BCB cyber-attack raises serious concerns

Summary:

  • BCB is repository for invaluable historical information

  • Stated-owned entity must be transparent on strategy and remedial action

  • Ransomware attack reveals absence or deficient contingency plan

  • Vulnerability test should be commissioned immediately


Full Release:

The DNA notes with great concern, recent reports regarding a cyber-attack on the Broadcasting Corporation of the Bahamas (BCB).  According to media reports, an individual would have caused the encryption of the BCB’s digital library and other data and is attempting to extort funds in the form of Bitcoins as a condition for decryption and restoration.

BCB Chairman Mike Smith, confirmed that international hackers originally demanded $50,000 incremental payments of bitcoins which was eventually negotiated down to $18,000. Subsequently, no further updates have been provided to the Bahamian people and fundamental questions remain unanswered by a government that professes commitment to transparency and accountability.


We appreciate that paying the requested ransom may not be in the overall interest of the BCB and the country as such a payment may be used to fund further cyber criminality or terrorism. However, the Bahamian people remain in the dark on the overall strategy or course of action that the government has adopted to bring normalcy to the BCB’s operations. It is common knowledge that the BCB is a repository of invaluable historical data and materials which document important milestones in our nation’s history. Further, as a state funded entity, an attack on the BCB constitutes an attack on the Government of The Bahamas and its people.  We call on the government to address this matter with the high level of importance, transparency and urgency it deserves. Pertinent details on potential data loss, recovery efforts, impact on operations, compromise of employees’ personal information, vendors’ details and proprietary information should be released forthwith.


The recent ransomware attack also raises serious concerns about the business continuity and disaster recovery framework of the BCB. The Board and management of the BCB must immediately disclose whether a robust Business Continuity Plan (BCP) exists for the organization and its effectiveness. In the absence of such a framework, the BCB should move swiftly to draft and implement a BCP and Disaster Recovery Plan (DRP) which among other things articulates a contingency plan for cyber-attacks and other operational disruptions.  Such a plan may also call for the update of computer and operating systems, installation and updates of anti-virus and anti-malware software, or conversely installation of Artificial Intelligence software, regular backup of important files, proper vetting of vendors and their approach to cyber security as well as relevant insurance coverage among other things.


As a further precaution, we recommend that training sessions are held for staff to alert them to the instance of phishing tactics included in malicious attachments that may come via email or other sources.  Additionally, Information Technology policies should be implemented that address email and internet usage inclusive of blocking non-work-related sites that may be prone to spreading viruses.


We call for the commissioning of a comprehensive vulnerability and penetration test to ascertain the areas of weakness within the BCB’s I.T. systems. The recommendations arising from such a test conducted by competent professionals must be implemented without delay. The DNA believes that these recommendations and information are both useful and instructive to all government agencies and departments, the private sector inclusive of small business and indeed the average consumer who possess a computer in their homes.


The DNA stated in its ‘Vision 2017 and beyond’ platform that we will create a Ministry of Information and Technology.  We strongly believe that the Government of the Commonwealth of The Bahamas must set the pace for data security and protection.  Appropriate laws and regulation are needed to guide and ensure compliance in this sector of our economy. An investigation should be launched, and recommendations made that will serve as directive for all government ministries and departments.  We emphasize that all efforts must be made to increase the resilience of our infrastructure and minimize the probability of a recurrence of this nature.



Samuel Strachan

Spokesperson for Information Technology

Democratic National Alliance



EU and OECD: Wrong Impetus for Reform

  • Financial services under constant pressure

  • Agility of Government questioned

  • Long term strategy required for Financial Services

  • Domestic-driven comprehensive tax reform long overdue

  • Proper consultation and details required

The Bahamas' financial services industry has been under intense pressure over the last year. During this period, we have seen The Bahamas placed on adverse listings or blacklists by the European Union, Organization for Economic Cooperation and Development (OECD), Financial Action Task Force (FATF), United Kingdom, United States of America and The Netherlands.

Observers of the global landscape for financial services are aware that the second pillar of the Bahamian economy has been under assault for over two decades with the goal posts for compliance being moved constantly and continuously. The end goal of the implementation of new standards and placement of additional hurdles for International Financial Centres like The Bahamas seems apparent to industry professionals.

This could not have been more obvious than the Netherlands' recent inclusion of The Bahamas on a blacklist of tax havens with no corporate tax or corporate tax rates lower than 9%. This took place while the Government was working around the clock to implement sweeping changes to our tax system in order to meet an EU imposed deadline. The Netherlands Government in this instance, indicated that the list was subject to consultation from 25 September to 22 October 2018. It is concerning that adverse listings of this nature and other blacklisting initiatives often catch the Government by surprise. This raises questions about our level of engagement and the agility of relevant government ministries or agencies in keeping up with global trends and initiatives.

It is time for the Government to wake up to the reality that the pressures will not cease, and the goal posts will continue to shift. A reactive approach to new standards set by international bodies and other jurisdictions is myopic and demonstrates a lack of a long term plan or vision for the financial services industry and the Bahamian economy as a whole.

Long overdue reforms that are required to usher The Bahamas into the 21st century cannot be ignored or delayed until external pressures force the Government into these initiatives. The recent press release on financial sector reform is a prime example of this phenomenon. We have once again kicked the proverbial can of comprehensive tax reform down the road thereby ignoring the need to move from the current regressive tax system to a more progressive and equitable one. The current system places undue and unfair burden on the working and middle class as well as those who can least afford it.

While some clarity has been provided on the basis for the calculation of business license tax with a link to positively rated taxable supplies, it does not address the main concern of the business community that the tax is imposed on turnover rather than profits. This is especially relevant for high turnover and low margin businesses.

It is imperative that the actual details underlying the proposed changes to our tax regime are provided to stakeholders and the public for scrutiny and feedback. We urge the Government not to shove this down the throats of domestic entities in the same manner as the significant increase in the VAT rate. There must be transparency and disclosure in relation to the criteria for determining the proposed new taxes and/or fees.

We welcome any initiative aimed at reducing the cost of doing business and improving the ease of doing business in The Bahamas. It is our hope that the Government's agenda and priorities will someday not be dictated or determined by external factors but rather a coherent vision which has at its core the best interest of the Bahamian people.

Arinthia S. Komolafe

Deputy Leader, Democratic National Alliance


Campaign finance reform long overdue

  • PLP and FNM have avoided reform for decades

  • Curious timing following NPO Bill backlash

  • Robust legislation will reveal special interests

  • No further delay to passage of legislation

The Democratic National Alliance (DNA) notes the comments attributed to the Attorney General that a draft bill seeking to regulate the financing of campaigns for political parties in The Bahamas.

This announcement comes on the heels of significant pushback and backlash following the tabling of the Non-Profit Organizations (NPOs) legislation. The legitimate concern of the populace that political parties just like NPOs should not be exempt from scrutiny seems to have forced the Government to finally propose campaign finance legislation.

We believe that it is extremely important that the Bahamian people are aware of the sources of funding for political organizations. The legislative and policy priorities of successive administrations upon assuming office point to an obvious need for transparency and accountability in the campaign finance process. An effective campaign finance legal framework will reveal special interests and groupings that may seek repayments in favours, contracts and appointments from political parties following election victories.

The discourse on campaign finance regulation has been taking place in The Bahamas for decades without any meaningful progress by the Progressive Liberal Party and Free National Movement administrations to date. Campaign finance reform in The Bahamas is long overdue and should not be delayed any further.


While it can be argued that the Government’s recent pronouncement is only an attempt to placate the Bahamas Christian Council, NPOs and the Bahamian people, we are hopeful that this is not another grandiose announcement without any intention to implement this vital framework. The Bahamian people deserve and urgently demand good governance from an administration that promised that it would be “the people’s time”.

We implore the Government to proceed with completing the drafting, tabling and passing of the legislation without any further delay and pray that this crucial legislation does not meet the same fate as the Freedom of Information Act, which has been put on the proverbial backburner. Campaign Finance reform has been at the heart of the DNA’s platform for good governance and the DNA looks forward to providing valuable input into the draft legislation and working with the Government to complete this process as soon as possible.

Arinthia S. Komolafe

Deputy Leader, Democratic National Alliance

Approach to OECD list must go beyond semantics

The Bahamas and twenty other countries were recently singled out by the Organization for Economic Co-operation and Development (OECD) on the premise that their residence by investment (RBI) and citizenship by investment (CBI) schemes pose a high risk to the integrity of the Common Reporting Standard (CRS) regime. This adverse listing followed the analysis of over 100 CBI/RBI schemes by the OECD.

In what was termed as the clamping down on CRS avoidance through CBI/RBI, the OECD asserted that it is seeking to equip financial institutions with tools to help them identify accountholders that may misuse RBI/CBI schemes specifically to avoid the CRS. We submit that this is another classic case of the moving of the proverbial goal posts by international organizations.

The Government must now move beyond the semantics and address this issue for what it really is. The reality is that only 21 out of over 100 countries were placed on this list for high risk CBI/RBI schemes. While the use of the word “blacklist” may be inappropriate or frowned upon, the list is not a positive, complimentary or favorable one.

As part of the OECD guidance, financial institutions are being asked to consider the results of the OECD’s CBI/RBI risk analysis and whether an accountholder has residence in a jurisdiction offering a potentially high-risk CBI/RBI scheme. This equates potentially to additional scrutiny and enhanced due diligence on legitimate economic permanent residents of The Bahamas.

We note that since the release of the guidance, the OECD has issued a statement in which it was asserted that Monaco’s residence and immigration requirements do not pose risks to the integrity of the CRS. This followed the provision of additional information by Monaco and it is expected that the guidance/list will be updated to reflect this.

The Government has an obligation to ensure that the OECD is made aware of the robust and rigorous process in place for the granting and maintenance of economic permanent residence by individuals. This includes a comprehensive due diligence and vetting process to ensure the fitness and propriety of all applicants.

The economic permanent resident programme and second home market are well regulated and pivotal to our economy. It impacts the real estate, financial services, tourism and government sectors with contributions to our nation’s Gross Domestic Product.

We need effective representation and diplomatic collaboration to address this latest attack on our nation’s economy. It is simply unfair and unacceptable for the OECD to place The Bahamas on any adverse list despite our demonstrated commitment to meeting our international obligations.

Arinthia S. Komolafe, Deputy Leader

Democratic National Alliance


EU Blacklist: Time to Change our Approach

The recent announcement that The Bahamas is at risk of being included on the European Union’s list of non-cooperative jurisdictions for tax purposes (blacklist) is both surprising and disappointing. According to media reports, the Code of Conduct Group (COCG) intends to recommend to the Council of the EU, the inclusion of The Bahamas on this infamous list.

In the aftermath of the recent efforts made by the Government to avoid the blacklisting of our nation, it is clear that the age-long practice of international and multilateral agencies continuously moving the goal post is still alive. The Bahamas dodged the proverbial bullet when the initial list was published in December 2017 due to the devastating storms that impacted the Caribbean in 2017.

Since then, our Government has signed on to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters and the Multilateral Competent Authority Agreement. The Bahamas also joined the Inclusive Framework on Base Erosion and Profit Shifting (BEPS) December 2017. However, these actions have been presumably deemed inadequate by the COCG.

Having addressed the criteria on Transparency and Anti-BEPS Measures, it remains unclear how the Government intends to address the issue of Fair Taxation as highlighted by the EU. In the EU's assessment of Fair Taxation, consideration is given to the absence of a corporate tax or application of a nominal corporate tax rate equal to zero or almost zero by a jurisdiction.

It is unfortunate that external pressures have put us in a position in which we are being compelled to address our system of taxation and chart the course for the financial services industry going forward. However, we have an opportunity to carry out comprehensive tax reform with due regard for the introduction of a more equitable and progressive tax system for our people.

Tax reform in The Bahamas should not result in an increase in the overall tax burden on Bahamians. The overall net effect of this reform should not complicate the ease of doing business or increase the cost of doing business in The Bahamas for Bahamian businesses. We are already burdened by several taxes, fees and levies without the necessary prudence, accountability or improved infrastructure to show taxpayers. Due consideration should be given to the reclassification or modification of existing taxes. A prime example is the business licence tax which is currently assessed on gross revenue rather than net profit.

The evolving and shifting goal posts for compliance with international standards have nurtured a reactive rather than a proactive approach to our nation’s financial services industry over the years. We have found ourselves in survival mode rather than being strategic in planning for the repositioning of the financial services industry. It is time to turn this around for our own benefit.

Rather than just focusing on the short-term goal of avoiding blacklists, a Financial Services Growth Action Plan (FSGAP) should be developed. This plan must be holistic while leveraging our strengths and the expertise of Bahamian professionals. The DNA stands ready to assist the Government in the development of a plan to ensure financial services growth inclusive of the crafting of a fair and equitable system of taxation for Bahamians.

Arinthia S. Komolafe
Deputy Leader, Democratic National Alliance

Where’s The BAHAMIAN Plan?

In the eight short months since taking the reigns of governance, the Minnis administration has seemingly adopted the same late again, and foreigner dependent style of governance made popular by the Progressive Liberal Party during their last term in office. Despite its many campaign promises the government has failed to put forward any plans designed to meet the needs of the citizenry and have instead focused its efforts on fast tracking legislation which satisfy foreign interests and bend to international pressures.

First, the government set an aggressive 2019 timetable for the Bahamas’ accession to the WTO, which has left little time for local businesses to prepare for impending changes to the business climate. Second, under the guise of encouraging new industry, the government all but declared war on Bahamian businesses in 2017 by fast tracking the problematic Commercial Enterprises Bill, which will allow large foreign interests to compete with Bahamians. However, eighteen days into the New Year, and eight months into its administration, Bahamians continue to wait with bated breath for the Minnis administration’s highly anticipated economic plans to move Bahamians to the front of the economic line.

As a party, the DNA had hoped that by now this government would have revealed plans to bolster Bahamian ownership of our economy, improve employment, and spur economic growth through tangible means such as (1) a flat rate Business License scheme, (2) reduction in mortgage rates by 50%, (3) reduce the cost of power by 50%. Instead we’ve heard more of the same tired rhetoric, much of which continues to depend heavily on foreign investment rather than proactive changes to make the Bahamas for Bahamians.

After five years of a government which ignored the will of the people, Bahamians everywhere believed the FNM when they promised that it would finally be THEIR time, but is this what the people’s time looks like?

Christopher Mortimer
DNA Interim Leader