Changes to FATF Black List

A staff reporter 25 June 2001

Changes to FATF Black List

The Financial Action Task Force has removed the Bahamas, the Cayman Islands, Liechtenstein and Panama from its list of non-cooperative count...

The Financial Action Task Force has removed the Bahamas, the Cayman Islands, Liechtenstein and Panama from its list of non-cooperative countries. The Caymans and Panama have been let off the list while still having to comply with certain of the FATF's criteria. Six new additions to the list - Egypt, Guatemala, Hungary, Indonesia, Myanmar and Nigeria – were confirmed by the FATF during a meeting in Paris last Friday. The new list reads as follows: the Cook Islands; Dominica; Egypt; Guatemala; Hungary; Indonesia; Israel; Lebanon; the Marshall Islands; Myanmar; Nauru; Nigeria; Niue; the Philippines; Russia; St Kitts and Nevis, and St Vincent and the Grenadines. Egypt has established banking secrecy laws, but US intelligence investigators have long been able to bribe officials to surrender the details of suspect accounts. The FATF's choice of countries for de-listing is interesting. The international organisation, which is based in Paris at the Organisation for Economic Cooperation and Development headquarters, has long been claiming that recalcitrant countries must spend some time implementing their reforms before they are removed from the list. This oft-repeated policy seems to have gone by the board. The Cayman government has certainly made some spectacular reforms, changing every part of its existing financial legislation in the second half of 2000 and again in the first half of this year, but it has yet to fulfil the FATF stipulation that it must pass its Securities Bill. Nor has it fallen in with the KPMG report's recommendation that its regulation should be independent of any ministry. The new regime has also had no time yet to demonstrate its effectiveness. The Caymans, although considered a well-policed jurisdiction, has yet to put finishing touches to its reform programme. The Securities Bill and regulatory independence should become a reality within a month if all goes well in the legislature and the reforms have been built on a ready made body of existing regulation. This is not the case in Panama, which has no history of effective regulation and depended very heavily on US help in implementing its reforms. In making its de-listing choices the FATF has sent out an important message that it will be possible for a state to leave the list even if it has not fully conformed to FATF requirements. Two weeks ago, Liechtenstein launched a successful last ditch attempt to secure its removal from the list by setting up an independent compliance body. The Bahamas, as with Panama, have depended heavily on the help of US and Canadian consultants in their reform work. "I think that this report is a very clear statement of confidence in the abilities of the monetary authority to deliver and that the industry itself is working very closely with us. The FATF knows that when we say we're going to do something, it will be done. It is also a vindication of our policy of setting up an FIU, which incidentally has just been allowed to become a member of the Egmont Group," said John Bourbon, head of the Cayman Islands Monetary Authority. "The FATF didn't tell us about our de-listing before it was announced, and we weren't sure that we were coming off. But we did our own technical assessment which proved that there was nothing that hadn't been technically addressed." Alistair Walters, chairman of the Cayman Islands Compliance Association echoed these sentiments. "We didn't know we were off the list until it was announced. In fact, we expected to stay on because some things on their original list of requirements haven't been completed and the FATF said that they wanted to see everything in action first," he said.

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