Private wealth management is the foundation of the Bahamas’ financial services industry. With its historic commitment to providing high quality service to families that span the globe, the Bahamas is in fact one of the world’s foremost wealth management centres. The strength of the country’s private wealth services has contributed to the Bahamas becoming a mature financial centre, whose services to a global clientele now include the full range of private banking, estate planning, asset management and fund administration services; the Bahamas also provides services to the international capital markets, insurance and maritime industry. Corporate registry and legal and accounting services are at the core of the multitude of services available in the Bahamas.
This diversity not only reflects the Bahamas’ long history in providing financial services, which dates back to the 1930s, but it also reinforces the jurisdiction’s ongoing commitment to maintain and increase its presence as a provider of high quality financial services. Furthermore it demonstrates the importance and foresight of the many progressive developments in the jurisdiction as it continues to meet the requirements of an increasingly sophisticated financial services marketplace.
A Well-regulated Jurisdiction
Regulation in the Bahamas has also served the industry well. Policy makers and regulators are committed to open and ongoing dialogue with the private sector. This has created an environment designed to encourage the continued growth of the sector through adherence to internationally accepted regulatory principles, and efficiency in their administration.
Since the banking industry itself is the cornerstone of the country’s financial services industry, the Central Bank of the Bahamas (Central Bank) plays a lead role among the country’s regulatory agencies and enjoys full autonomy. Its stature within the Bahamas is reinforced by its long-standing presence in the jurisdiction; the Central Bank in fact has been regulating banks and trust companies in the Bahamas since 1965. The Central Bank along with the Securities Commission of the Bahamas and the Office of the Registrar of Insurance both adhere to the standards established by the relevant international agencies and participate actively, as opportunities are presented, within these agencies.
This philosophy, that the Bahamas itself operates in a globally integrated market for financial services, saw the Bahamas lead the way among international financial centres (IFCs) in being the first to criminalise money laundering in 1996; and it has continued to give keen attention to this area to ensure the country’s counter money laundering legislation is continually advanced to meet global best practices and standards.
Market responsiveness is a key focus of the jurisdiction. The Bahamas has been very careful to ensure that its legislative and administrative frameworks are continually refined, facilitating legislation and products to meet emerging market needs.
Examples of the jurisdiction’s progressiveness include:
With more than 200 banks and trust companies located in the Bahamas, many of the world’s largest and most prestigious financial institutions have branches or subsidiary operations in the jurisdiction, taking advantage of the country’s stable political and economic system.
The worldwide reach and influence of these institutions, combined with the entrepreneurial character of the country’s well-regarded medium and smaller institutions and related financial service organisations, allows the Bahamas to look at business opportunities on a global basis.
The integrity and continuity offered by institutions located in the Bahamas provide a secure environment. With personnel committed to the local community, continuity of service is more predictable and secure in the Bahamas, and is the basis of its many long-standing institutional and client relationships.
Growth is a priority for the Bahamas.
The jurisdiction has a high capacity to meet the needs of institutions through the availability of qualified professionals and land in an ideal location.
A Home for Business and Pleasure
As the second largest contributor to the Bahamian economy, the financial services industry also provides essential linkages to other vital business sectors such as real estate.
The Bahamas’ tropical environment and location offer lifestyle benefits that more and more individuals are finding attractive as they increasingly choose to ‘follow their money’ and acquire second homes, or relocate permanently in the country.
Second home ownership by global high net worth families is on the rise with the presence and continued development by world-renowned organisations spanning the many islands of the Bahamas.
Immigration laws and regulations allow non-Bahamians to reside in the Bahamas under several scenarios.
A permanent residence permit provides accelerated consideration to applications from major international investors and owners of residences valued at a minimum of US$500,000. There is a one-off government fee of US$10,000 and US$100 for spouses and dependent minors.
The annual residence permit for those wishing to reside in the Bahamas annually does not require the applicant to purchase a 'second home'. The government fee for this permit is US$1,000 for the head of household, and US$25 for each dependent.
Many of the country’s features complement and support the financial services sector including a robust information communication framework and a wide variety of first-class office facilities and business support services.
From Europe, commercial airlines offer direct daily flights from London – and shortly direct from Paris – while from North America there are daily flights to Miami (several times a day), Atlanta, New York, Chicago, Boston and many other US cities and Toronto.
There is also an excellent private fixed-based operation (FBO) in New Providence and Abaco catering to those who travel by private jet with all of the usual supporting amenities. In total the Bahamas has 14 international airports located in New Providence, Grand Bahama, and a number of family islands.
The Bahamas also has a large number of marinas able to accommodate even the world’s largest yachts and numerous ports of entry.
The nation's 23 seaports also include a modern container facility – one of the largest in the region of the US eastern seaboard – in a 200-square-mile free trade zone on Grand Bahama. This strategically located and modern international container port is ideal for the trans-shipment of goods to and from ports in North and South America. The city of Nassau also has a major cruise ship port. The Bahamas ranks number one in the world for cruise ship registry and number three in total world tonnage.
A Welcoming Environment
An independent nation since 1973, the Bahamas marked 275 years of parliamentary democracy in September 2004 which ranks it as one of the oldest, most vibrant democracies in the western hemisphere. All political parties in the country support the financial services industry.
The legal system in the Bahamas, modelled on the British pattern and independent of the political process in the country, provides a well-established environment for international business. The highly respected judiciary of the Bahamas includes a Supreme Court with unlimited jurisdiction in civil and criminal matters, a Court of Appeal and a final Appellate Court in the Privy Council of London.
The country provides a tax-neutral platform in which there is no income, capital gains or inheritance taxes. There is also no stamp duty on security transactions. As there is no distinction between Bahamians and non-Bahamians, a person choosing to do business or to live in the Bahamas receives the same benefits that Bahamians do.
Most importantly, advisors and their clients will find a warm welcome when they come to the Bahamas as both the jurisdiction and its institutions continue to take steps to ensure they respond to the evolving needs of the many faces that populate the spectrum of quality clients.
Wendy Warren is managing director of Caystone Solutions. Wendy served for 11 years as CEO and Executive Director of the Bahamas Financial Services Board (BFSB). BFSB works with The Bahamas government, regulators and private industry to ensure The Bahamas provides global clients with best in class financial services. Beginning her professional career in 1988, Wendy has worked in a variety of roles in the fund administration, wealth management and audit fields. She has served on various boards and committees including Bahamasair Holdings, Bahamas Electricity Corporation, Bahamas Trade Commission, the Financial Services Consultative Forum and the Bahamas Association of Mutual Fund Administrators. Wendy is a Chartered Accountant and holds a Bachelors Degree in Accounting from the University of Waterloo, Canada.