By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
All Bahamian non-profit groups have been cleared of any involvement in financing terrorism with those deemed to present a “higher” risk found to collectively control some $150m in turnover.
A Caribbean Financial Action Task Force (CFATF) paper, dated September 20, 2022, reported that just 273 out of 1,090 - or 25 percent - of registered Bahamian non-profit organisations (NPOs) fell into that category due to an annual turnover that exceeded $75,000, cross-border transfer of funds and/or having an “international nexus”.
The regional affiliate of the world’s anti-financial crime standard setter, which has recommended that The Bahamas this week be upgraded to ‘compliant’ with global benchmarks on non-profit regulation, added that all such groups operating from or within The Bahamas had been given a clean bill of health with no terrorism financing connections uncovered over a four-year period between 2018 and 2021.
“The NPO Act requires all NPOs operating in The Bahamas to register. The registration process under the NPO Act provided an estimation of the amount of NPOs operating within the jurisdiction. As of April 2022, there were a total of 1,090 registered NPOs in The Bahamas,” the CFATF report added. “Following the risk rating exercise of all 1,090 registered NPOs, it was found that the major portion of the sector’s NPOs were rated as low risk (800-plus)
“The Bahamas carried out a desk based review in 2020 with the purpose being to identify the NPOs which hold a significant portion of the resources under control of the sector, and a substantial share of the sector’s activities. Using the information gained through the registration process, some 273 NPOs with a turnover of $75,000 or more were identified. These 273 NPOs accounted for a combined turnover estimated to be in excess of $150m.”
That turnover is significant, but the CFATF report added: “Information obtained from the relevant agencies reveal that no NPOs registered in The Bahamas were involved in the financing of terrorism within the assessment period (2018-2021) or any other period. The Royal Bahamas Police Force and director of public prosecutions provided information that reveal that there were no investigations, prosecutions or convictions involving NPOs.
“The Financial Intelligence Unit (FIU) reported that there were also no intelligence or suspicious transactions reported involving NPOs. No open source information indicated NPOs involvement in terrorism financing in The Bahamas. It was determined that there was no evidence to indicate actual or potential terrorism financing activity within The Bahamas.”
Most Bahamian non-profits were focused on domestic issues, the CFATF report found, with the Government having worked with the sector “to develop best practices to address terrorist financing risk and vulnerabilities” via a Best Practices Manual that was released to the industry on May 10, 2022. However, adjusting to the new regulatory framework has not been easy for all.
“During the initial registration process, several NPOs had their bank accounts frozen for failure to register. Banks were consulted, and several meetings and consultations were conducted in 2020 to enable an understanding of the obligations so as not to cause any undue restriction to NPOs,” the CFATF conceded.
“The freezing of accounts have proven dissuasive during the process as there was a massive influx of registration applications after publishing public notices of this effect. The process has seen smaller NPOs having their accounts frozen as opposed to larger NPOs who have more efficient and sophisticated operations or are managed by regulated persons.”
Noting that The Bahamas now has “a full understanding of the risks” presented by the non-profit sector, the CFATF added that sanctions - including the loss of registration and forfeiture of assets - were among the enforcement options available to the authorities if non-profits break the law.
“Each individual NPO will be reassessed on either an annual or biennial basis to serve to underpin its updated risk assessment. Further, the sector as a whole will be reassessed on a periodic basis,” the CFATF added. “Additionally, The Bahamas has implemented a risk-based supervision framework that allows for proportionate and effective actions for those NPOs deemed at higher risk.
“The Bahamas is able to engage a number of sanctions that are dissuasive, and proportionate, which includes the power to revoke business licences, order that the corporate body be wound up, forfeiture of assets and criminal fines up to $25m.
“The Bahamas has ensured that the law enforcement authorities have the requisite training and expertise to effectively investigate NPOs. A Memorandum of Understanding between the Registrar General and relevant authorities for the sharing of information on money laundering and terrorist financing has been established as a mechanism to ensure information is promptly shared with competent authorities to take preventative and investigative action.”