**Hon. Alfred Sears, M.P.
Addressing delegates at a recent “Special Programme for Intermediaries in Nassau” (SPIN), hosted by the Bahamas Financial Services Board and the Association of International Banks & Trust Companies in The Bahamas, Attorney General the Hon. Alfred Sears spoke on some of the attributes that position ***”The Bahamas as a Leading Financial Centre”***.
He referenced the natural and general qualities of The Bahamas that add to its reputation as an international financial centre. These include its geographical proximity to the world’s most powerful economy in the world; a long history of economic and political stability, with a tradition of parliamentary democracy that dates back to 1729; a robust tradition of the rule of law, and a fiercely independent judiciary, at the apex of which is the UK Privy Council; and an excellent communications infrastructure.
**Legal & Regulatory Environment**
A chief focus of his presentation to the international intermediaries, however, was The Bahamas’ approach to creating the proper legal and regulatory environment that has enabled the jurisdiction to remain a major player in the financial services industry, notwithstanding the tumultuous changes in the sector. *”Thus, I should like to kick-start this roundtable discussion,”* said Minister Sears, *”by stating in the strongest terms the commitment of the Government of The Bahamas to putting in place and sustaining the legal and regulatory environment to support and implement the best market practices in customer due diligence and know-your-customer principles.”*
The Bahamas, because of its importance as a financial service centre, has paid great attention to the OECD’s harmful tax initiative and to the FAFT’s review of non-cooperative jurisdictions in the area of anti-money laundering. According to the Attorney General, *”Whatever one’s views of the fairness or otherwise of the way in which this process was carried out, the quest for greater financial transparency in the global financial services industry, including offshore jurisdictions, led to the development of new international standards.”* While these standards do not yet constitute public international norms, they represent best practices and most jurisdictions – including The Bahamas – have been required to effect comprehensive changes to their financial services legislation to implement these international standards into their domestic systems.
The national legislative apparatus must be attuned to the evolving and rapidly changing international standards, said Minister Sears.
Specifically referencing the *Proceeds of Crime Act* as the centre-piece of the resulting legislative initiative, SPIN delegates were told that this criminalized the concealment of the sources and ownership of ill-gotten gains, providing for forfeiture of such and for international cooperation in the prevention of money laundering. The *Financial Transactions Reporting Act* imposed obligations on banking officials and other financial operators to make reports of suspicious transaction to a special investigative body set up for the purpose of receiving such reports, i.e. the *Financial Intelligence Unit*.
The *Anti-Terrorism Act* was described as another significant legislative intervention, that made similar inroads in respect of the financing of terrorist acts or causes, as was done in respect of money laundering by the Proceeds of Crime Act. This Act gives effect to the FATF Recommendations on the Prevention of the Financing of Terrorism, the UN Convention on the Financing of Terrorism, and the United Nations Security Council Resolution 1373. The Anti-Terrorism Act also imposes serious liability and penalties upon entities providing financial services to persons intent on carrying out terrorist offences.
The *International Obligations Act* allows The Bahamas to give effect in domestic law to economic sanctions such as those required by the UN Security Council.
Jurisdictions must put in place the enabling environment to allow potential investors to take advantage of a range of services. In The Bahamas, recent initiatives in this connection have included a series of Acts known compendiously as the e-Commerce legislation: The Computer Misuse Act, the Data Protection Act, the Electronic Communications and Transaction Act. Other recent pieces of legislation have been designed to expand the range of vehicles and instruments available to investors, most notably the Foundations Act 2004, which provides the legislative basis for the holding of private assets endowed on a foundation for the benefit of identified persons, and the Segregated Accounts Companies Act 2004.
Minister Sears pointed out that the attributes mentioned earlier – economic and political stability, developed legal systems, good communications, and a well-regulated financial service sector – have to be weighed when looking at the value of bank confidentiality and a tax-free status in building and maintaining a strong financial center. *”I believe that discriminating investors will return to those jurisdictions which have a history of good governance and regulation in accordance with the prevailing best market standards, and not simply because of bank confidentiality or no taxes,”* he said.
The prognosis for private banking worldwide seems to be that the “good jurisdictions” will continue to prosper — that is those who have a history of probity and transparency. *”Of course, regulation and supervision will continue to be the cornerstone of national efforts, if we are to ensure that the frontline operators in the financial services industry adhere to best market practices.”*
**Culture of Compliance**
Acknowledging the importance of public/private sector partnership espoused by other Government presenters during the SPIN initiative, Minister Sears said any government’s effort in putting in place legislative and supervisory regimes will be of no effect if they remain “dead in the water”. It is the unique partnership created between the Government and the financial operators that will ensure the continued success and competitiveness of The Bahamas as a major financial centre.
These financial practitioners, he pointed out, have taken the benchmarks set by relevant legislation and made them a part of their banking and corporate culture — not just a response to the threat of legislative sanctions. *”It is the culture of settling for nothing less than the highest standards in the governance of our financial services industry that will continue to make The Bahamas attractive to reputable investors, no matter the vicissitudes of the global financial system,”* he concluded.