The EU AML/CFT List of High-Risk Third Jurisdictions: Implications and Options for The Bahamas

Jun 2019
This Policy Brief argues that inclusion on any future adopted European Union (EU) AML/CFT list of high-risk third jurisdictions would be problematic for The Bahamas for three main reasons. First, EU ‘obliged entities’ will be required to conduct enhanced client due diligence (ECDD) on transactions involving Bahamian clients and Bahamian intermediaries. Secondly, while no sanctions are involved, noncompliance for an international financial center like The Bahamas might entail reputational fallout at a time when Caribbean countries are facing the loss of correspondent banking relationships (CBRs) due to the de-risking practices of large global banks, with the attendant implications for the ease of doing business, cross-border trade and financial transaction flows. Thirdly, The Bahamas will now be expected to comply with another set of rules defined by a body of which it is not a member and where it has little or no opportunity to influence the methodology by which it is being assessed.