‘We have the means to expose fraudsters here’, says regulator

In light of the Pandora Papers scandal that exposed the secret financial dealings of some of the world’s rich and powerful, a senior financial services regulator sought to give an assurance that there are adequate measures in place to catch financial fraud here.

Chief Executive Officer of the Financial Services Commission (FSC) Kester Guy said the authorities continued to put measures in place to identify and report fraud while having a healthy exchange of information with international organizations.

But Guy acknowledged that there was always room for improvement in the various mechanisms.

“So, yes, there are broad reports that Barbados may exist in but that does not clarify nor say that Barbados isn’t doing its part to demonstrate that there is a robust mechanism in place. Is there room for improvement? There is always room for improvement,” said Guy.

He was responding to a question on Tuesday regarding the Pandora Papers during the final session of the Central Bank of Barbados 2021 Domestic Financial Institution Conference on Financial Fraud in Barbados.

“We operate in a space that caters to the international sector in various ways,” he said. “Just as everything else we are mindful that as you do business there is always somebody trying to beat the system and there are always things of an illicit nature. That is the reason we have regulation, and we have systems in place where we follow or try to detect and resolve issues that are fraudulent, illicit and other types.”

The Pandora Papers investigation implicates several high-profile private sector and government officials around the world who have stashed hundreds of millions of dollars in offshore accounts.

The Pandora Papers is a leak of almost 12 million documents that reveals hidden wealth, tax avoidance and, in some cases, money laundering by world leaders, politicians and celebrities.

More than 600 journalists in 117 countries trawled through the files from 14 sources for months

The data was obtained by the International Consortium of Investigative Journalists (ICIJ) in Washington DC, which has been working with more than 140 media organisations on the landmark global investigation.

Some 35 former and current leaders who were featured in the investigation and are said to be facing several allegations including corruption, global tax avoidance and money laundering.

The leak of documents also revealed a number of transactions which, while legal, raised embarrassing questions about secrecy and legal manoeuvring among some figures.

Barbados was identified among the countries in which some figures were said to have offshore accounts.

A former senior Mexican government official who was on charges in the US for taking huge bribes, was reported to have millions of dollars in an offshore bank in Barbados.

While avoiding reference to any specific case, Guy insisted that there was constant monitoring and tracing of fraud taking place, adding that it was “not a one-man show”.

“We have a sort of relay mechanism – something is identified in one place and it passes on to the next person, and pass it on to the next and it gets to [the police] and they do their investigations,” he said.

“We don’t come publicly to say ‘well, we find this thing so this is what we are doing in the background’. But there are a number of things always taking place in the background that the general public is not aware of. There are things that our systems have captured and weeded out – from onboarding clients to just observing and tracking the normal types of businesses that they do. We have systems in place to track and follow through with those issues.”

The FSC official said entities know they had to provide certain reports to regulators once they deemed a transaction to be suspicious, and that has been taking place.

“Entities have been growing in awareness and enhancing their own monitoring and tracking and providing the relevant reports,” he said, adding “further, we have all types of exchanges in international forum where we provide intelligence and engage and provide support if we need [to]”.

Director of the Financial Intelligence Unit (FIU) Kirk Taitt said he believed there could be some reputational impact for the country from the release of the Pandora Papers.

“I think the impact to Barbados is mostly on our reputation as a pristine jurisdiction that does good business,” said Taitt.

Acknowledging that “people will exploit the international financial services system and hide ill-gotten gains”, Taitt said he was confident that Barbados was engaged in “good business” even as there was still a belief there was a “mystique” about the island’s financial services sector.

“We know what we do here. We do good business. We are comfortable and we are compliant and do our best to make sure we follow international standards,” said Taitt.

He suggested that in some instances the international media could sometimes “sensationalise the reality of good businesses in the region”, he added that there were also parties with tremendous wealth who “sought to hide ill-gotten funds in the Caribbean”.

“It is those parties to me that have to be uncovered and exposed,” said the FIU head. “So generally speaking, it is my personal view that the idea of a low tax jurisdiction is reasonable and has been reasonable although it has been abused over the last several years.”
marlonmadden@barbadostoday.bb