Bank; Capital and Reserves; Currency; Gold, Foreign Exchange, External Reserve, etc.; Relations with the Commercial Banks; Relations with the Government; General Powers of The Bank; Accounts, Statements and Audit; Miscellaneous; and Repeal, Transitional.
Section 2, in Part 2 which deals with the establishment and functions of the Bank, includes three new definitions. The definition of civil and administrative investigations and proceedings is added because the legal system in countries outside The Bahamas recognize concepts that differ fundamentally from those recognized by The Bahamas and the United Kingdom, which are limited to civil and criminal laws. Examples are administrative courts which operate under a system to provide a definition of “overseas regulatory authority”. For the sake of clarity and certainty “regulatory functions” is also given a definition.
Much of the rest of the Act remains unchanged including Capital and Reserves; Currency; Gold, Foreign Exchange, External Reserve, etc.; Relations with the Commercial Banks; Relations with the Government; General Powers of the Bank; and Accounts, Statements and Audit. However, the Miscellaneous Part deals with new information that may be required from financial institutions. Section 35 enables the Bank to request information both for its own regulatory purposes and to enable it to respond to a request for assistance from an overseas regulatory authority. The Bank will be able to obtain a court order if its requests are not complied with, and to request the court to examine a person on oath. There is a provision to protect legal professional privilege and to protect liens of third parties on documents that are required to be produced. The penal provisions are clarified, and brought up to date. Further, Section 36 enables the Bank to obtain assistance from the police or other person with particular expertise in obtaining information. Restrictions are placed on the provision of such assistance.
Regarding disclosure and confidentiality, Section 38 enables the Bank and its staff to disclose information to a person who has requested it for the purpose of criminal proceedings, or disciplinary proceedings in respect of a professional employee, or other persons who might have given cause to be disciplined. This section enables the Bank to respond to an external request for information and to enable the Bank to take a number of factors into account when deciding whether to exercise its powers of disclosure, to require undertakings of reciprocity, and to require its costs to be covered.
Also, the Bank may not disclose information unless it has been given an undertaking of confidentiality, unless it is satisfied that the overseas regulatory authority requires the information for its own regulatory activities; and that the person providing the information will be protected from prosecution for a criminal offence in which the information is used against him.
Lastly, where in the opinion of the Central Bank it appears necessary in relation to any request for assistance received from overseas regulatory authority to invoke the jurisdiction of a court in The Bahamas the Central Bank must notify the Attorney-General with the particulars of the request and shall send him copies of all documents relating to the request and the Attorney-General is entitled to appear or take part in any proceedings. All other Sections are restatements of the law as it presently existed prior to the passage of this Act.
(e) The Banks and Trust Companies Regulation Act, 2000 (38 of 2000)
The cornerstone of Bahamian banking confidentiality used to be Section 10 of the Banks and Trust Companies Regulation Act, Chapter 287. In the package of legislation aimed at satisfying the requirements of the OECD and other so called supranational organizations, the Bahamas Government has passed the Banks and Trust Companies Regulation Act, 2000, which substantially changes the regime of Section 10.
The Act repeals the Banks and Trust Companies Regulation Act, Chapter 287 and aims to make fresh provisions relating to banks and trust companies. There has been a shift away from the courts to a greater exercise of executive power by the Central Bank. The effect of the repeal of Section 10 and its replacement by a highly qualified Section 15 is to remove any remnant of secrecy. In that highly qualified Section, a release of information depends essentially on the executive discretion of the Governor of the Central Bank. This introduces transparency, but is far removed from the linchpin of banking confidentiality which attracted banks to the jurisdiction in the past.
The provisions provide for greater regulation by the Central Bank over licensees and make possible cross-border supervision by banking regulators of foreign banks and trust companies with branches or subsidiaries licensed in The Bahamas. Additionally, many functions previously reserved for the Minister of Finance have been vested in the Governor of the Central Bank giving the latter significantly enhanced authority.
The Act consists of 25 sections. Section 2 comprises five new definitions. Of note is the definition of “Supervisory Authority” which means a foreign entity charged with the responsibility of conducting consolidated supervision of banking and trust business by organizations licensed in its home country.
Section 3 is expanded to increase the fines and penalties in that Section. Section 4 sets out the factors which the Governor must consider before granting a licence, and the factors which the Governor must consider in granting a licence to a bank or trust company having its office outside The Bahamas.
Application to carry on banking or trust business must be made to the Governor of the Central Bank for the grant of a licence. In granting a licence the Governor must consider whether the applicant is a fit and proper person to carry on banking business or trust business, the financial resources of the applicant, the soundness of the business plan, the business record and the experience of the applicant and whether the carrying on of the business will be in the best interests of The Bahamas.
Where the head office of the bank or trust company is located outside The Bahamas the bank or trust company is required –
8. to notify the Governor of its principal office in The Bahamas, the name of one of its officers who is to be its authorised agent in The Bahamas;
9. to satisfy the Governor that it is subject to adequate consolidated supervision by the Supervisory Authority in its home country;
10. to ensure the Supervisory Authority is permitted to examine, wherever they are kept the books of the bank or trust company;
11. to ensure the Supervisory Authority is informed where the bank or trust company will be managed.
Section 5 is new and requires a licensee to obtain the approval of the Governor before establishing a branch outside The Bahamas. But, Sections 6, 7 of the legislation remain substantially the same except for minor changes made in order to comply with the new and amended provisions. The provisions that have been changed or added are set out below.
For example, Section 8 increases the power of the Governor to require financial statements and other documents o
