Tag Archives: Bahamas

The FTX Collapse and the Risks of Crypto Corruption

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Last month, the cryptocurrency industry experienced a seismic shakeup as FTX—a Bahamas-based crypto exchange led by the young ex-billionaire Sam Bankman-Fried—collapsed. It turns out that FTX was riddled with fraud, and many of the company’s assets are still hidden or missing. Quite understandably, most of the reporting on FTX’s wrongdoing has focused on how FTX defrauded investors, customers, and the U.S. government. But there is another aspect of the case that deserves further scrutiny: the possibility that FTX corrupted Bahamanian regulators, and that this corruption facilitated the company’s other types of malfeasance.

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Guest Post. Effective AML Strategy: A Small Country Perspective

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Smaller states are often thought to be more vulnerable to money laundering: less resources, fewer personnel, a lackadaisical attitude towards others’ problems. But as Charles Littrell explains in today’s guest post, even the smallest jurisdictions can prevent money laundering if there is the will to do so, and those don’t care or think they will benefit by turning a blind eye towards it are inviting a particularly virulent strain of cancer into their society.  Mr. Littrell is head of bank and trust company supervision for the Central Bank of The Bahamas, including AML supervision.  He was formerly an executive at the Australian Prudential Regulation Authority, and a member of the Basel Committee on Banking Supervision. He founded and is the Convener of the International Research Conference on Empirical Approaches to Anti-Money Laundering. This post represents Mr. Littrell’s personal views.

This post outlines a suggested strategy for small states to engage in the international money laundering movement.  The strategy comprises three elements:

  • Know what you don’t want—which is engagement with dirty money and the people associated with dirty money.
  • Deploy locally successful AML tactics in a globally unsuccessful world.
  • Proactively manage the FATF relationship.

Despising dirty money and dirty people

The core element in a successful small state AML strategy is sincere and comprehensive rejection of foreign illicit money, and the people associated with that money. The world’s major league criminals and their financial facilitators are among the least attractive and most dangerous human beings on the planet, and a successful small state will absolutely not welcome such people, their money, or their activities.

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Guest Post: Obstacles in Establishing Whistleblower Regimes in Small Developing Countries—From The Bahamas to Kosovo

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Today’s guest post is from Lemarque Campbell, a Policy and Legislative Development Specialist for the International Development Law Organization (IDLO), and Vlora Marmullakaj, a Senior Project Officer for the Project Against Economic Crime implemented by the Council of Europe. The views and analysis expressed in this post are those of the authors and are not attributable to the IDLO or the Council of Europe.

Encouraging whistleblowing is one of the most important tools for detecting and deterring wrongdoing in public sector organizations. Especially in small developing countries that lack strong institutions, insiders may be the best or only source of accurate and reliable information about malfeasance. Moreover, whistleblowers not only help expose corruption, but they also play a significant role in providing information that could lead to the recovery of assets derived from corrupt practices. And in this time of global pandemic, when opportunities for corruption abound and the normal oversight and accountability processes are weakened, whistleblowers are even more crucial—a fact emphasized by, among others, GRECO and Transparency International.

Unfortunately, many developing countries lack an adequate system for encouraging and protecting whistleblowers. Even those countries that have substantially overhauled their whistleblower laws continue to face significant problems of implementation. Considering the recent experience of the Bahamas and Kosovo—two very different small developing countries that have recently overhauled their whistleblower laws—helps illustrate some of the obstacles to achieving effective reforms. Continue reading →

Offshore Tax Havens: Whose Fight Is It Anyway?

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By the end of 2017, offshore tax havens were (again) in the spotlight. This was largely thanks to the International Consortium of Investigative Journalists (ICIJ), which helped release the “Paradise Papers”, a trove of documents primarily concerning the clientele of Appleby, a prestigious law firm with offices in the Cayman Islands and the Bahamas. These documents illustrated how firms like Appleby help wealthy individuals use offshore tax havens to avoid or evade paying taxes in their home jurisdictions; this is possible because tax havens offer significantly lower tax rates compared to the home jurisdiction, and also offer a measure of secrecy surrounding financial transactions. (Tax havens often have little to offer but these discounts; they rarely have good governance, and opportunities outside the finance industry are difficult to find for the locals.)

The movement to crack down on offshore tax havens has gathered much support from anticorruption activists. Pointing to leaks like the Paradise Papers (and the Panama Papers before them), anticorruption activists argue that the secrecy associated with offshore tax havens exacerbates the problems of kleptocracy and corruption. While I agree that offshore tax havens pose serious problems, I’m skeptical whether this issue should be a focal point for anticorruption activists (rather than, say, advocacy groups concerned primarily with tax justice or global wealth inequality). There are two reasons for this: Continue reading →