Last Updated on January 5, 2023 12:11 am by Editor
According to a TV8 news item of 24 December 2022, acting Deputy Registrar of CAIPO – the Barbados Corporate Affairs and Intellectual Property Office – gave certain Barbadian companies Saturday, December 31 as the deadline to submit a form to the agency or risk being penalized.
A December 09 GIS (Government Information Service) release indicated that the following types of business entities were exempted from completing the form:
- Businesses or entities without legal personality (e.g. registered business names, charities);
- Companies with valid Foreign Currency Permits;
- Companies and other legal entities that already fall under a regulator; or
- Companies that have already been issued with a questionnaire during Phase 1 of this process.
While the CAIPO official was tight-lipped about the rationale for this threat, our investigation on the agency’s website at www.caipo.gov.bb, GIS ( Government Information Service) at www.gisbarbdos.gov.bb and elsewhere uncovered the motive behind the agency’s terse public statement.
Enter FATF
Barbados is a member of 200 member strong FATF, the Financial Action Task Force, which describes itself as “the global money laundering and terrorist financing watchdog” and as an “inter-governmental body [that] sets international standards that aim to prevent these illegal activities and the harm they cause to society”.
The FATF was established by the G-7 Summit held in Paris in 1989 as a response to its recognition of “the threat posed to the banking system and to financial institutions”.
Under FATF rules, member countries such as Barbados, are required to make commitments to implement AML ( Anti-Money Laundering) and CTF (Counter Terrorism Funding) recommendations and protocols.
According to the Barbados page in the FATF website, since February 2020, Barbados has made “a high-level political commitment to work with the FATF and CFATF to strengthen the effectiveness of its AML/CFT regime”.
The agency indicates that Barbados has been asked to “continue to work on implementing its action plan to address its strategic deficiencies”. This requirement involves:
- taking appropriate measures to prevent legal persons and arrangements from being misused for criminal purposes, and ensuring that accurate and up-to-date basic and beneficial ownership information is available on a timely basis;
- demonstrating that ML investigations and prosecutions are in line with the country’s risk profile;
- further pursuing confiscation in ML cases, including by repatriating or sharing confiscated assets with other countries.
The FATF urged Barbados to “swiftly complete its action plan as all deadlines have now expired and to address the above-mentioned strategic deficiencies by February 2023”.
What we can glean from the CAIPO website is that the form companies must complete has to do with the issue of “beneficial ownership”. In a document entitled Guideline for The Application and Interpretation of The Term “Beneficial Ownership” and The Identification of Beneficial Owners of Companies published on July 2021, the government agency defined “beneficial ownership” as follows:
The CAIPO document cites Section 448 of the Companies Act, Cap. 308, which provides a working definition of the term. The full CAIPO document can be accessed here.
In providing background to the requirement to disclose “beneficial ownership”, the CAIPO document explains that:
“the introduction of these new requirements were in direct response to the international recommendations in order to ensure that Barbados has in place an effective framework to prevent money laundering, terrorist financing, corruption, tax evasion and other financial crimes (emphasis ours); and where there is evidence of such activities, that there are measures in place to identify the perpetrators and bring them to justice” (paragraph 7).
On more than one occasion, Barbados has been accused by the OECD of facilitating tax evasion by being a tax haven (source) and being placed on the OECD blacklist.
Former DLP politician Donville Inniss is now serving a 24-month prison term in a US prison having been convicted of two counts of money laundering and one count of conspiracy to commit money laundering (source).
Beam Calling Mote
While every effort ought to be made to decrease or eliminate corruption, it is often the case that those with a beam in their eye are the ones pointing their finger at the those with a mere mote (speck) in the eye. Such is the case with the FATF which has been accused of sheer hypocrisy and unwittingly helping governments target their critics.
On the first count, Global Witness in a 2018 article expressed dismay as the G7 anti-corruption watchdog (FATF) gave the UK the highest ever rating despite the fact that the country laundered “hundreds of billions of pounds each year”.
On the second count, a Reuters report fingered compliance with G7/FATF anti-money laundering legislation as the culprit in helping Ugandan President Yoweri Museveni to silence “a fresh challenge to his 35-year rule in early 2020″.
Only Impressions Matter
None of this should be surprising as the UK and various European agencies often devise regulations which do nothing more than provide an opportunity for ticking boxes that address indirect/surrogate indicators of compliant behaviour.
Such is the case with the CAIPO, FATF inspired requirements where certain companies are required to complete a 40 item questionnaire, ostensibly to deal with the issue of beneficial ownership.
Approximately two-thirds of the forty questions requests nothing more than basic information about the company and whether it has submitted annual returns. One-third of the form (questions 28 – 39) do nothing more that ask whether the company has complied with “beneficial ownership” disclosure requirements.
Clearly such disclosures cannot stop corruption such as money laundering; all they do is (hopefully) provide the identity of the real owners – if ever a case of corruption is brought. Beyond that such virtue-signaling merely provides comfort for fools.
