Regulation Watch: Bahamas blacklist efforts, El Salvador goes SWIFT, Mexican ML/TF proposal

Bahamas push to avoid EU blacklist

The Bahamian government said it would introduce additional legislation to ensure it escapes the EU's tax haven blacklist.

"The amendments follow the latest round of high-level discussions between senior government officials and the European Commission, and take into account feedback received from the commission following an assessment of the legislation," said the government as reported by Bahamian news outlet Tribune.

Prime Minister Hubert Minnis' administration said it would unveil amendments to the Commercial Entities (Substance Requirements) Act to satisfy the 28-nation bloc's demands following the PM's recent trip to Brussels.

The Bahamas' placement on the EU list in December 2017 led to a legislative drive to enter into compliance last year; however, the latest move suggests the act passed in early December 2018 failed to satisfy concerns. The government added it would alter the sections related to "holding companies and resident criteria."

The Bahamas faces further challenges ahead. The country was placed on a European Commission list on Wednesday as one of 23 nations with weak anti-money laundering and terror financing [ML/TF] regimes (release and list available here), along with Panama, Puerto Rico, Trinidad and Tobago and the US Virgin Islands, in Latin America and the Caribbean.

El Salvador adopts SWIFT

El Salvador's banking regulator (SSF) said the country's financial sector has incorporated the international financial messaging service SWIFT, as of February 12, citing its priority for continued strengthening of risk-based supervision.

Through SWIFT, electronic money transfer messages are sent to approximately 11,000 financial institutions subscribed the network in around 200 countries.

A statement from SSF noted its adoption of the SWIFT system would allow the regulator "to have detailed and timely information on the transfer operations carried out by the banks of El Salvador that are users of said network, in order to strengthen the constant and automated monitoring of the flows of the sending and receiving of money transfers made to and from other parts of the world."

Concerns raised on Mexican anti-ML/TF proposal

A recently proposed law to strengthen Mexico's anti-money laundering and terrorism financing (anti-ML/TF) efforts could result in significant new reporting burdens on non-financial businesses in the country, according to an analysis by local consultancy Asimetrics.

The firm offered an analysis of the law presented by the majority Morena party in the senate on February 7, raising concerns for what the bill describes as "vulnerable activities."

The activities would include the sale or leasing of real estate, the sale of vehicles, reception of donations, among others, which would have to report information to Mexico's tax authority (SAT) depending on the nature of the individual transaction.

In a press release with the proposal, the initiative is described as an "advanced reform that will improve the country's finances and that will respond to the recommendations of the Financial Action Task Force (FATF), in accordance with global standards in the task of preventing and combating money laundering."

Asimetrics, however, asserted that the proposed modifications do not take into account the current situation of many of the companies that could be affected.

"It is evident that when attempting to assign to vulnerable activities obligations that exceed their budgetary capacities and knowledge in terms of anti-laundering risk assessment, the obligated subjects will be facing an adverse scenario that will probably result in sanctions by the [SAT]," said Asimetrics.

Asimetrics specializes in the areas of governance, crisis management, as well as anti-corruption and anti-ML/TF services.