Welcoming delegates to Grand Bahama for the Bahamas Association of Compliance Officers’ Northern Bahamas AML Conference, Grand Bahama Chamber President Doswell C. Coakley spoke to the importance of professional industry associations such as BACO. Specifically, he referenced the Association’s role, along with Bahamas financial institutions generally, in educating members and the public on the new compliance environment.
BFSB spoke recently with Robin Scavella, current President of BACO. She says the association was formed to provide a forum for Compliance Officers to freely discuss issues related to the execution of their duties and to network and educate themselves on issues of compliance. The association maintains a close co-operative working relationship with financial services industry regulators and offers assistance in the review of relevant laws, procedures and best practice. Hence, its motto: **”Committed to Compliance”**.
The role of the Compliance Officer took on even greater significance with Regulation 5(e) of the Financial Intelligence Unit (Transactions Reporting) Regulations, 2001 that provides for financial institutions to *”identify and appoint a senior officer as a ‘compliance officer’ who shall ensure that a regulated institution is in full compliance with the laws of The Bahamas”*. The regulations also provide that institutions must advise their regulator and the FIU respectively of the chosen appointee and must establish relevant staff training procedures.
BACO has been sharing best practices among its members and has concentrated efforts on providing training of interest to compliance related staff. The President said the Association is exploring avenues for extending the educational outreach more broadly to the general public.
An International Diploma in Compliance and Anti-Money Laundering is offered in the Bahamas through a collaborative effort of the International Compliance Association, BACO, Bahamas Institute of Financial Services, and the Manchester School of Business.
The recent Northern Bahamas conference also raised discussion on what some may consider excessive KYC practices of some financial institutions and the possible need for greater coordination between regulators, particularly on the matter of reporting. Ms. Scavella says there must always be a degree of reason injected into the KYC process. She maintains that the Central Bank’s risk assessment policies and the mandate to risk rate clients should address some of the concerns reported. *”Accounts will be scrutinized case by case, transaction by transaction and in accordance with criteria which will determine if a client is a low risk, moderate or high risk to a financial Institution.”* The cohesion called for will be enhanced, she says, as Industry Regulators collaborate more and continue to act on Memoranda of Understanding.
**Compliance in The Bahamas**
The concept and function of Compliance existed in The Bahamas prior to BACO, of course. Financial Institutions adhered to the Money Laundering Act (The Bahamas was one of the first countries to criminalise money laundering) and employed professionals to assist them in carrying out training on Money Laundering Prevention and Identification.
The Code of Ethics of the Association of International Banks and Trust Companies in The Bahamas also implicitly recognises the importance of financial supervision and the prevention and detection of money laundering to The Bahamas as a leading international financial centre.
In 2000, The Bahamas Government strengthened the regulation of the financial industry and also widened the definition of a “financial institution”. BACO says the compendium of legislation passed by The Bahamas at that time addressed money laundering prevention and compliance in detail, including:
• Central Bank of The Bahamas Act 2000
• Bank and Trust Companies Regulations Act 2000
• Financial and Corporate Services Providers Act 2000
• Financial Transactions Reporting Act 2000
• Financial Transactions Reporting Regulations 2000
• Financial Intelligence Unit Act 2000
• Financial Intelligence (Transactions Reporting) Regulations 2001
• International Business Companies Act 2000
• Proceeds of Crime Act 2000
• Proceeds of Crime (Designated Countries and Territories) Order 2000
The government agencies responsible for enforcing compliance with the provisions of the relevant acts are the Central Bank of The Bahamas for activities regulated under the Banks and Trust Companies Regulation Act; the Securities Commission for activities regulated under the Securities Industry Act and the Investment Funds Act; the Registrar of Insurance for activities regulated under the Insurance Act and the External Insurance Act; the Inspector of Financial and Corporate Service Providers for activities licensed or registered under the Financial and Corporate Service Providers Act; the Gaming Board in respect of licensees which are subject to its regulation; and the Compliance Commission for financial institutions which are not otherwise regulated by any of the preceding regulators.
In The Bahamas it is not unusual to find the Compliance Officer serving also as the Money Laundering Reporting Officer; in fact, the legislation allows for this duality of roles. BACO maintains that progressive institutions treat compliance like any other investment — i.e. they are convinced that *“what they receive has a direct correlation to what they invest”*. This applies to good personnel and good systems.
In addition to identifying risks it is the responsibility of the Compliance Officer to design and implement controls to protect the organization from those identified risks. The Compliance Officer must also monitor and report on the effectiveness of those controls in the management of his/her organization’s exposure to risks, which include money laundering.