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Financial sector has unique alliance with government
WELCOME BAHAMAS - NASSAU, CABLE BEACH & PARADISE ISLAND - 2004
Financial sector has unique alliance with government
Introducing a creative mix of new products
To use a sports analogy, one of the best teams to come out of The Bahamas in recent memory was formed in 1999 when the islands? financial services industry and the government came together in an unprecedented show of solidarity.
Their cooperation stems from a commitment not to be bullied by outside forces and to reassure investors that The Bahamas is a well-run, transparent financial operation that offers a wide range of cutting-edge products. Or, as announced by Allyson Maynard Gibson, Minister of Financial Services and Investments, ?The Bahamas has a place as a financial centre alongside jurisdictions such as London, New York, Switzerland, and Singapore.?
The need for an aggressive public relations effort in a relatively short time frame came after The Bahamas began grappling with attacks from the US Treasury and others, including the Organization for Economic Cooperation and Development (OECD) and its Financial Action Task Force (FATF).
For openers, The Bahamas was being investigated by FATF, which was concerned with money laundering and the moving of funds related to drug trafficking and other major crimes. Add to this the OECD?s charge that The Bahamas was an unfair tax haven.
In essence the islands? financial services, second only to tourism as the nation?s lifeblood, was being seriously threatened. This required The Bahamas to respond as a nation. ?It became a national challenge,? says Wendy Warren, CEO and executive director of the Bahamas Financial Services Board. ?The result had not only the public and private sectors working together,? she explains, ?but the private sector working more closely together as well.?
However, the manner in which The Bahamas? reputation was being damaged with sweeping accusations drew cries of foul from many in both government and financial circles. ?Ill conceived,? was one minister?s criticism of the OECD initiative. ?Malicious? was another. ?Countries shouldn?t deal with other countries in this way in the 21st Century.?
In any case, The Bahamas had to quickly amend and introduce new laws that guaranteed more transparency, permitted the exchange of information and conformed to international regulatory standards. The upshot is that The Bahamas now has a system of anti-money laundering as good as any in the world.
?Our financial services industry was being greatly altered,? says Minister of State for Finance, James Smith. Smith points out that, in the past, The Bahamas was known for its private banking and asset administration trust business, which required secrecy and confidentiality. ?We still lead the Caribbean region in private banking,? he contends, ?but to expand our financial services industry we have to go after other types of business,? such as captive insurance.
The Bahamas redeemed
In June 2001, the FATF confirmed that The Bahamas was being cooperative in the fight against money laundering. Also, by passing an anti-terrorism bill immediately after 9/11, The Bahamas was one of the first countries to react to the new threat of terrorism financing.
Nonetheless, en route to fulfilling the regulators? requirements, there were some heart-stopping moments. For example, Julian Francis, Governor of The Central Bank of The Bahamas, tells of ?a very scary point when we got towards the end of 2000 and QJ (Qualified Jurisdiction) status had not yet been granted by the United States.? QJ status allows Bahamian companies to trade in US securities without being subject to a US 30 per cent withholding tax. ?I?m not sure that many people understood how critical that was,? says Francis.
The urgency to legislate caused government to pass laws that some in the financial community believed were too restrictive. Consequently, the measures have gone through some fine-tuning while maintaining their core structures.
A level playing field
One concession demanded by The Bahamas team was that the OECD apply its policies across the board. The country made it clear that it was willing to do whatever the 19-nation organization was prepared to do, as long as it was applied to everyone, including their own members. Although The Bahamas has signed a commitment in favour of the OECD, it said it wouldn?t go any further until other jurisdictions are made to comply with OECD rules on tax competition. ?Once you?re seen as vulnerable under attack, your attackers are likely to push until you capitulate,? says Francis. ?We?re just asking for a level playing field.?
In other areas, the government has plans to amend and update the perpetuities law and draft legislation that would permit companies to form segregated accounts, partitioning a portfolio?s assets and liabilities from the company?s assets and liabilities
as a whole.
New possibilities
Other ideas being actively discussed were the basing of charities in The Bahamas, the creation of an airline registry and an international arbitration centre. Another hot topic was how to make The Bahamas a location for creating foundations, useful in estate and inheritance planning in civil law jurisdictions. The Bahamas is a common law nation, but there?s no reason that legislation permitting foundations could not be passed, says Andrew Law of Credit Suisse Trust Ltd. Law was quoted in the 2004 Bahamas Handbook, ?We are in control of our own destiny and we believe that foundations have a proper role to play?? Many believe foundations legislation would open the door to a huge increase in business from Latin America and Europe.
Aside from the unveiling of innovative new products in post-2000, the synergy formed between the public and private sectors has once again made The Bahamas a formidable competitor in attracting investors worldwide.
Sidebar
CEO & Executive Director of the Bahamas Financial Services Board (BFSB)
Wendy Warren
In The Bahamas? financial services industry, few people are as high profile as Wendy Warren.
Warren is CEO and executive director of the Bahamas Financial Services Board (BFSB), a joint venture between the private sector and the government. The organization is devoted to increasing the quantity and quality of financial services in the jurisdiction.
Warren has a Rolodex as full as any Hollywood press agent?s. When not in her Nassau office, she?s usually attending meetings, hosting conferences, fielding media queries, and/or travelling outside the islands to promote The Bahamas as ?the jurisdiction of choice? for investors.
Along with Minister of Financial Services and Investments Allyson Maynard Gibson, Warren is charged with presenting the case for the financial services industry as a responsible one, offering commercial advantages to the world.
Warren?s ability to know what makes the financial services sector tick stems from years of being a top-flight student and business executive. Born in Nassau, she studied computer science and accountancy at College of The Bahamas. Deciding to pursue a career in accounting, Warren was able to attend a university, thanks to two scholarships ? one from KPMG, a major accounting firm, and the other from the Canadian Lyford Cay Foundation.
She opted for the University of Waterloo in Waterloo, Ontario, Canada. ?It continues to have some of the best results in Canada in the field of accountancy,? she says of the school, adding, ?it?s also significantly less expensive than a US college.?
Warren?s first full-time job after earning her bachelor?s degree was with the Toronto office of KPMG,
a position arranged by KPMG?s Nassau office. As a senior auditor, she transferred to KPMG Nassau and remained there for two years. She then became actively involved with the private banking and investment funds business at MeesPierson (Bahamas) Ltd Fund Services and was co-founder of Cardinal International Fund Services Ltd. At Cardinal she served as a director, principally involved with investment funds. In addition, she is a former director of the Bahamas Electricity Corporation.
The BFSB was formed in 1998 and Warren served on its Board of Directors from 1998 to 2000. When her term expired, she was later appointed to her current position as CEO and executive director on February 1, 2001.
Warren and her colleagues are reassuring the international community that The Bahamas continues to offer personal privacy and a safe haven for their assets.
Says Warren, ?I think we are perceived as a credible centre, a serious contender, in fact one of the most complete centres around. But we still have work to do,? she says.
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