Barry J. Malcolm
CEO & Executive Director
Bahamas Financial Services Board
Year-end Report To Members – 2000 Overview
During 2000, The Bahamas Financial Services Board, in its third year of operation, continued the programs defined by its mandate to:
-build the ‘Bahamas Brand’ within the financial services industry
-promote The Bahamas as ‘The Financial Centre of Choice’
-develop strategies for continuing development as a competitive centre
-inform and sustain key markets and stakeholders
-channel international trade, business and financial news publications
-cultivate domestic understanding and support for the industry
The business plan executed by BFSB, in discharge of this mandate during the year, included a multi-faceted program of activities in areas such as:
-publications and products
-conference sponsorship and presentations
-international and domestic advertising
-media relations / editorial placements
-development of domestic support
-media support to BISX
-Annual General Meeting
At the beginning of the year, our business plan anticipated that resources of BFSB would be focused primarily on areas of activity such as promotion and direct marketing of The Bahamas. By mid-year, and throughout the balance of the year, our efforts were substantially re-focused to strategic development and government liaison initiatives, as the industry sought to craft for itself and influence legislative initiatives in responding to OECD, FATF, FSF and other international challenges.
BFSB, throughout the year, maintained the support of all constituencies and continued to provide a broad range of services to its membership. Considering the changed agenda for 2000, a significant service was the commitment of substantial resources to continual dissemination of information to member companies on current issues of importance, such as results of Government briefings and pronouncements, drafts of new legislation, market data from external sources, and other matters potentially affecting the industry. Our records confirm that members received an average of two direct mailings per month by fax and/or e-mail from the offices of BFSB, with a larger number understandably being received during the latter half of the year.
For the year net membership was sustained at 152. Several smaller organizations, particularly law firms, opted not to continue as members; efforts are ongoing to encourage the return of such members. The actual number of BFSB members remained fairly constant, as a result of the enrollment of several new financial services organizations. Total membership at December 31st, 2000 is provided at Attachment A.
During the year representation on BFSB’s Board of Directors expanded to include the participation of all major associations of professionals then established within the financial services industry. With an equal voice on all policy matters affecting the strategic direction of BFSB, the following organizations were directly represented on the Board of Directors:
-Association of Clearing Banks
-Association of International Bank & Trust Companies
-Bahamas Association of Health & Life Insurers
-Bahamas Bar Association
-Bahamas General Insurance Association
-Bahamas Institute of Chartered Accountants
-Bahamas Association of Mutual Fund Administrators
-Bahamas Society of Financial Analysts
-Society of Trust & Estate Practitioners
Other membership services included: the presentation, by name, of members in ‘good standing’ in BFSB-funded international and domestic advertisements; substantial internet exposure of member firms through the BFSB web-site; business referrals by BFSB from on-line and direct market enquiries; the clearing and sharing of information important to the industry; co-ordination of several industry-wide and smaller industry and/or government briefings; and ongoing presentation of current information on industry sectors and individual member companies through newsletters, the website and other media outlets.
A special benefit of membership and an invaluable resource to BFSB was the opportunity afforded members from all sectors to participate in special working groups convened throughout the year to undertake specific assignments of importance to the industry. More than 35% of BFSB members contributed time to work groups, which produced significant output for: the Bahamas Financial Services Guide, the Careers Guide, E-commerce Legislation and Guidelines, Amendments to the IBC Act, assessment of Aviation Registry Services, and Strategic Development. The quality of support received from members during the year was outstanding, and indispensable to BFSB’s ability to discharge its mandate.
The composition and mandate of BFSB and the opportunities and demands of our industry continue to require this open [and generous] contribution and engagement by individual members.
After some six months of development, and with the guidance of a specially convened work group, bfsb-bahamas.com was launched in early March. Through its new website, BFSB has developed a powerful platform across which a large market with direct interest in the financial services offerings of The Bahamas is instantly and continually provided a deep range of current information.
Since launch, activity on the site has continued to grow. “hits” now exceed 19,000 per month, and there are approximately 3,500 substantial “visits” to the site per month. There are over 500 repeat monthly visits. The information provided through these daily site enquiries is extensive. Top downloads are the BFSB brochure and newsletters. Top enquiries are for information / assistance related to specific companies and company formation, investment / advisory and management services, and current Bahamas industry news. Most of the site visits originate from North America, Europe and Japan.
BFSB has set up services to provide a preliminary response to all ‘customer’ e-mail enquires within 24 hours.
Over the year the site has grown substantially, directly in response to user demand. It is becoming a benchmark site within the industry. Its key features now include:
-Information About BFSB
-Information About the Industry
-Frequently Asked Questions
-Members in the News
-Financial Services Legislation
-BFSB News Briefs
-Financial Services Guide
-Customer Service E-mail
Given its performance and the level of user demand over the past year, bfsb-bahams.com should continue to evolve as a major platform across which BFSB, its members, and the financial services industry of The Bahamas service an important segment of the international financial services marketplace.
Publications and Products
During the year, BFSB committed substantial resources to publishing and distributing a Quarterly Newsletter, a Guide to Careers in Financial Services and the Bahamas Financial Services Guide.
BFSB News Briefs, the quarterly newsletter published in the months of March, June, October and December, provided a current digest of significant events within the industry, programs and activities of BFSB, and comment on current issues of interest. Publications also featured guest commentaries by contributors such as John Goldsworth of Trust & Trustee magazine and H.E. Arthur Foulkes, Bahamas Ambassador to the People’s Republic of China. A minimum of 1,000 copies of each issue was printed for distribution to BFSB members, international mailing lists and general distribution.
The Guide to Careers in Financial Services was published in June. An important initiative to promote the financial services industry within the country, this primer on careers in the industry was printed for distribution to 9th and 10th graders. Throughout the month of September Guides were distributed to all high schools in the country. The Guide provides an overview of the industry, identifying key positions in each sector, listing both technical and personal skills required, and ‘hot’ jobs in each sector. BFSB members participated directly in compiling the contents, and in presenting the Guide directly to schools in New Providence and Grand Bahama. The Ministry of Education coordinated delivery to other family islands.
Bahamas Financial Services Guide, a comprehensive reference book on the financial services sector, was published in September. The publication reviews banking, trust services, legislative developments, mutual funds, capital markets, insurance, professional services, maritime affairs, real estate, government services and economic development in the country. Compiled over a period of six months, and published as a revenue-sharing venture in collaboration with Symonette’s Marketing Group, it was the editorial product of a BFSB working group.
This Guide was bundled for distribution and sale with a CD-rom of then current financial services legislation. The accompanying CD-rom was published in collaboration with Benchmark Publishing. Some 10,000 copies have been printed for worldwide distribution and sale.
In its Business Plan BFSB had also anticipated production of two revenue sharing publications with the Pageant Media Company of London. The first, scheduled for release in October was postponed to first quarter 2001 because of the external issues that affected the industry during the latter half of the year.
At the end of May, a small team of BFSB Board members visited London, Guernsey and Jersey. Joining the delegation for the London presentations was H.E. Basil O’Brien, Bahamas High Commissioner.
In London, the team met with the International Underwriting Association, Leopold Joseph, The Royal Bank of Scotland, SG Hambros, Rothchilds and KPMG. Each meeting provided the opportunity for a first-hand exchange on latest developments in the industry. BFSB member companies hosted various presentations to which they invited their respective principals and operations personnel, in addition to intermediaries currently conducting or wishing to conduct business in the Bahamas. Over 400 intermediaries were seen by BFSB within a period of five days.
Friends of The Bahamas (London) and The Bahamas High Commission provided support with the London schedule, and hosted the delegation at a reception and dinner.
While in Jersey and Guernsey, BFSB delegates met with the financial services commissions and international bankers associations for presentations on the responsibilities of the respective organizations and for an exchange of views on other matters of common interest. Meetings, similar to those in London, were also held with Chase Bank, MeesPierson and Leopold Joseph.
In August, BSFB took the decision to cancel its end-of-year promotion tour to Latin America and its planned participation in the Shorex Uruguay conference. Developments arising from OECD/FATF/FSF/FinCen actions demanded a re-direction of available resources by BFSB to respond to these and related matters.
Conference Sponsorship & Presentations
In mid-February, BFSB was a principal financial sponsor of a conference hosted by the Bahamas Bar Association at the newly reopened British Colonial Hilton. The three-day event, held under the theme “An Action Plan for the New Millennium: the Justice System, the Legal Profession and the Economy”, was also supported by the American Bar Association, International Union of Lawyers and the Organization of Commonwealth Caribbean Bar Associations.
In April, BFSB, with other domestic industry sponsors, supported the Bahamas Chamber of Commerce’s one-day seminar “Positioning The Bahamas for Global Competition: The Development of E-commerce”. Speakers from the United States and Canada joined with presenters from Government and local service providers. The conference underscored a view that many of the factors which give the Bahamas a competitive edge in financial services, also strongly benefit the development of an e-commerce industry in the country.
In early June the Offshore Institute, hosted a three-day conference and exhibition in Nassau. The agenda included presentations on international taxation, estate planning, asset protection, virtual banking, due diligence, client relationships, and marketing international financial centres. BFSB was the principal financial sponsor and a presenter at the conference. Prof. David Bickford, former legal counsel to the British Foreign Office and the British Security and Intelligence Services, presented the keynote address of the conference.
In mid-June BFSB was also the principal sponsor of the annual Offshore Financial Services Seminar organized by the Washington-based Caribbean / Latin American Action institute. The one-day event drew participation and speakers from across the region. In addition to several BFSB presenters, the seminar also featured presentations by high-ranking officials from the U. S. Federal Reserve Board, the European Policy Forum, and the International Monetary Fund.
Throughout the year, the Executive Director, addressed various conferences and meetings on behalf of BFSB and the industry. These presentations included:
-Higgs & Johnson Client Seminar – March 2000
-IBC Conference – April 2000
-St. Benedict’s University Commencement – May 2000
-Offshore Institute Conference – June 2000
-Credit Union Managers Forum – July 2000
-CLAA Seminar Washington – September 2000
-Central Bank Human Resource Management Seminar – September 2000
-Freeport Bar Association Conference – November 2000
-University of Miami – November 2000
The Chairman, other Directors, and other Members, also addressed and/or attended conferences on behalf of BFSB, as follows:
-Leadership For The Future Conference – February 2000
-IBC Trust Conference Geneva – June 2000
-Rotary Club of East Nassau – July 2000
-Bahamas Institute of Chartered Accountants Seminar – November 2000
-Kozloff Stoudt Bench Bar Conference – November 2000
-IBC Trust Conference London – December
International and Domestic Advertising / Media Relations
Despite the constraints of a limited budget, BFSB targeted several small, but key publications throughout the year, a presence in which provided significant reach to intermediaries who typically refer business to The Bahamas. As the publications were generally small, cost of advertising was relatively inexpensive. But, as they were directed to specific professional groups, such as lawyers, advertising in them was thought to be effective. BFSB placed advertising insertions in the following publications:
-ICFA Offshore Centres Handbook
-International Money Marketing 
-In Brief 
-International Wealth Management
-Trust and Trustees
Advertisements, displaying BFSB’s directory of members, were placed in several domestic publications including the Bahamas Handbook, Welcome Bahamas, Bahamas Financial Digest, Island Scene, and a special page in the National Telephone Directory.
Media Relations / Editorial Placements
During the year, again in an effort to optimize market reach with limited resources, BFSB directed its media relations activities toward specialist publications favored by intermediaries such as trust and estate practitioners, lawyers and other industry specialists. Efforts were directed to such industry publications, with articles, special Bahamas sections and bye-lined submissions appearing in:
-Financial Times Survey – Caribbean /Atlantic Financial Centres
-OFC Report 2000
-Offshore Financial Review
-Trust & Trustee
-Professional Advisors Guide to International Offshore Centres
-Offshore Finance Review (Canada)
-ICFA Offshore Centres Yearbook
-International Trust Yearbook 2000
-International Financial Services Centres 2000
Special reports, which had been planned for more costly and larger circulation publications, such as the Financial Times and L’Agefi, were rescheduled to 2001 because of the uncertainty of market message during the latter half of the year.
Within country, domestic media programs included ongoing press briefings, special training and orientation sessions for press personnel, and sponsorship of and participation in various business programs for television and radio.
BFSB in discharging its mandate as industry representative met throughout the year with the Prime Minister, Minister of Finance, the Governor of the Central Bank, the Ambassador for Trade and Investment and others in the Public Sector to brief authorities and present issues of importance to the industry. The frequency of these briefing sessions averaged approximately three per month with various agencies of Government.
Government relations during the year evolved as a high-demand area of BFSB work activity. Particularly significant and ongoing consultation was required, during the latter part of the year, to provide input to Government in crafting The Bahamas’ response to FATF, FSF, OECD, FinCen, Q-I / J, and other related issues. Many meetings were held with Government to advance consideration of amendments to existing and development of new legislation.
During the year, at the invitation of the Minister of Finance, the Executive Director headed The Bahamas Delegation Negotiating Group on Investment at the FTAA meetings in Florida.
Strategic Development and Other Initiatives
Strategic Development Committee
With the involvement of a wide cross section of professionals from within the industry, the Strategic Development Committee [SDC] was convened by BFSB in late July to formulate private sector strategies for continued growth, development and competitive capacity of the financial services industry, and in response to the challenges of the Financial Stability Forum [FSF], the Financial Action Task Force [FATF], and the Organization for Economic Development and Cooperation [OECD] and other initiatives. The initial work of the SDC centered on evaluating and obtaining a clear understanding of these initiatives, enabling BFSB and the industry to participate to the greatest extent possible in the formulation of The Bahamas’ response.
While The Bahamas’ response to the G7 initiatives assumed priority attention by the SDC initially, other matters quickly came into focus. Firstly, the pending application for Qualified Jurisdiction designation by the United States’ Internal Revenue Service. Secondly, the need for new or revised legislation to improve the product offering and to provide state-of-the-art legislative infrastructure. To that end, the SDC recommended to Government enactment of Purpose Trust, Foundation, Protected Cell and Netting (setting-off) legislation. The Committee also urged Government to enact E-Commerce legislation with urgency.
The SDC also hosted special guests to share relevant expertise.
During mid-September, Mr. Timothy Lemay of the United Nations International Drug Control Programme, formerly of the Canadian Justice Department and Mr. Boudewijn Verhelst of the Belgian Financial Intelligence Processing Unit, presented to the Committee on the nature and work of various financial intelligence units around the world. They also educated the Committee on the Egmont Group of Financial Intelligence Units.
In late September, Mr. Michael Chamberlain of the Emerging Markets Traders Association, USA, and Peter Geraghty of Darby Overseas Investments Ltd presented to the Committee on how American emerging markets traders responded to a “blacklisting” of sorts by American regulators. They were able to share their experience as to how the private sector may respond to engender the confidence of regulators as regards good practice issues.
Mr. John Rhodes, Partner with MacFarlanes, London, presented to the group on “The Changing Dynamics of the Financial Services Industry”.
In November, Mr. Richard Hay, Partner with Stikeman Elliott, London, and legal advisor to The Bahamas Government was engaged to address a special meeting of the Financial Services Industry on “The Bahamas and the New International Financial Services Architecture”. The session provided an assessment of the likely impact of the current initiatives on The Bahamas, and also explored possibilities for the future of the industry.
Going forward, the SDC intends to organize presentations to the industry on relevant topics by experts.
E-Commerce Working Group
BFSB appointed a special Working Group to prepare input on a policy framework for e-commerce development in The Bahamas, including key points to be included in e-commerce legislation. Early in the year, the E-Commerce working group presented a Position Paper to the Ministry of Finance, indicating the strategy for development of a two-fold action plan:
The development of enabling legislation and a strategy for The Bahamas to become a global leader as an electronic commerce and communications hub; and
The development of domestic e-business and the attraction of foreign business to The Bahamas to achieve growth in the point-of-sale function of e-commerce business, and the necessary transfer of technology.
Members of the working group also served on the National E-Commerce Steering Committee, participating in the consultative exercise over a five-week period leading to the drafting of an Action Plan submitted to Cabinet.
In the final quarter of the year, BFSB was asked by the Ministry of Finance to review the following pieces of draft legislation:-
-The Electronic Communications Act, 2000;
-The Data Protection (Privacy of Information) Act, 2000; and
-The Computer Misuse Act, 2000.
In December, the E-Commerce working group submitted a formal review of the draft legislation to the Ministry of Finance, in anticipation of new E-Commerce legislation being passed in early 2001.
Standards & Practices Committee
In November, the BFSB Board of Directors approved a recommendation of the Strategic Development Committee for formation of a Standards and Practices Committee [SPC], in recognition of the need to formalize a system of attentiveness to the maintenance of best practices for the financial services industry. The SPC will promote and encourage adherence by BFSB members to best international standards and practices generally, and, in particular, in relation to “Know Your Customer” and counter money laundering systems, procedures and practices.
The Committee, which includes a broad cross section of industry representatives, including an official representative from each of the principal industry associations, will seek to compile and evaluate industry standards and practices that are followed internationally with a view to assuring establishment of comparable standards and practices within our own industry.
The work of the SPC is intended to be advisory in nature.
BFSB hosted meetings during July 2000 with key participants in the international aviation sector, representing a wide range of worldwide commercial expertise, including aircraft leasing, consulting, regulatory issues, aircraft finance, aircraft registration and local trust management involved with holding aircraft.
The aim of the meeting was to provide insight into how the aircraft finance industry operates and what factors encourage its development. Further, the Roundtable sought to determine if there would be commercial interest in developing a world-class aircraft registry based in The Bahamas, as well as promoting other aircraft finance and aircraft oriented businesses.
The study clearly concluded that there would be strong commercial potential for these initiatives, assuming the active support of the Government of The Bahamas, and, based on the outcome of discussions, BFSB has recommended a 2-Phase approach:
-Investment in the Department of Civil Aviation to create a sound platform for growth, and
-Development and promotion of Aircraft Registration, Finance and associated businesses.
BFSB further recommended, that The Bahamas follow up with ICAO on the potential of serving as the location in which the proposed International Aircraft Registry might be based. BFSB will continue to monitor this initiative and make further input to Government, as required.
Annual General Meeting
The second Annual General Meeting of the Bahamas Financial Services Board was held on Wednesday, October 3rd, 2000 at the British Colonial Hilton Hotel. More than 100 member firms of BFSB were in attendance.
In his address to the meeting, the Chairman protem noted that while promotion will no doubt be a focus of future efforts, BFSB must lay new foundations for the financial services industry, reshaping and establishing services and products to stay ahead of the competition and to assure long term, sustainable success.
In addition to the Chairman’s address and the presentation of BFSB’s 2000 report to members, and plans for 2001, a new slate of Directors were elected to serve on BFSB’s Board of Directors for a two year term.
BFSB members were also presented with the opportunity for an informal discussion with a panel of members of the Strategic Development Committee.
The Bahamas Financial Services Board truly has had a remarkable year. With a degree of success we would wish you as supporting members of this organization to assess, we have executed the business plan established [and subsequently modified] for our organization for the year 2000. The information provided above, hopefully, tells in full the story of our year.
In presenting our 2000 business plan at the annual general meeting of 1999 we noted that “global issues affecting The Bahamas, including: OECD, EU tax harmonization, international concerns regarding money laundering, client confidentiality / bank secrecy, and aggressive competition ……would require BFSB to continue to maintain a fluid and responsive plan”. While absolutely on target in the assessment, we could not have predicted the degree to which those noted concerns would actually demand the attention and resources of BFSB and the industry throughout this year.
What we have done, and are doing as BFSB and as an industry, to secure the future of The Bahamas as a competitive and successful international financial centre, has been possible because of the extraordinary level of commitment and support from you our members. We thank you for your unfailing support in the many forms in which we have asked for it over the past year.
As this will be my final annual report to you as CEO & Executive Director of BFSB, I wish to convey to you my appreciation for what has truly been a rewarding experience. I have enjoyed the close working relationships established, and the genuine support from so many, which has made the many successes of BFSB possible. BFSB’s successes will continue, and I look forward to being a part of them as a continuing member of the Board of Directors.
The solidarity and collaboration within our industry, in my view, is singular among Financial Centres!
Barry J. Malcolm
CEO & Executive Director