Any country heavily engaged in financial services bears the responsibility and a commitment to the international community of which it is intricately involved, the financial institutions operating within its borders, the clients which it serves and its citizens which rely on the sustainability of the industry for continued economic development. The Bahamas is such a country. The Bahamas has always sought to provide superior financial products and services and a world class client experience. It has proven itself to be nimble and responsive to global changes – always mindful of the need to adhere to international standards with respect to compliance, cooperation and transparency. This is complemented by the fact that The Bahamas is not only somewhere that offers bespoke private wealth management, it is also a beautiful place to live and work in.
The need to be a responsible international financial service provider is not seen as a heavy burden to those engaged in financial services. Rather, it is embraced as a sacred pact with the many stakeholders who have come to rely on and recognize the Bahamas for its financial services acumen over the years.
Four vital features at the heart of what distinguishes The Bahamas as an international financial centre of significance are: Regulation, Expertise, Innovation and Location. Everything The Bahamas offers is defined by these four words. Everything that comprises The Bahamas’ value proposition and continued success as a leading international financial services centre is guided by these distinguishing factors.
The strong regulatory regime that characterises the financial services sector ensures that the Integrity of The Bahamas as an international financial centre is maintained. As a sovereign nation for more than 40 years, successive governments have consistently demonstrated the country’s commitment to international best practices, cooperation in the administration of justice, international tax transparency, anti-money laundering and the countering of financial terrorism initiatives. Bahamian regulators are well regarded and active partners with international peer groups and agencies. There is collaboration between government and the private sector to ensure that The Bahamas remains a well regulated, blue chip international financial centre. In fact, The Bahamas Financial Services Board (BFSB) was established in 1998 to create a public-private partnership and forum for open dialogue about the challenges and opportunities facing the country’s second most important economic sector. The integrity of the jurisdiction is evidenced by the following:
* A strong anti-money laundering, counter financing of terrorism Regime;
* Tax Transparency and Cooperation
* US Foreign Accounts Tax Compliance Act implemented (FATCA Compliance); and
* Commitment to Automatic Exchange of Information/The Common Reporting Standard
**A Strong Anti-Money Laundering (AML) and Counter-financing of Terrorism (CFT) Regime:**
The Bahamas always has been committed to complying with international best practice and has fared well in its Phase II ‘Peer Reviews’ by the OECD’s Global Forum. In fact, The Bahamas has been deemed “largely compliant” with the OECD’s existing standard of exchange of information on request. The jurisdiction has gone on record with its intention of attaining and maintaining *”the very highest levels of conduct as a clean jurisdiction, complying with the highest standards to prevent the abuse of its financial system by money launderers and criminal elements”*. It has committed to satisfying recommendations coming out of the Caribbean Financial Action Task Force (CFATF), and Financial Action Task Force (FATF) in relation to simplifying and making more efficient The Bahamas’ cooperation with foreign jurisdictions in legal proceedings. Some of the key elements from the rounds of The Bahamas’ regulatory reform are as follows:
* In 2000 The Bahamas eliminated bearer shares;
* Since 2001, there is the filing of a register of directors and officers;
* The law mandates that financial institutions have Know Your Client/Client Due Diligence as well as Counter Financing of terrorism processes. Further, regulators have issued guidelines to industry outlining best practices for verifying customer identity and for developing anti-money laundering procedures and measures to prevent terrorist financing;
* There is a regulatory framework for the reporting and investigation of suspicious transactions;
* There are independent inspections and regulatory examinations of financial service providers including corporate service providers for compliance with AML/CFT laws;
* The 2000 legislative restructuring included the Evidence (Proceedings in Other Jurisdictions) Act and the Criminal Justice (International Cooperation) Act. The former regulates cooperation by Bahamian courts in civil matters while the latter regulates such cooperation in criminal matters. The 2000 legislative restructuring included the Evidence (Proceedings in Other Jurisdictions) Act and the Criminal Justice (International Cooperation) Act. The former regulates cooperation by Bahamian courts in civil matters while the latter regulates such cooperation in criminal matters.
**Tax Transparency and Cooperation:**
In order to meet international standards for transparency and tax cooperation, The Bahamas has entered into 33 Tax Information Exchange Agreements (TIEAs). On March 20, 2010, The Bahamas achieved the G20 standard on Transparency and Cooperation in Tax Matters. This standard was first promulgated by the Organisation for Economic Cooperation and Development (“OECD”) in the 1990s. In 1998, the OECD sought to have 40 plus countries, including The Bahamas, adopt this standard. The Bahamas, in a 1999 presentation to the OECD, insisted on a level playing field. This principle was formally accepted by the OECD in 2002 and represented in a communiqué issued by The Bahamas in 2002.
For more than 10 years, The Government of The Bahamas held firm to this principle and kept faith with the industry; likewise in 2009, The Bahamas, as an integrated member of the international community, moved to implement the standard immediately following global consensus and the achievement of its key pre-condition of a level playing field. Over a 12 month period culminating in March 2010, The Bahamas successfully concluded 19 agreements to achieve the standard. Today, The Bahamas facilitates international co-operation in tax matters through these various exchange of information agreements.
**The Bahamas is FATCA Compliant:**
On 3 November 2014, the Bahamas and the US signed their Agreement to Improve International Tax Compliance (the Agreement) and to Implement FATCA based on the Model I IGA. To accommodate the non-direct tax system in The Bahamas, the IGA is a model 1B (non-reciprocal) IGA. As an IGA partner jurisdiction, Bahamas-based Financial Institutions will not be subject to a 30 percent withholding tax on US source income, unless they fail to meet the requirements set out in the IGA and in Bahamas domestic implementing legislation.
Under the terms of the Agreement, Bahamas Financial Institutions will provide the Bahamas Competent Authority with the required information. The Bahamas Competent Authority will forward that information to the Competent Authority in the US. The Agreement is an international instrument for exchange of information for tax purposes between the Bahamas and the US.
**Commitment to the Automatic Exchange of Information/Common Reporting Standard:**
The government has restated commitment to the bi-lateral approach. Industry and government are collaborating on the implementation strategy. Both the multilateral (OECD Convention) and bilateral or country-by-country-basis (Automatic Exchange of Information Standard/Common Reporting Standard) approaches have been endorsed by the OECD. The bi-lateral approach allows The Bahamas to negotiate with countries where satisfied that those countries will safeguard the confidentiality and security of the data exchanged. The Bahamas already has the foundation for a bi-lateral approach, namely its existing TIEAs and is committed to being a responsible international player in this regard.
With an 80 plus year track record in financial services, few jurisdictions offer the wealth management experience that The Bahamas has to offer. This heritage is the basis for the strong legal framework that has been cultivated for financial services, an investment climate that has been nurtured through years of maturity and a stable and predictable business environment anchored by the thousands of Bahamian wealth management professionals who work side-by-side with expatriate colleagues in the more than 250 financial institutions that call The Bahamas their home.
Market responsiveness has long been a part of The Bahamas’ DNA as a forward thinking IFC, and has been the basis of legislation creating innovative, client-centric products and services in a modern, compliant regulatory regime. Such innovation can be seen in the country’s evolving and often ground-breaking trust legislation. It led The Bahamas to become the first common law jurisdiction to introduce foundations. It sparked The Bahamas Executive Entity and has thrust The Bahamas into the forefront of the investment funds industry with the introduction of SMART Funds and the Investment Condominium (ICON). And with this innovative spirit it should come as no surprise that the country’s once dormant insurance business has re-emerged as a sought-after destination for captives.
The innovation experienced in the sector is fuelled by a progressive investment climate that seeks to place financial services in the context of development.
The unique geographical location of The Bahamas, just fifty (50) miles off the coast of Florida and positioned as the gateway to the wider Americas, is an undeniable advantage for The Bahamas. Its proximity to the U.S., Central and South America places The Bahamas in an enviable position to serve both our traditional and emerging markets and presents an opportunity to link commercial and financial interests. In recent years, as more and more individuals have chosen to “follow their money” with respect to where they live and work, The Bahamas with its tropical environment has become the preferred choice for many who yearn for an excellent quality of life whilst being able to manage their financial affairs. Most importantly, individuals, family offices and institutions will find a warm welcome when they come to The Bahamas as the country is committed to utilising its natural resources and cultivated assets to create an environment that is attractive to business and the enjoyment of life. Few competitive jurisdictions can claim – or duplicate – the business and lifestyle combination which exist naturally in The Bahamas.
**The Jurisdiction of Choice**
Regulation, Expertise, Innovation and Location are the pillars of financial services in The Bahamas. In combination they form a compelling reason to consider The Bahamas as place to do business and will continue to guide the jurisdiction’s pathway to be a provider of superior financial products and a world class client experience.