Resilience Marks The Bahamas Financial Services Industry

None of these challenges have impeded the country’s financial services industry from conducting business and delivering bespoke solutions to meet changing diverse client needs. Robust business continuity plans that are in place with all financial institutions have allowed businesses to continue doing business during Hurricane Dorian last year and recently as the world has dealt with COVID-19. The foresight of implementing vigorous business continuity measures have clearly been in play in cushioning the implications of these events and reinforces why the country is seen by many as an ideal location for financial institutions and the services they provide to their international client base.

This adaptability has been especially evident in The Bahamas’ response to international initiatives which has ensured adherence with the highest standards of compliance with every internationally agreed standard of conduct.

The Bahamas has evolved over the years from being an “offshore” centre, with all that the word connotes, to the world’s premier international banking and trust business centre in the Caribbean and Latin American region. The jurisdiction has been, and remains demonstrably and effectively, unwelcoming to those seeking to engage in questionable and illegal activities. Further, The Bahamas is a cooperative and transparent partner in tax and related matters. Acknowledgement of this commitment was the news earlier this year of The European Union’s Economic and Financial Affairs Council’s complete removal of The Bahamas from its List of Non-Cooperative Jurisdictions for Tax Purposes. Against this background, The Bahamas joined more than 108 countries in the OECD’s Global Forum in formally acceding to The Multilateral Convention on the Mutual Administrative Assistance in Tax Matters (“The Multilateral Convention”). The legislative framework for implementation of The Common Reporting Standard (CRS) was also put in place by The Bahamas in 2016. The integrity of the jurisdiction is further evidenced by a strong anti-money laundering, counter financing of terrorism regime and implementation of the US Foreign Accounts Tax Compliance Act  (FATCA Compliance).

The Financial Action Task Force (FATF) has acknowledged that The Bahamas has remediated the issues identified in its assessment of  the country’s anti-money laundering framework and had agreed to an onsite inspection as a part of the formal process of exiting the FATF ‘Grey List’. This onsite visit was scheduled for April 2020 but had to be postponed as a result of the COVID-19 pandemic. The Bahamas remains buoyed by The FATF’s announcement, notwithstanding later pronouncements of the intention of the European Union (EU) to include The Bahamas on a list of high risk third countries which is scheduled to effect in October 2020.  

The Bahamas has expressed its disappointment to the EU over its intention to include The Bahamas on the list of high risk third countries and is engaged with EU officials at the highest diplomatic and political level to demonstrate the strength of The Bahamas’ AML/CTF regime. The Bahamas maintains that it is attaining the highest standards in the fight against money laundering, terrorist financing and other identified financial crimes risks. Further, The Bahamas continues to liaise with the FATF to ensure that the on-site inspection takes place as soon as possible with a view to The Bahamas being removed from the ‘Grey List’ prior to finalisation of the EU AML blacklist in October 2020.

A Shared Commitment

Financial services are the second most important industry in The Bahamas after tourism. As such, successive governments have recognised the importance of the industry to the country’s continual economic and social development. The financial sector’s viability is therefore a priority for both public and private sectors alike.

This level of importance is indicated by the responsiveness of the legislature and regulators to the needs and demands of the market, as well as the swiftness with which these processes can take place. It is also demonstrated by the balance that regulators strike between ensuring that the financial services industry keeps its integrity, while still encouraging lively competition. What’s more, The Bahamas has a government ministry dedicated solely to financial services, and a shared commitment exists between the public and private sectors to help promote and develop the industry.

Transparent Environment 

With a history of financial services dating back to the 1930s, The Bahamas ranks among the world’s most significant international financial centres (IFCs). The jurisdiction is one of the world’s leading international banking centres, alongside New York City and Miami in the United States, London, Switzerland, Toronto, Dubai, Hong Kong and Singapore; and it is the preeminent banking jurisdiction of the Caribbean region. The centre comprises several sectors including banking, private banking and trust services, mutual funds, capital markets, investment advisory services, accounting and legal services, insurance, and corporate and shipping registry. While providing the largest offering of international banks – US, Europe, Asia and Latin America – in the region, including South and Central America.

Wealth management accounts for a large part of the jurisdiction's financial sector. For many high-net-worth individuals (HNWIs), banking and wealth management outside one’s home country are simply good business and a wise avenue for investment. There are several reasons for this.

First, multi-national and multi-generation families and family businesses find that they can preserve their wealth for the long term and transmit it to younger generations with ease when they site some of their assets in a jurisdiction with trust laws. Their home jurisdiction might be subject to civil unrest or have a history of political or financial instability, while its government might want to expropriate their wealth and subject them to capital controls.

It is therefore important for HNWIs to offset these risks by keeping at least some of their assets in a jurisdiction that does not suffer from these problems. Further, international banking and wealth management centres often possess financial products and services that are superior to those found in their home countries.

The Jurisdiction Of Choice

 ‘Expertise, Innovation and Location’ are the pillars of financial services in The Bahamas. In combination with the resilience of the jurisdiction in the face of international initiatives, 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.

Dr. Tanya C McCartney
Dr. Tanya McCartney is a UK trained barrister and chartered banker who since 2016 has served as the CEO and Executive Director at the Bahamas Financial Services Board. Over the past two decades Tanya has distinguished herself as a hardworking professional with expertise in the law, regulatory and gaming compliance, risk management, banking, and international financial services. She holds a Doctor of Business Administration from Edinburgh Napier University (Scotland, U.K.) for a programme of work entitled “Perspectives on Leading change: Exploring Change Readiness Strategies used in the Bahamian Financial Services Sector”. Tanya was appointed to the Senate of the Commonwealth of the Bahamas in 2001 being one of the youngest persons ever appointed to the Upper House where she served for five years. She vied for a seat in parliament in the 2002 general elections. She is a former President and founding member of the Bahamas Association of Compliance Officers. She is the co-chairman of the Bahamas Chapter of the global Association of Certified Anti-Money Laundering Specialists. Tanya is also an adjunct professor in the School of Business at the University of the Bahamas. She has served on several government boards over the years including The Public Hospital’s Authority, The University of The Bahamas and currently serves as Chairman of The Police Complaints Inspectorate and Deputy Chairman on The Airport Authority.