“BAHAMIAN OFFSHORE FINANCIAL CENTRE AND THE OECD: FREE TRADE OR PROTECTIONISM?”

 

BY  ALFRED M. SEARS, ESQ.

 

 

The listing of The Bahamas by the Financial Action Task Force (“FATF”) as a “non-cooperative jurisdiction” with respect to money laundering; the classification of The Bahamas by the Organisation of Economic Cooperation and Development (“OECD”) as an “uncooperative jurisdiction” engaged in harmful tax practices and the Advisory against The Bahamas issued by the United States Treasury Department are without justification under international law.  The response of The Bahamas, in addition to negotiating with the OECD, should include a complaint to the International Court of Justice in the Hague and the World Trade Organisation against the unlawful conduct of these countries.  This concerted attack on The Bahamas is also contrary to the principles of free trade, economic competition and non-protectionism in the global economy.

On the 22nd June 2000 FATF published a list of fifteen (15) countries, which included The Bahamas, the Cayman Islands, Panama, Israel, Liechtenstein, and the Philippines as jurisdictions as “non-cooperative” in the fight against money laundering. 

The FATF, a 29 member multilateral organization based in Paris, was created at the 1989 at the G-7 Economic Summit, to combat money laundering.  The OECD, formerly the Organization for European Economic Cooperation, was formed in 1961.  In addition to the countries of Western and some in Eastern Europe, the OECD’s  membership also include the United States, Canada and Mexico.  The object of the OECD is to provide an institutional framework for cooperation in the solution of the economic problems of the Atlantic Community.  The Bahamas is not a member of the OECD and the FATF.

OECD AIMS TO ELIMINATE TAX HAVENS

 

In 1998 the OECD, in its attempt to counter the competition that offshore tax free financial centres represented to their tax sources, determined to eliminate the concept of offshore tax havens and bank confidentiality.  This determination was contained in a Report entitled Harmful Tax Competition: An Emerging Global Issue which was approved by the OECD Council on the 9th April, 1998.  The Report focused on how to deal with “mobile activities that unfairly erode the tax bases of other countries and distort the location of capital and services...” and made 19 recommendations to counter harmful tax practices.  According to the Report, tax havens which (a) have no or nominal income tax; (b) there is no effective exchange of information on tax; (c) there is a lack of transparency; and (d) facilitates the establishment of foreign owned entities without the need for local substantive presence were defined as engaging in harmful tax practices.  The OECD created the Financial Stability Forum to identify jurisdictions which engaged in harmful tax practices, with the aim of eliminating these tax havens and preventing the spread of the same.  In a Report published in early 2000 entitled “Towards Global Tax Co-operation: Report to the 2000 Ministerial Council Meeting and Recommendations by the Committee on Fiscal Affairs – Progress in Identifying and Eliminating Harmful Tax Practices”, 35 jurisdictions were identified as tax havens which engage in harmful tax practices.  In this Report, at page 17, in which the OECD identified and listed The Bahamas as an “Uncooperative Tax Haven”, in accordance with the criteria of the 1998 Report.

            There is no doubt that the effects on any tax free offshore financial centre which implements all of the recommendations of the OECD would be grave if not devastating.  This fact was acknowledged by the OECD itself.  In the said Report, at page 7, the OECD admitted that:  “The Committee accepts that the changes necessary for jurisdictions meeting the tax haven criteria that commit to remove their harmful tax practices may adversely affect the economies of some of those jurisdictions.  The OECD will work with other interested international and national organisations to examine how best to assist co-operative jurisdictions in restructuring their jurisdictions.”

          While acknowledging the harm that is likely to be experienced by those countries which implement their recommendations, the OECD has not committed any resources to assist in the adjustment process.  There is only a commitment to work with other “to examine how best to assist” those countries.  Clearly, The Bahamas, acting in concert with CARICOM and other offshore financial centres need to negotiate a more concrete commitment from the OECD.

MONEY LAUNDERING AND TAX HAVENS

 

On the 22nd June, 2000  the FATF published a list of “uncooperative jurisdictions” in the global fight against money laundering.  With respect to The Bahamas and the other 14 jurisdictions listed as “non-cooperative”,  the FATF recommended that “…financial institutions should give special attention to business relations and transactions with persons, including companies and financial institutions, from the ‘non-cooperative countries and territories’”.  Specifically, the FATF defined The Bahamas, under its twenty-five (25) criteria, as a “non-cooperative country” in the international fight against money laundering.  

The FATF criticised The Bahamas for having “serious deficiencies” in its money laundering system; for a lack of information about beneficial ownership as to trusts and international business companies which allows bearer shares; having “a serious breach in identification rules since intermediaries”; for a lack of international cooperation which is “marked by long delays and restricted responses to request for assistance” and; for there being “no room to cooperate outside of judicial channels”. 

The FATF in a stunning revelation, at paragraph 13, stated that The Bahamas is “a member of the Caribbean Financial Action Task Force (CFATF), and has indicated, during the process of this review,  its commitment to follow the recommendations contained in the CFATF mutual evaluation of 1997.”  If the FATF is to be believed, The Bahamas Government agreed to implement the 29 recommendations of the CFATF.  Yet, Prime Minister Hubert Ingraham, while addressing the Financial Services Industry on the 16th August, 2000 at British Colonial Hilton, stated that “we have not struck any deal with any country, any institution or any organization, whether that is the U.S. the OECD, the FATF, the FSF, or any other country in the world.”  This apparent contradiction needs clarification in order properly to assess the Bahamian position and the available policy options in responding to the concerted attack of the OECD and the United States, it is imperative that the Bahamian people be told what commitments, if any, have been made and to whom.

The issues raised by FATF and the United States and their complaints of The Bahamas as a “non-cooperative jurisdiction” in the fight against money laundering are almost identical to the complaints made by the OECD of The Bahamas as a “uncooperative tax haven” engaged in harmful tax practices.  Clearly, there is an orchestrated and coordinated attack by the OECD, FATF and the United States which suggest that the complaints of money laundering weaknesses may, for the most part, be a pretext to eliminate the competition that the Bahamas, as an offshore tax free financial services centre, represents for the high tax regimes of the OECD countries.

UNITED STATES TREASURY ADVISORY AGAINST THE BAHAMAS   

 

          Acting in concert with the FATF and the OECD, in July, 2000 the United States Department of the Treasury, Financial Crimes Enforcement Network, issued Advisory #13 against The Bahamas alleging, in almost identical terms to those of FATF and the OECD, that the Bahamian legal, supervisory and regulatory systems relating to counter-money laundering, suffer from “serious systemic problems”.  Specifically, the Advisory claimed, amongst other things, that The Bahamas supervisory system does not include rules for the reporting of suspicious transactions by financial institutions; that banks are not required to verify the identity of bank customers for whom Bahamian lawyers or certain other intermediaries open accounts; that access to customers’ bank accounts can only be obtained by Order of the Supreme Court, collectively defined as “deficiencies in the counter-money laundering controls”. 

Further the United States Treasury Advisory complained that The Bahamas remains committed to bank secrecy, that regulatory procedures for identification of customers and account opening procedures are limited and that Bahamian International Business Companies (“IBCs”) may issue bearer shares.  The Advisory required banks and other financial institutions operating in the United States to exercise “enhanced scrutiny”, when dealing with  transactions originating in or routed to or through The Bahamas, or involving entities organised or domiciled or persons maintaining accounts, in The Bahamas, to determine how the aforesaid deficiencies in the counter-money laundering controls affect the possibility that those transactions are being used for illegal purpose. 

The said Advisory required the U.S. banks and financial institutions to apply United States law and federal financial institution supervisory guidelines to determine whether any transaction over $5,000.00 originating in or routed through The Bahamas requires reporting under the U.S. rules.

CRITIQUE OF ACTIONS OF THE FATF, OECD & UNITED STATES

 

          The listing of The Bahamas by the OECD, the FATF and the issuance of the Advisory of the United States Treasury Department against The Bahamas appear to be a coordinated and calculated maneuver to force offshore financial centres such as The Bahamas to abandon their tax free offshore financial centres upon which their livelihood has been based and in which they have developed expertise.  According to Prime Minister Hubert Ingraham, in a communication he made the House of Assembly on the 9th August, 2000, “…the United States Treasury Secretary said it in unmistakable, candid language, ‘we intend to chase and put all tax havens out of business’…”.   

If the United States Secretary of the Treasury were to succeed, the likely result of this policy could be economic dependency for these countries upon other countries.  There is no substantial evidence and data in support of the claim that the existence of tax-free offshore centres discourages taxpayer compliance, or contribute to undermining the integrity and fairness of tax structures or increase the administrative cost to taxpayers in the OECD member countries.

          The cartel-like policies being pursued by the OECD run counter to the concept of a liberal and open global economy which has been espoused by the industrialised countries over the past 55 years.  These same OECD countries have promoted a global economy, based on the principle of free and unrestricted cross border business activities, free trade and investment across national borders.  The post Bretton Woods world economy has been based on the gradual removal of quantitative barriers and restrictions to free trade, as reflected in the Charters of the World Bank, the International Monetary Fund and the General Agreement on Trade and Tariff (now known as the World Trade Organisation).  Rather than pursuing protectionism, the OECD countries, in the area of financial services, should be promoting competition among countries in the area of financial services in order to sustain reasonable levels of tax burden.

          The argument by the OECD that offshore financial centres are “harmful tax jurisdictions,” runs counter to the policies of free trade and liberalism pursued over the last 55 years.  The OECD and the United States are taking us back to the pre-World War II period of economic protectionism, by imposing new restrictions on  the freedom of choices offered to multinational enterprises to pursue legitimate business in the most cost effective environment by using offshore financial centres to minimise their global tax costs.

          This protectionist attack by the OECD on offshore financial centres, such as The Bahamas, has even been criticised by certain agencies within the OECD itself.  The Business and Industry Advisory to the OECD published a statement in June 1999 in which it criticised the aforesaid 1998 Report of the OECD recommending the elimination of offshore centres such as The Bahamas, in the following terms:

We believe that it is not erroneous to state that is unwarranted taxation by governments, rather than competition among them in the tax area, that is stifling to economic and business development.  After all, countries do compete in other ways to attract business to their territories, so why single out taxation of one relatively limited form of activity as harmful?  Tax competition tends to keep tax burden lower, which creates pressures for less wasteful, and, therefore more efficient use of public funds.  In addition, it fosters increased efficiency in the allocation of scarce resources.  Lower tax burdens also translates into lower cost for multinationals operating within the territory and internationally…

 

We interpret the Report as an attempt to mobilise the OECD nations to adopt a strategy designed to make low tax countries abandon the activities upon which their livelihood has been based for many years and in which they have developed recognised expertise.  A result of such a strategy could make these countries economically dependent on other countries.”

 

          I submit that the existence of tax free financial centres, such as The Bahamas, tend to impose discipline on high tax regimes, such as the OECD countries, by forcing them to make more efficient use of tax revenues in their spending decisions.  The assertion by OECD countries that “mobile activities”, primarily financial functions, are subject to criminal manipulation must be carefully considered.  It is accepted that the proper controls and supervision are indispensable to maintain the integrity of any on or offshore financial centre.  However, we should resist protectionist measures designed to keep multinational enterprises in high tax regime environment, in the name of fighting money laundering.  Multinational enterprises should be free to carry on their activities in the most conducive and cost effective environment.  All countries, small and large, should be free to compete in offering services to these entities in a tax or non-tax environment.  The Bahamas should have the right to exercise is fiscal sovereignty by choosing to be a tax-free jurisdiction and the freedom to choose between various fiscal policies.

          The naked protectionism behind the OECD’s attack on offshore  financial centres, it is submitted, is against the long-term interest of a liberal global economy, based on free trade and competition, of which the industrialised countries of the OECD will be the major beneficiaries.

VIOLATION OF INTERNATIONAL LAW BY OECD AND THE UNITED STATES

 

The punitive measures taken by the OECD, the FATF and the United States against The Bahamas, as an exercise of power politics, is clearly an attempt to promote the interests of high tax regimes of the OECD countries.  Do they have this right under International Law?  Self Help measures by powerful countries must be consistent with the norms of customary international law and multilateral treaties, such as the United Nations Charter and the Charter of the Organisation of American States.  Is the punitive labeling of The Bahamas as a “non-cooperative jurisdiction” a modern form of unlawful intervention by powerful countries into the domestic affairs of a smaller weaker country under the guise of curbing money laundering?

Unlike domestic legal systems, the international legal system is decentralised and effective power is concentrated in nation states which are sovereign and equal, though some national states, such as the OECD countries, in the words of  the Honourable Paul Adderley, “…but some are more equal than others.”  But does might make right under international law?  If it does, then why pretend to be a sovereign nation?   In an interdependent world, it is recognised that there is no absolute national autonomy; however, when is the line from interdependence to unlawful intervention crossed?

The development of international law, as reflected in the United Nations Charter, treaties and customary international law, is a continuing process of authoritative decisions for clarifying and securing the common interest of community members, both small and large.   International Law serves not only as a limit on effective power but also as a creative instrument in promoting both order and other civilized values, such as human rights, in a world of sovereign states.     

          According to Article 2 (3) and (4) of the United Nations Charter:

 

“All Members shall settle their international disputes by peaceful means in such a manner that international peace and security, and justice, are not endangered.

 

All Members shall refrain in their international relations from the threat or use of force against the territorial integrity or political independence of any State, or in any other manner inconsistent with the purposes of the United Nations.”

 

          “Intervention” is defined by the International Law scholar, Professor Hersch Lauterpacht, as “…dictatorial interference in the sense of action amounting to a denial of the independence of the State.  It implies a demand which, if not complied with, involves a threat or recourse to compulsion, though not necessarily physical compulsion, in some form.” (Hersch Lauterpacht, International Law and Human Rights, 1950).

          However, International Law recognises three limited exceptions to the general prohibition against intervening in the domestic affairs of sovereign nations.  The first exception is the right of Individual and Collective Self Defense.   Under Article 51 of the United Nations Charter, the right of self defense can be exercised if an armed attack occurs against a Member State of the United Nations, until the Security Council has taken measures necessary to maintain international peace and security.  This right may also include anticipatory self defense, such as the United States quarantine of Cuba in October 1962.  Clearly, no one would seriously contend that The Bahamas made an “armed attack” on the United States or other members of the OECD.  Therefore, the actions of the OECD cannot be justified on the basis of collective self defense.

 

The second limited exception to the general rule of non-intervention in another country, under Articles 1(3, 55 and 56 of the United Nations Charter, is Humanitarian Intervention in order to protect human rights.  This limited right is based on the theory that where egregious violations of human rights occur within a State whose government will not or cannot stop them, the general community of nations or another State may enter the territory of the defaulting State to secure an end to the outrage and compliance with a minimum international standard of human rights.  Humanitarian intervention has been used to rescue religious minorities, such as the Indian activities in Bangladesh in 1971, the Entebbe operation in Uganda undertaken by Israel in July 1976.  Surely it cannot be contended that the punitive measures of the OECD was motivated by any humanitarian concern.

The third limited exception to the general rule of non-intervention in another country is Self Help.  Large countries often use self Help, often called “retorsion, retaliations, reprisals, intervention, minor coercion or measures short of war” to control smaller countries or advance their national interests.  For example, the International Court of Justice in the Corfu Channel (United Kingdom v. Albania) 1949 I.C.J. 4, allowed Britain to send its war ships in Albanian waters to ensure the freedom of maritime commerce.  While countries are generally allowed to used Self Help measures in response to some act of aggression, such as refusing to trade with others or to deny benefits to others, the legality of these measures will be questioned when the counter-measures are directed to an unlawful end.  An unlawful end may be a condition where the purported offending State is required to change its internal or foreign policy in order to resume trade with the intervening State.  Professor Oscar Schacter, a leading scholar of International Law, (Schacter, International Law in Theory and Practice 178 Rec. des Cours 185-186 (1982-V)) wrote that:

“In that case, an otherwise discretionary act, the retorsion, is used as a means of coercing the object of that retorsion to give up its sovereign right, quite apart from the alleged violation of law that gave rise to the retorsion.  There is good reason to consider such use of retorsion as illegal because of its improper objective.  One may characterize it as an abuse of rights, but it is more precise to refer to a primary rule that precludes such coercion.  The rule is expressed in the unanimously agreed Declaration of Principles of International Law Concerning Friendly Relations (adopted by the United Nations General Assembly in 1970) in the following language:

         

‘No State may use or encourage the use of economic, political or any other type of measures to coerce another State in order to obtain from it the subordination of the exercise of its sovereign rights and to secure from it advantages of any kind.’

 

However, its [retorsion] application in actual cases is not always readily apparent except in rather extreme situations (such as a demand that the offending State changes its government or cease relations with another State).  Nonetheless, even acknowledging the impropriety of these ‘extreme cases (which are by no means hypothetical) can be a significant step toward recognizing that in some cases otherwise legal acts may be rendered illicit because of the wrongful end sought.”

 

          By the admission of the FATF and the United States Treasury Advisory, the object of the punitive measures taken against The Bahamas was to force The Bahamas to dismantle its offshore financial services sector and make certain changes in its internal administration under the guise of fighting money laundering.  However, it is now generally accepted that the real aim of these punitive measures is not in response to any aggression by The Bahamas, but is rather a response to the competition that offshore financial centres, such as The Bahamas,  represent to the tax sources of the large industrial countries that control the OECD.  It is submitted that this is an unlawful end, as it is calculated to force The Bahamas to dismantle a lawful economic activity for the benefit of high tax regimes.  The punitive measures taken by the OECD and the United States were calculated to subordinate the exercise by The Bahamas of its “sovereign rights and to secure from it advantages” through the dismantling of its offshore financial centre.

         

 

The punitive measure taken by the FATF and the United States also fail under the requirements of proportionality and reasonableness.  The magnitude of the punitive actions taken is disproportionate to any “offense” committed by The Bahamas.  In fact, The Bahamas simply took seriously the principles of free competition in the area of financial services.  The United States and other OECD countries cannot compete, because of their high tax regimes.  Should The Bahamas be made to suffer because those countries cannot or refuse to be more efficient and imaginative in their financial services sectors, tax policies and general fiscal administration?

THE BAHAMIAN RESPONSE TO THE PUNITIVE MEASURES OF OECD AND THE UNITED STATES

 

          The response of the Bahamian Government has been characterised by panic, confusion, conflicting statements, lack of adequate consultation and full and frank disclosure and the absence of a clear policy focus.  It is curious that the Bahamian Government has not challenged the right of the OECD and the United States to dictate the internal economic policies of The Bahamas, when it is acknowledged even by the Government that the primary motivation behind the OECD’s attack is the promotion of the tax interests of high tax jurisdictions within the OECD. 

 

Even though the Government is directly involved in the promotion of the financial services sector and has continuously represented to prospective investors, through its literature and promotional agencies, that The Bahamas is a well regulated offshore financial centre, the Prime Minister has nevertheless accepted the premise of the OECD’s attack on The Bahamas.

          In a statement issued on the 26th June, 2000, the Prime Minister stated that The Bahamas was “surprised and greatly disappointed to be included in a list of uncooperative jurisdictions in relation to the prevention of Money Laundering released by the Financial Action Task Force (“FATF”) on 22nd June, 2000.”  The Prime Minister posited that “…the Government shall now undertake a comprehensive review of all its laws, regulations and practices to ensure that The Bahamas complies with the best practices pursued by the principal financial centres worldwide.  He announced that certain bills will be introduced to amend the International Business Act, the Trustee Act, The Bank and Trust Company Act, the Central Bank Act, The Money Laundering (Proceeds of Crime) Act and the Mutual Legal Assistance Act.  Further, he informed that a Financial Intelligence Unit would be established and immediate administrative action will be taken so as to address the systemic delays in the Ministry of Foreign Affairs and in the Office of the Attorney General as regards the processing of requests for assistance under the provision of the Mutual Legal Assistance Treaties.  The Prime Minister stated that “The Bahamas will respond positively and promptly to the stated concerns of the FATF and the OECD.”

          Although Prime Minister Ingraham had stated that the Government had been “surprised and greatly disappointed” by the actions of the OECD, Sir William Allen, Minister of Finance, while addressing the House of Assembly on the 10th August, 2000, made a refreshingly frank admission acknowledged that The Bahamas has known for some time that at some point there would have to be fundamental changes made in our offshore Financial centre.  He stated, in part, that:

“We all recognised that at some point they would have had enough and they could take civil action.  We always knew that industrial countries could take action because the banks came from them.  We knew also that we could only do business if the industrial countries permitted us to close transactions in their countries.  They would prevent the use of their clearing systems.  We knew that when they had enough, they were going to do that ”

 

The candid admission by Sir William Allen raises the legitimate concern of whether we prepared ourselves adequately for this foreseeable event.

 

 

          Prime Minister Hubert Ingraham gave a national address on the 23rd July, 2000 in which he stated that “…our inclusion on a list associating The Bahamas with practices with which we have sought, relentlessly, not to be connected was a tremendous disappointment and the cause of great concern to my Government..”  Prime Minister acknowledged that in the view of the OECD, the FATF and the CFATF secrecy no longer has a place in international financial dealings. 

Notwithstanding this view, the Prime Minister stated that his Government was committed to the continued growth and success of the financial services sector, within the framework of “international best practices”.  The Prime Minister also made a telling admission.  He stated:   “My Government accepts the legitimacy of a number of deficiencies identified in the FATF Report on The Bahamas, particularly as they relate to weaknesses in the regulatory supervision of financial institutions and non-financial institutions such as legal and accounting firms and management companies, in their conduct of financial transactions.”  The Prime Minister then promised to present certain legislative bills to Parliament to “raise standards in The Bahamas in accordance with the best practices observed by the major financial centres of the world namely, New York, Toronto, London Paris, Frankfurt, Geneva and Zurich.”  He announced that beginning the 24th July, 2000 he, the Minister of Finance, the Governor of the Central Bank, the Director of Legal Affairs and the Permanent Secretary in the Prime Minister’s Office will hold meetings with appropriate American and Canadian representatives in Washington, D.C., New York, US and in Ottawa and Toronto in Canada.  The Prime Minister promised that, through widespread international and local consultations with all relevant parties, to take all necessary steps to have The Bahamas’ name removed from the FATF’s list and have the US Advisory lifted.

RECOMMENDATIONS

1.                If  “we have not struck any deal” with any country or international organisation,  as Prime Minister Hubert Ingraham asserted, I recommend that The Bahamas should challenge the validity of the punitive labeling of The Bahamas and lodge a complaint with the International Court of Justice in the Hague against OECD and the United States for unlawful economic measures and interference in The Bahamas, contrary to the United Nations Charter, customary principles of International Law and the principles of free trade and non-protectionism.  If the right of The Bahamas to pursue a tax free offshore financial centre is an essential expression of its right of self determination and fiscal sovereignty, then the unjustified interference and challenge of that right by another country or group of countries, even under the pretext of money laundering, cannot be accepted.  Cooperation in the fight against money laundering should not preclude The Bahamas from offering itself as tax free offshore financial centre.  Further, I suggest that such a legal challenge can be pursued while we are negotiating with the OECD and the United States for the least harmful exit route for The Bahamas.

2.                The Bahamas’ response to the OECD and the United States Treasury Advisory should be coordinated with the Caribbean Community.  When The Bahamas signed the Treaty of Chaguaramas on the 4th July, 1983, The Bahamas agreed, as member of CARICOM, to coordinate our foreign policy initiatives and responses to challenges from non-community countries. 

3.                There should be a bipartisan domestic response to the threat by the OECD and the United States.  Sir Stafford Sands provide an example of mature political leadership for transitional periods in Bahamian national life.  In 1961, Sir Stafford Sands, as Chairman of the Development Board, invited Sir Henry Milton Taylor, then Chairman of the Official Opposition Progressive Liberal Party, to accompany him on a trip to the United Kingdom to promote year-round tourism.  The two men agreed not to discuss politics on their trip, but to focus their attention on the promotion and expansion of the tourism sector in The Bahamas.  Again in 1962 Sir Stafford Sand invited the Leader of the Opposition to accompany the delegation to visit the European cities of West Germany, Sweden and the United Kingdom to promote foreign  investment in the tourism sector in The Bahamas.  Under our Constitutional system the requirement of consultation is a primary principle of ordered government.  For example, the Prime Minister is required to consult with the Leader of the Opposition on every major appointment of the Judiciary and the Executive Branch.  There is, therefore, the constitutional convention that bipartisan consensus be secured when addressing those issues which transcend the particulars of partisan concerns.  I suggest that the present crisis facing our financial services sector is such a national challenge which demands a bipartisan response.

4.                I recommend that the Government appoint a negotiating team, drawing on the collective intellectual talents, technical expertise, experiences and counsel of all of our people, irrespective of race, partisan politics and gender, to negotiate on our behalf a reasonable accommodation with the FATF, OECD and the United States. 

5.                I recommend that we place a moratorium on the further enactment of any further legislation related to money laundering until we would have had an opportunity to engage in a widespread consultation with all sectors of our civil society to determine how best to respond to the external challenge, with proper safeguard for the reasonable expectation of privacy and the secure protection of the law as guaranteed under the Constitution, and, most significantly, how to better position our offshore financial services sector to be more competitive in the future as well as the development of other sectors of our economy.

6.                I call on the Government to make a full disclosure to the Bahamian people by responding, amongst others, to the following issues:

(a)             Did the Government give any undertakings to the United States and/or OECD and its affiliated agencies between the period 1992 to June 2000 to implement  any changes in its anti-money laundering regime?

(b)             Did the Bahamian Government agree to implement the 40 FATF recommendations and 19 Caribbean Financial Action Task Force recommendations which were part of the Kingston Declaration on Money Laundering in November 1992 or any time thereafter?

(c)             Did the Bahamian Government sign a Memorandum of Understanding affirming its commitment to implement the 40 FATF and 19 CFATF recommendations?

(d)             If the Bahamian Government agreed to implement the 40 FATF and 19 CFATF recommendations, did the Government in fact carry out its obligations thereunder and, if not, would such failure have contributed to the placing of The Bahamas on the List by the OECD and the Advisory of the US Treasury Department?