Barbados Pushes Regulatory And Compliance Plans

Since the onset of its international business sector some four decades ago, the Caribbean island of Barbados has been unequivocal in its actions and desire to be a responsible and a competitive player in this sector.

Some estimates have put global financial services at about 20 to 25 per cent of the global economy. This involves insurance, banking, wealth management, financial and other investments, as well as corporate services that support such activity.

Conservative estimates suggest the global sector reached US$22 trillion in 2021, even though its growth was scaled back as a result of the recession spawned by the COVID-19 pandemic.

Barbados’ contribution to this mammoth level of global economic activity is comparatively small; however, in terms of its value to the Barbados economy, the impact is significant.

During the pandemic, when the world’s volatility was at its highest, and economic activity slowed to a crawl, it was the resilience of the island’s global business sector that helped to sustain Barbados’ BDS$5 billion economy in 2020 and 2021.

Derrick Cummins, the Chief Executive Officer of Amicorp Barbados and the Immediate Past President of BIBA - The Association for Global Business, highlighted the reliability of the sector to the island when other pillars of the economy were compromised under the weight of the pandemic.

The sector provided approximately 70 per cent of corporate revenue collected by the Mia Amor Mottley-led administration in the 2020-2021 financial year.

And while Government has argued for a more transparent and fairer process of assessing the country’s compliance with various evolving standards of the global financial sector, Cummins reinforced his country’s pledge to be an exemplary financial centre.

“We are in a global industry, and we are serious players. Like any other business, there are ups and downs – and there are always things that will cause us to re-visit our platforms and our core, and to assess what we can do differently and better.

“That is a natural course of business for a single corporation, for multinationals and for an industry. We must get used to this, and where necessary, to reinvent ourselves and reshape our services,” he observed during a launch of the organisation’s Global Business Week 2021.

Presently, the island is the world’s seventh largest domicile for captive insurance companies. Relying heavily on the range of experienced and highly skilled minds and management on the ground, Barbados continues to expand this area of financial services.

Barbados is a key domicile for Canadian corporates and these entities have relied on an enabling double taxation agreement (DTA) between Canada and Barbados, established some 43 years ago.

According to the Canadian Government, Barbados is the sixth largest recipient of Canadian direct investment, and in 2021 the stock of Canadian Direct Investment Abroad in Barbados was CAN$45.1 billion.

Though attractive to Canadians, Barbados’ treaty network is among the most extensive in the Caribbean with more than 40 DTAs and bilateral investment treaties in force. Negotiations are currently underway to further expand that network to include more countries in Africa, South America, and Asia.

In addition, the country is expanding and strengthening its infrastructure and processes to enhance its attractiveness as a nearshore location for business process outsourcing.

Invest Barbados is the state agency dedicated to ensuring an ecosystem that is conducive and supportive of foreign direct investment in the country. Its Chief Executive Officer,  Kaye-Anne Greenidge emphasised: “Barbados remains a resilient global finance centre . . . built on a stable environment underpinned by transparency and compliance.”

Despite the tremendous gains of the international business sector; and its importance to the overall economic growth of Barbados and contribution to the human and social development on the island, Barbados concedes there are headwinds and challenges that the sector is prepared to confront.

Shifting regulatory and compliance standards established and imposed by the Financial Action Task Force (FATF), the European Union and the Organisation for Economic Cooperation and Development (OECD) are among those challenges.

As Cummins notes, “No industry, profession, sector, or country is without blemish and that is why Barbados, from the development stage of this sector, and to this day, has engaged in robust regulation.”

The financial sector executive reiterated the country’s aims. “We are a proud people for whom reputation is everything.  That is why we support the efforts of our government and regulators to ensure that we are removed from any adverse lists which impact our industry’s expansion.”

Barbados is not just talking the talk, it walks the walk, as it assures companies registered here of the stability, continuity, and common-sense regulation of the sector, while also responding to international compliance requirements.

Additionally, Barbados has taken a whole-of-country approach to protect and ensure the sustainability of the international financial services sector and its desire to be a compliant participant in global financial services.

Recently, Invest Barbados along with BIBA hosted a Global Business Industry Update at which the island’s key regulators presented.

Updates were provided by representatives from the Attorney General’s Office, the Financial Services Commission, Barbados Revenue Authority (BRA), the International Business Unit (IBU), and the Corporate Affairs and Intellectual Property Office (CAIPO).

Kevin Hunte, the Director of Government’s IBU gave the assurance that Barbados was not only robust on regulatory matters but on business facilitation.

Though Barbados still maintains some exchange controls, it was also expanding the list of entities under the Financial Institutions Act that are permitted to hold foreign currency accounts.

Barbados is a jurisdiction that seeks to attract reputable businesses of substance. To this end, Hunte disclosed that Barbados has started economic substance reporting for no-tax and nominal tax jurisdictions.

In another effort to ensure regulatory compliance, Barbados is in the process of establishing a Beneficial Ownership Register to ensure that competent authorities and law enforcement agencies have timely access to accurate beneficial ownership (BO) information for all legal persons in Barbados, and to effectively monitor companies’ obligations to maintain BO information at their registered offices.

This move is among the many tangible demonstrations of the island’s capacity to effectively monitor this area identified by the OECD in its review of Barbados.

Another development outlined in the update from the IBU was the overhaul of the island’s extensive network of bilateral and investment treaties. The aim is to make them even more effective and fit for purpose in the new global environment.

Cheryl Greenidge, Director of Bank Supervision at the Central Bank of Barbados, anti-money laundering (AML) technical expert and lead negotiator with the Caribbean Financial Action Task Force, outlined how Barbados has proactively addressed some of the items in the FATF/Barbados approved Action Plan ahead of the agreed timelines.

Barbados’ regulatory stance, she explained, was for sustained, robust representation made around context, materiality and FATF processes.

Among the areas that resulted in a regulatory upgrade in the June 2022 reporting cycle for Barbados were the establishment of the new Compliance Unit under the Anti-money Laundering Authority with appropriate resources; the commencement of Barbados’ risk based approach to on-site and off-site inspections; and the risk assessment methodology that was developed.

On the matter of beneficial ownership information, the country made robust submissions and arguments on the phased rollout, monitoring, supervision and enforcement by CAIPO’s Compliance Unit.

Another example of Barbadian regulatory authorities working cohesively to ensure the jurisdiction is not only exchanging information, but that its systems are effective, and the regulations practised, came from the BRA’s General Counsel Graeme Stoute.

The BRA’s approach, for example, in relation to the Foreign Tax Compliance Account Act is to encourage voluntary compliance by providing as much information as possible to ensure persons are aware of their obligations under the tax law.

At the same time, the BRA is also pursuing actions to determine the incidence of non-compliance and where it may exist, to issue notification of planned audits.

CAIPO in its regulatory role is currently risk rating all registered entities in the country, while undertaking on-site inspections of those deemed as high risk.

As Prime Minister Mottley has reiterated on several occasions, Barbados is committed to the highest standards of operation in the global financial space.

At the Caribbean Financial Access Roundtable in Barbados, attended by a delegation of Financial Services Committee members of the United States Congress, CARICOM heads of state and government, as well as senior North American banking executives last April, the Barbadian leader said the country was “unflinching” in its support of international efforts to stop money laundering and the financing of terrorism.

Learn more about Barbados’ welcoming investment climate: www.investbarbados.org