The Hon. C.V. Hope Strachan, M.P., Minister of Financial Services, addressed the February luncheon meeting of the STEP Bahamas Branch yesterday, providing an overview of developments within the sector.
The Minister noted that marketing initiatives, including a number hosted in collaboration with STEP events worldwide, have become a key focus of her Ministry. *“This year we intend to be even more aggressive in our marketing initiatives, trusting that this will translate into viable business opportunities for the sector.”* She also said that coupled with these marketing initiatives the Ministry has designed several other aggressive initiatives to ensure the survival and preservation of the industry, to capture new business, to improve products and to diversify the sector’s offerings, allowing the jurisdiction to compete on a regional and global level.
**Survival and Preservation**
The Bahamas has much to be proud of as a premier financial services centre that offers a wide range of wealth management services, a robust regulatory and legislative regime and a highly skilled work force. Minister Strachan noted that while the jurisdiction always has responded to international initiatives to ensure compliance with international regulatory obligations, it also has been resourceful and creative enough to protect its financial services industry. She referenced in particular the number of Tax Information Exchange Agreements (TIEAs) in force, the FATCA Bahamas-US IGA, and the OECD obligation for Automatic Exchange of Information (AEOI) and the Common Reporting Standard (CRS). On the last, The Bahamas has committed to a 2018 compliance date and a bi-lateral approach opting for agreements with countries on an individual basis as opposed to the multi-lateral approach, simultaneously becoming a party to the Multi-Lateral Convention on the Mutual Administrative Assistance in Tax Matters along with all other member states who are signatories.
According to the Minister, whatever approach is adopted the overarching principles which govern AEOI and CRS are consistent. They include the principles that the OECD member states must act together to combat tax avoidance and tax evasion internationally; that for member states to do so successfully requires co-operation and a coordinated effort by all states; and that the protection of confidentiality of information and taking account of international instruments of protection of privacy and flows of personal data is critical to the cooperation of member states in the AEOI system. *“Notwithstanding that The Bahamas has elected the bi-lateral approach for the automatic exchange of information, we are confident that we can successfully remain true to those overarching principles and their intended goals.”*
Also with regard to the 2018 implementation date, the Minister reported on an Implementation Task Force, comprising representatives from all major stakeholders: the
Ministry of Finance as the portfolio Ministry, the Ministry of Financial Services, the Bahamas Financial Services Board (BFSB), the Office of the Attorney General, and representatives from the private sector. *“Our work on this initiative is key to the survivability of the sector and this government will work assiduously to ensure success.”*
**Capturing New Business**
In addition to work done and planned to attract the traditional sectors (offshore banking, private wealth and asset management, and insurance), the Minister spoke to initiatives to expand, diversify and increase The Bahamas’ value. High on this list is the establishment of The Bahamas as an International Arbitration Hub for the hemisphere. Consultants have been engaged, outreach made on targetted markets and end users, and training workshops conducted. Importantly, The Bahamas has obtained the blessing of the Permanent Court of Arbitration (PCA) for membership in that organization. It is anticipated that the establishment of a Caribbean Permanent Court of Arbitration Facility in The Bahamas will allow the PCA to offer their expertise in dispute resolution to countries in the Caribbean and the Americas in a more effective manner.
Also reported was that the Law Reform Commission is expected to commence the consultative period for The Bahamas International Commercial Arbitration Bill 2016 in short order, and that the present Bahamas Arbitration Act 2009 will be amended.
**Improving The Product Base**
The Bahamas’ success with innovation of products is well known locally, regionally and internationally, according to Minister Strachan; she referenced Bahamians Foundations, Bahamas Executive Entity, SMART Funds and the ICON as prime examples. *“All of these products came about as a result of the need to remain relevant and responsive to our clients’ needs and work is ongoing to create new products that will help to sustain the industry.”*
The Government of The Bahamas through a grant from The European Union (EU) facilitated by The Caribbean Development Bank (CDB) currently is working to create a Centre for Excellence with a focus on financial services. This project is well underway with The Bahamas Institute of Financial Services (BIFS) providing advice. The Centre for Excellence will cater not only to Bahamians but other financial services professionals within the region, increasing the jurisdiction’s profile and competitiveness regionally.
The Minister also reported on the ongoing 2015-2016 pilot programme to introduce the Rosetta Stone Language programme within public schools throughout The Bahamas, made possible through a collaborative effort with her Ministry, the Ministry of Education, BFSB, and private sector sponsors. *“Recognizing that the future of financial services, and indeed The Bahamas, lies within our youth, educating and equipping students with a second language will help to strengthen our industry and create a competitive advantage.”*
Many major financial services jurisdictions have created products aimed at attracting the High Net Worth Individual (HNI) and Ultra High Net Worth Individual (UHNI) to become residents or citizens of their country. This is in recognition of the economic impact that they can have on an economy – e.g. investments, home ownership, business ownership, education, infrastructure, commodities or even corporate social responsibility. The Ministry of Financial Services has completed its research and consultation with BFSB and the private sector on the approach to be taken by The Bahamas, and the Minister noted that there will be several significant changes and improvements to immigration policy for the sector introduced over the course of the next few weeks, related to residency not citizenship.
Minister Strachan remains optimistic about the future for the sector.*”I am confident that together we will be able to respond to the challenges and maintain the soundness and stability of our financial services industry. There is still much work to be done but as the Minister of Financial Services I can assure you that I am committed to doing the work and to the success of this industry.”*