The world is emerging from a challenging period. The global pandemic dealt a harsh blow to tourism-dependent economies like The Bahamas', and many questioned whether there would be a domino effect throughout other industries.
While many industries were impacted, financial services, as our second largest industry, proved resilient throughout the pandemic, staying steady in rapidly changing circumstances affected by changes in service delivery channels and the ongoing transformation of the regulatory landscape. Today, we remain a major global destination for wealth management.
On a per-capita basis, no other country can match the level of expertise teeming within our borders. We have an entire cadre of legal, accountancy, trust, banking, and insurance professionals working with and for financial services firms of all sizes and specialisations in the planning, creating and managing of our world-class offerings. Our in-country expertise is a major driving force behind our success, serving as the springboard that propels our financial services sector through the best and worst times.
Over the years, despite multiple economic shocks and a rapidly evolving global financial services market and regulatory landscape, The Bahamas continues to lead the way. You will find secure anchorage for your financial services and investments within our borders. We refer to our approach as measured innovation: each step we take is well-planned and strategic and balances the preservation of our historical strengths with the need to evolve and lead the way constantly.
A prime example of measured innovation at work is within the securities sector. "The Bahamas has done and continues to do substantial work to ensure that we reset the outdated and inaccurate “tax haven”, “non-compliant” narrative,” said Christina Rolle, Executive Director of the Securities Commission of The Bahamas. “It is important to us that the jurisdiction not only keeps pace with but anticipates international best practices and is viewed globally as best in class with respect to our regulatory framework. This also is a big part of our story and the evolution and innovation you see in our financial services industry.”
Executive Director Rolle, explaining the strategy used to balance innovation with regulation, added that “If you take The Bahamas' approach and positioning concerning the enactment of the Digital Assets and Registered Exchanges Act, 2020 as an example, you can see that we, as regulators, took the time to speak with industry, to understand the needs of operators and more importantly to understand where regulation can play a much-needed role for the protection of consumers and investors. In designing the legislation, we took a pragmatic approach that would enable us to address the space with robust authority but also with flexibility as it evolves. This is always the approach in The Bahamas – where regulators study the markets and take into consideration the needs and feedback from stakeholders.”
Echoing these sentiments, Wendy Warren from Caystone Solutions said, “I think The Bahamas has been fearless in its confidence that we can strike the right balance. If we think or perceive there’s a need to tweak, we will tweak, but we will not stand still, we will always be responsive and reflect the needs of our clients and our partners.”
Alexander Christie, Partner at McKinney Bancroft & Hughes, reflected on the culture of innovation that the jurisdiction has created over the years. “The Bahamas historically has been very proactive in seeking out what is needed in the market. Let me give you a few specific examples: The Bahamas has very flexible trust legislation in terms of giving its settlor certain retained powers. We also have the Foundations Act, which is really a civil law structure, but that was integrated into our common law regime in The Bahamas to attract a different type of investor. Or look at our ICON fund structure, which was targeted specifically for the Brazilian market. We were quite innovative with the Smart Funds regime, which was really tailored for investors to allocate different risks to satisfy a very particular investor.”
As the second-largest contributor to our GDP behind tourism, the financial services industry is a central pillar of the Bahamian economy. Successive administrations have demonstrated their commitment to sustained innovation and success in this sector. The government remains committed to avoiding adverse listings, harnessing the potential within existing and new niches, and ensuring that our financial services regime continues to provide market-responsive wealth management vehicles.
As a result of the investment of a tremendous amount of resources, you will not find The Bahamas on any existing blacklists. We have met and exceeded global standards for anti-money laundering and counter-terrorism financing measures and established the highest tax transparency and compliance levels. Investors can expect consistency, stability, and security within the confines of the financial services sector.
We have responded to and adopted EU standards related to economic substance, ensuring that entities in The Bahamas are managed and conducting adequate business and removing all preferential exemptions for local entities operating commercial activity outside the country. We embrace change as an opportunity for growth.
Greater transparency measures for mandatory disclosures and the arrival of global minimum corporate taxes are issues that we are prepared to address in the near future. You can be sure that our response to these looming issues will be thoughtful and maintain clearly articulated, balanced policy positions. Our number one priority, as always, is to protect the interests of our investors, clients, and other key stakeholder groups.
You can expect to see sustained jurisdictional excellence and world-leading innovation from our financial services sector. This is increasingly important as the world grapples with the current inflation crisis, and economic indicators have spurred economists to begin warning of an impending recession. Savvy investors are positioning themselves to secure their assets and future while taking advantage of a re-opened global economy.
One of the critical elements of the Bahamas infrastructure is a robust public-private partnership where communication is open and frank among all three participants involved with this agenda: government, regulator and private sector. This public-private dialogue facilitates our engagement in creating and investing in our wealth management pedigree.
Comments by Chris Illing, ActivTrades Corp, speak to the positive impact of this partnership. “In foreign exchange, we had major regulatory changes last year and I just love the dialogue that you can have with the regulators. They were looking for real input from our industry, how we can kind of make it more compliant and safer, but don’t hinder the growth and still give us a flexibility that other jurisdictions don’t have. Our dialogue was positive. It's like the old paradigm of onshore and offshore jurisdictions disappearing and that in a sense we've become a bit like midshore now, so not offshore anymore.”
To many in The Bahamas, the onshore-offshore debate has been fueled by misunderstanding or ignoring the true essence of a jurisdiction like The Bahamas. “I will be a little bit provocative and say I think there was never an onshore and an offshore,” said Caystone’s Ms. Warren. “We know many places in major economies provide similar features just like The Bahamas provides. We perhaps were ahead of the curve, vis-à-vis these other "onshore" locations in terms of our movement towards transparency, towards accountability, towards regulation. It was easy to look at a small country and label it as offshore. But the reality is, we've always operated in a manner that was consistent with what was happening onshore.”
The defining turning point for this transition was in 2000, when there was considerable pressure on many jurisdictions, including The Bahamas, to increase their regulation and transparency. Christel Sands-Feaste, Higgs & Johnson noted, “We have done that and now operate at a blue chip-level in terms of our regulation. We provide financial services in a way that is regulated, responsible and consistent with international best practices. Despite encountering considerable headwinds, we continue to retool, re-adjust, and elevate the standard of the offerings and the jurisdiction. When The Bahamas was made an IOSCO Category A signatory, that was a huge win in the investment funds space, particularly considering the country's marketing focus on Latin America. Even in the digital assets space, where the regulatory framework is fairly new, the policymakers have indicated there are some refinements that need to be made and their commitment to effecting those changes as soon as possible.”
As a jurisdiction, we lean into our geopolitical advantages as a global transhipment hub – a gateway to the Americas – and as a politically, economically, and socially stable nation with a strong international standing. While global markets and economies remain in flux, The Bahamas' financial services sector remains a bulwark of strength, stability, and consistency. This is not by chance. Through the strategic development of the industry, we have created optimal conditions for our financial services stakeholders to grow and protect their economic interests.
This is why leaders in the FinTech industry, for example, are now making moves to establish a foothold in The Bahamas. Valdez Russell from FTX, a blue-chip digital assets exchange which has established its global headquarters in Nassau, said there are many reasons for this optimism for not only FinTech companies but other areas of business. “As we build our global headquarters here in Nassau, we have our teams from around the world come in and out, we are seeing more people visit the jurisdiction to understand what is attractive,” he said. “We are seeing the strength of our democracy, we’re seeing our modern infrastructure and access to talent as all being incredibly attractive added to the fact that we’re in a good time zone which may differ from other jurisdictions. We should see more entities being in The Bahamas in such a way that other jurisdictions will want to know what it is that we’re doing. We just so happen to be a good country and a great place to raise a family, to consider retirement, to invest in. And while jurisdictions have other competitive advantages, it is our people who genuinely make the difference real.”
During these uncertain times, it is more critical than ever for investments to be anchored in a safe harbour. The track record of our financial services industry speaks for itself. We have weathered storm after storm. The Bahamas will continue to maintain its position as a global destination of choice for wealth management and wealth generation. We are committed to keeping our status as the complete and compelling choice for financial services for years to come.
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.