Tanya McCartney, BFSB, examines how The Bahamas have reacted to international initiatives on tax transparency with a balanced approach.
Q&A: With the Antigua and Barb…
Innovation in wealth and asset management services provided in The Bahamas parallels the level of changes in international regulatory standards heralded by the revised FATF recommendations, FATCA and other such initiatives. The Bahamas has taken a balanced and cooperative approach in responding to these worldwide initiatives at both the legislative and product level. This approach balances the need to ensure that clients operating in a compliant manner have the right to privacy with The Bahamas commitment to being a cooperative and transparent jurisdiction that adheres to international best practices. Indeed, The Bahamas has been fully engaged in the work of the various multilateral organizations. As a result, The Bahamas achieved a largely compliant rating in the Phase 2 Peer Review process of the Global Forum, which evidences its commitment to the practical effectiveness of its Tax Information Exchange Agreement (TIEA) obligations, and intention to ensure the effective implementation of the FATF revised standards.
The Bahamas has to date signed over 30 TIEAss and has implemented rigorous KYC/AML standards with regulated financial institutions being required to complete effective due diligence on clients.
Provided the timelines remain as currently contemplated, The Bahamas is expected to adopt the OECD’s Standard on the Automatic Exchange of Information (AEOI Standard) - through bilateral mechanisms - by September 2018. Of utmost importance to The Bahamas is that the receiving country is an ‘appropriate’ country for the receipt of such information, meaning that such country has in place the safeguards necessary to ensure the confidentiality, data protection and proper use of the information exchanged.
The Bahamas has also moved forward with its Model 1 IGA with the US in respect of FATCA which will include a secure FATCA reporting system, the establishment of The Bahamas Competent Authority and a number of other elements to effectively manage compliance with FATCA Model 1 IGA requirements. In keeping with the country’s public-private sector partnership for the development and management of its financial services industry the Ministry of Finance which is responsible for FATCA compliance, has worked closely with the financial services industry to ensure its views were incorporated into the Bahamas FATCA solution.
The Bahamas is the first independent country in the region with IOSCO ‘A’ Status, which it received last year. Appropriate steps are being taken to raise its profile as an attractive funds centre. To succeed as an international funds centre requires not only a proactive regulator but a willingness to respond to the changing needs of the market and develop new products accordingly.
Aside from securing the “A” Standard with IOSCO, The Bahamas’ financial regulator, the Securities Commission of the Bahamas (SCB) takes innovation seriously when it comes to furthering the evolution of its funds industry. For example, an unrestricted fund administrator on the island has oversight capabilities and delegated authorities that administrators in other jurisdictions simply do not have. They have the SCB’s imprimatur to register and launch Professional and SMART Funds (not Standard Funds), which brings undoubted speed-to-market benefits to the manager and streamlines the whole licencing process. Ongoing supervision is then conducted by the SCB in line with international standards.
About the Author
Tanya C McCartney CEO and Executive Director, Bahamas Financial Services Board, Tanya McCartney was appointed CEO of the Bahamas Financial Services Board in December 2015. She is a UK trained barrister and chartered banker. Her professional career began in 1997 as Assistant Counsel in The Office of the Attorney General. Since 1999 she has held senior positions in financial services.