The Central Bank of the Bahamas has said the phasing out of managed banks in The Bahamas is progressing in accordance with plans.

Under the enhanced regulatory regime introduced by the Bahamas Government at the end of 2000, “managed” banks were required to:

-establish a physical presence in The Bahamas;

-retain at least one resident professional at a director level;

-have committed management resources to ensure the institution operates in accordance with Bahamian legislation; and

-maintain all records in The Bahamas.

Managed banks have been given until June 30, 2004 to establish a physical presence.

In its recent “Bahamas Annual Report & Financial Statement of Accounts”, the Central Bank indicated that in the future it will not licence a foreign bank to operate a managed branch from The Bahamas unless its parent organisation already maintains or establishes a subsidiary or branch with a full physical presence in the jurisdiction, and satisfies the criteria and operating requirements laid out in its guidelines.

Central Bank Governor Julian Francis said there has been no “new licences granted for managed banks” over the last 2 years, and that it has long been the Government’s plan to phase out this category of bank licence in due course. *”The Bahamas is doing the things necessary to ensure that it continues to be seen as a serious jurisdiction, one that is perceived to embody those things that are attractive to legitimate business — businesses which want to be in a mainstream, solid, well-regarded jurisdiction,”* he said.

It was projected that there would be no net loss of employment in the sector, as erstwhile-managed banks would provide jobs in both senior and non-managerial positions. The report for 2001 confirmed that some 200 new jobs had been added to the sector, with the banking industry contributing an estimated $432 million to the economy.

See web site below for contact information on receiving the latest Central Bank reports.

Under provisions of the {*I}USA PATRIOT Act{I*}, US banks have been prohibited from correspondent banking relationships with foreign shell banks, with enhanced due diligence requirements coming into effect during July for correspondent banking relations with all offshore banks. (See separate newsletter article)