Friday, February 19, 2010

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G-20 and offshore financial centers: Free trade or protectionism? - A call for reform of global regulation of anti-money laundering and terrorist financing (Pt. 10) I n this final article, there is a continuation of the recommendations contained in article #9 and a conclusion restating the thesis of this series that the drive to fight international financial crimes should be separated from the protectionist interests of the G-20 countries and be based instead on the universal norms of equal sovereign participation, fairness and transparency. RECOMMENDATION (B) 7.To ensure that Parliament is fully briefed on the current status of Bahamian compliance with the evolving standards of international cooperation in anti-money laundering, anti-terrorist financing and tax cooperation, the government should require the Minister responsible for international cooperation to makes quarterly Communications to Parliament on the evolving standards of international cooperation in relation to The Bahamas. 8.The government should sponsor regular parliamentary seminars on the evolving standards of transparency and international cooperation in relation to the existing laws and regulatory practices of the Bahamian state. 9.The government should arrange regular technical meetings with industry stakeholders, such as the bankers' association, chamber of commerce, compliance officers association and other professional associations in the financial services sector to share information, receive industry feedback and to encourage a public/private partnership in protecting the jurisdiction from financial crimes. 10. The government and the Official Opposition, in consultation with civil society, should agree to pass a campaign finance law to abolish the pervasive practice of secret campaign contribution, often by foreigners and sometimes by disreputable sources, to political parties and candidates during by-elections and general elections; thereby, compromising the appearance that the Parliament is legislating laws and the government is executing the laws for the peace, order and good Government of The Bahamas. CONCLUSION I submit that the existence of offshore financial centers, such as The Bahamas, provide important avenues for the easy movement of global finance and promote production and investment in industrialized as well as developing countries. Moreover, the existence of low tax jurisdictions tend to impose market discipline on high tax jurisdictions, such as most G-20 member countries, by forcing them to make more efficient use of tax revenues in their spending decisions. It is accepted that the proper controls and supervision are indispensable to maintain the integrity of any onshore or offshore financial center and fight international crime. The Bahamas should embrace its responsibility to maintain a well-regulated financial services sector, reflecting the best international practices. However, we should resist protectionist measures from the G-20 and the agencies controlled by it to keep multinational enterprises in high tax jurisdiction under the guise of fighting money laundering. Multinational enterprises should be free to carry on their activities in the most conducive and cost effective environment. All countries, small and large, should be free to compete in offering services to these entities in high or low tax environments. Comparative advantage in financial services should be based on excellence in wealth management, best practice, professional competence of accountants, bankers, lawyers, trust practitioners, telecommunications infrastructure, effective regulation, political stability, quality of life amenities rather than the protectionist fears and interests of onshore financial center members of the G-20. The fight against international financial crime and terrorist financing is most effectively advanced when every country has a voice and a vote in the prescribing of the rules and in their even and fair application. I submit that we can only effectively achieve that goal when anti-money laundering and anti-terrorist financing are the subjects of a global treaty under the administration of the United Nations; thereby, resolving all questions of the legitimacy of the G-20, OECD, FATF and Stability Board punishing a country that has neither a direct voice nor a vote in the deliberation of these organizations, under the guise of anti-money laundering, anti-terrorist financing and tax cooperation. Alfred M. Sears, Esq. is the managing partner of Sears & Co., former attorney general of The Bahamas and chairman of the Caribbean Financial Action Task Force (CFATF).