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AG on blacklistings: Why are European countries getting a free pass?

Attorney General Ryan Pinder yesterday appealed directly to the head of the Financial Action Task Force (FATF) to end the unfair practice of blacklisting developing countries while larger European nations are not for the same deficiencies.

Addressing the first day of deliberations of the Fourth AML (Anti-Money Laundering) Research Conference being held at the Margaritaville Resort – where FATF President T. Raja Kumar and Vice President Elisa de Anda Madrazo were present – Pinder called for a research study of what he called arbitrary actions versus the cost/benefit of enforcing them.

“I would also like to take the liberty to suggest a topic for further consideration of research activities as we have today and tomorrow. What is the true cost benefit analysis for countries such as mine of arbitrary and unilateral blacklists? What does it achieve? We all strive to be compliant, the world economy dictates we must be to participate. So, assuming that, what is the utility of blacklists in light of the extraordinary economic damage it implores on us small developing countries? We make up the vast majority of blacklisted countries, former colonies of European imperialists. Of the 65 jurisdictions gray-listed or blacklisted by the FATF from 2010 to 2020, none are in the Group of Seven industrialized nations while only two, Argentina and Turkey, are in the Group of 20,” Pinder told the conference, which was closed to the public and the media.

“The vast majority hail from the Global South, and 28 rank in the bottom half of economic output as measured by GDP. We must look at this much closer and have objective research demonstrate the point that blacklists have lacked objectivity and fairness, and have devastated at times economies of small developing states in our hemisphere, with questionable global benefit.”

Pointing to the 2017 leak of the Paradise Papers, in which millions of confidential documents related to the offshore investments of some of the world’s most powerful leaders were leaked, Pinder said larger developed nations were again protected from blacklistings.

“To continue the example, after the Paradise Papers, the EU’s code of conduct group blacklisted 17 countries. Not one European country was listed; they all got a free pass. In February 2019, The EU published an updated version of its AML/CFT list. Again, not a single European country was listed,” he said.

“In 2022, the EU identified jurisdictions with strategic deficiencies in their AML/CFT regimes that pose significant threats to the financial system. Why is not a single EU member country or their most influential trading partners listed? Again, I suggest a research study of these arbitrary actions and the cost/benefit analysis. I know that a paper was prepared last year that discusses this discrimination. We should take it further and assess the damage done to our countries versus the global benefit achieved. I suspect I know where that analysis will fall.”

Pinder said The Bahamas will continue to work with all international partners to maintain its anti-money laundering, countering the financing of terrorism and countering the financing of proliferation (AML/CFT/CFP) regime on par with international agreed measures to safeguard the global financial system.

“There is an important point I would like to make before I conclude. I would like to put the challenge, especially since we have the leadership of the FATF in the room. For AML/CFT/CFP purposes, the FATF is the recognized body internationally that sets the standards for every country to comply with. I can speak first hand, the requirements are robust, the obligations on countries are significant and we, like other countries, do what we need to do to comply at the fullest levels,” he said.

“A challenge arises when other institutions, organizations or multilateral bodies try to represent themselves as international standard-setting bodies, prescribing standards that are different from those of the recognized bodies. I implore on institutions like the FATF, reaffirm yourself as the only standard setting body and do not let others – in certain instances rogue organizations – supplant your standards.”