Off the grey list but remain cautious

Barbados has proven to the international watchdog for money laundering and the financing of terrorism that it not only has the necessary legislative framework to fight the scourge but also acts against those involved in the criminal practice.

The Paris-based Financial Action Task Force (FATF) succeeded in creating a pall of uncertainty over this country’s financial services sector for almost four years, due to the negative implications for those doing business with the country.

Had the island been on FATA’s ‘black list’, it could have led to the collapse of the vitally important global business sector and undermined the island’s economy. However, being on the group’s ‘grey list’ was also very harmful as Barbados promotes itself as a clean, highly regulated, and respected financial services domicile.

The FATF says those on its grey list are actively working with the body to address “strategic deficiencies in their regimes to counter money laundering, terrorist financing and proliferation financing”. But what is more critical is the fact that countries on that list are subjected to enhanced monitoring by the agency headquartered in France. Being on the grey list impacted Barbados’ correspondent banking relations which could impact our ability to trade.

There was also another insidious consequence of being on the grey list as most international companies, particularly those involved in financing, have entrenched governance rules that would bar them from establishing or even carrying on business in a country that is black-listed or even grey-listed.

Essentially, investors would be scared away from the jurisdiction, and it would lead financial institutions to be highly suspicious about even considering the jurisdiction as a place to do business.

And so, the country has been given another chance to breathe with the news last Friday that it was removed from the FATF grey list, along with Uganda and Gibraltar.

While the average man on the street may have been oblivious to the danger posed by being on the FATF’s grey list, the government and those in the affected sectors were well aware.

The degree to which state agencies such as the Barbados Revenue Authority, the Financial Services Commission, the International Business Unit and others, as well as private sector interest groups such as the Barbados International Business Association (BIBA) rallied to ensure Barbados was fully compliant, was an indication of just how much was at stake.

President of the Barbados Bar Association Kaye Williams stressed that local lawyers had been fully cooperating to meet the guidelines that would ensure Barbados’ name was removed from the harmful list.

It is understood that for professionals such as lawyers, accountants, and real estate agents, it will not be business as usual. Their responsibility to report on the suspicious activities of clients will represent a major shift for many of them.

The local Bar Association gave a commitment to work with regulators to “ensure compliance across the profession”.

It has not been lost on those who have been following developments in recent years that members of the legal profession have found themselves facing charges and some convicted of money laundering along with other financial crimes.

President of BIBA Jamar Arthur-Selman, who was obviously pleased with the news that Barbados was off the grey list, issued a warning that the work is not over.

A common feature in these matters is having successfully passed one hurdle, another is often around the corner. It was, therefore, not surprising that Arthur-Selman cautioned the country to be “mindful that work must be consistent to not only stay off such lists but to look ahead to the future and take steps to ensure we are two steps ahead of changes in the global requirements that could place us on future lists”.

This is critical advice from a group that has been around for decades and is very familiar with how these things work.

The BIBA president highlighted that investment opportunities where Barbados’ inclusion on the grey list presented a significant challenge, that has now been lifted.

As such, he was hopeful that Barbados could start to reverse the negative effects that being on the grey list created. These included reputational damage, reduced foreign direct investment and the “negative impact on some global banking relationships and cross-border transactions”.