Wendy C. Warren
BFSB CEO & Executive Director
The Bahamas shares a common interest with the concerned multinational agencies in seeking a well-regulated global market for the conduct of international finance. The events and developments in The Bahamas since the middle of 2000 point to the country’s resolve to redefine its financial services landscape and retain its well-deserved image as a sophisticated and progressive, yet responsible jurisdiction.
Legislative and administrative changes have been based on the principle of constructive cooperation involving a wide-ranging review of the financial services legislation and practices.
This process began with a commitment by the Government to bring The Bahamas’ financial services sector into compliance with new emerging international standards and practices as expressed in the Core Principles of the Basel Agreement on the Regulation and Supervision of financial institutions. It also involved a series of multilateral exchanges with governments and their regulatory agencies in the United Kingdom, Europe and North America, international financial institutions with operations in The Bahamas and the financial sector in The Bahamas to assess how best to respond to the multinational initiatives.
LEGISLATIVE INITIATIVES BY GOVERNMENT
The wide-ranging program of legislative and administrative changes introduced, was designed – in large part – to upgrade existing anti-money-laundering processes. This included the amendment and/or enactment of relevant legislation and the introduction of new administrative steps to strengthen and enhance the supervision of the financial services sector.
The Bahamas has expended considerable financial and human resources to ensure that the legislation is implemented effectively. The various institutions created by the new laws have been established, and are operational, and Government has continued its consultation process with the private sector to ensure smooth implementation.
The regulatory agencies in the Bahamas having oversight for the enhanced regulatory regime are:
*Central Bank of The Bahamas
*Inspector of Banks & Trust Companies
*Financial Intelligence Unit
*Securities Commission of the Bahamas
*Inspector of Financial and Corporate Services
*Registrar of Insurance Companies
The Evidence (Proceedings in Other Jurisdictions) Act, coming into force last August, also created an International Legal Cooperation Unit, Office of the Attorney General.
In each case above, the Government has allocated substantial funding for physical infrastructure as well as human resources. Further, the Government has committed, $1.5m to the full funding and expedited implementation of the Bahamas Integrated Justice Information System. This will create an integrated LAN for all computers in the law enforcement network.
PRIVATE SECTOR RESPONSE
The financial institutions in the Bahamas have over the past few years transitioned their businesses to adhere to the principles of the FATF. This adherence to counter money laundering polices was in part due to:
(i) the code of conduct established in 1985 by the Association of International Banks and Trust Companies in the Bahamas,
(ii) the legislative efforts by the Government in 1996, and
(iii) the adoption of international standards by branches and subsidiaries of international institutions.
In fact the FATF wrote to The Bahamas just before the “unco-operative” listing with commendation for progress to date in strengthening its anti-money laundering regime.
Since the introduction on the new regime, financial services firms are adjusting business and administrative practices to ensure full compliance. Institutions are well on their way to adopting the new standards with the view of compliance by the established deadlines.
Worthy of note is the strong compliance culture that has been fostered due to the weight of the law and which will sustain a robust anti money-laundering regime. This compliance culture has also brought an increased vigilance in the service providers in the Bahamas; this will serve the Bahamas well as it seeks to protect its reputation as a credible jurisdiction for the conduct of legitimate business.
The industry has always felt that The Bahamas is among the first class jurisdictions; however, these multinational initiatives caused both government and industry to take a close and aggressive look at what had to be done to keep pace with the evolving international standards for bank regulation and supervision — while at the same time not undermining our legitimacy as a preferred center for trust, investment products and other financial services.
Throughout the process, The Bahamas has remained firm in its resolve to eradicate any opportunity for compromise of the soundness and integrity of its financial services industry.
The new and amended legislation, a strengthened regulatory structure and a cohesive and confident private sector has positioned The Bahamas as an even stronger, more competitive international financial services center. Long-established as one of the foremost international financial jurisdictions and a key operational base for many of world’s most recognised and respected financial organizations, The Bahamas has preserved its crucial tax neutrality advantage in the new financial architecture that has emerged in the country. In the process, it has become an even more attractive jurisdiction in which to do business.
(Extract from Presentation at Financial Industry Seminar “The Bahamas: The New Financial Services Sector Initiative – Charting a New Course” hosted in Miami, Florida by Montaque Securities International Ltd. and Gibson, Rigby & Co.)