BAHAMAS FINANCIAL SERVICES REVIEW 2006, VOLUME 7 | A BFSB PUBLICATION | BFSB-BAHAMAS.COM/REVIEW/

WHAT’S INSIDE:

2006 BFSB ANNUAL REPORT

INDUSTRY NEWS REGULATION & SUPERVISON PEOPLE POWER

JURISDICTION DEVELOPMENTS

LEGISLATIVE DEVELOPMENTS PRIVATE TRUST COMPANIES

FOCUS ON BFSB ACTIVITIES BAHAMAS FINANCIAL SERVICES REVIEW VOL. 7 Incorporating BFSB 2006 Annual Report CONTENTS INDUSTRY AT A GLANCE - 2006 & 2005

MESSAGE FROM THE MINISTER 1

MESSAGE FROM THE CHAIRMAN 2

INDUSTRY NEWS

Privy Council Meets in Nassau 3

INDUSTRY REGULATION & SUPERVISION Bank Supervision And Regulation 4 The FIU: A Local & International Perspective 6 The Insurance Industry 8 The Securities Industry 9

INDUSTRY SNAPSHOT - PEOPLE POWER Executive Of The Year 9 Professional Of The Year 10 Achiever Of The Year 10 Financial Services Student Of The Year 10 FSI Development & Promotion Award 11 Minister’s Award 11

JURISDICTIONAL DEVELOPMENTS

PRIVATE BANKING Absolute Return: Back to the Roots of Private Banking 12

FOUNDATIONS A BFSB Interview 14 Private Foundations 15

PROFESSIONAL BRIEFS M&A Activity in the Private Banking Market 18 Segregated Accounts Companies 19

LEGISLATIVE DEVELOPMENTS Private Trust Companies Introduced 21 Segregated Accounts Companies Highlights 22 Foundations Highlights 22

FOCUS ON BFSB ACTIVITIES About The BFSB 23 Bahamas Strategy & Branding Survey 24 Bahamas Financial Services Retreat 2006 25 Manpower Assessment 26 International Intermediaries Meet in Nassau 26 Financial Services Sector Economic Impact Analysis 27 Business Continuity Planning 28

COLLABORATION WITH INDUSTRY STAKEHOLDERS 29

BFSB MEMBERS 30 INDUSTRY AT A GLANCE - 2006 & 2005 – House announces Conference Clearing (CBA) Trust BFSB Maritime BFSB Presents Automated of Association BFSB launches a review of the Act 2004 Foundations BFSB updates its Emergency BFSB updates its Emergency Contact List phase Banks ‘06 ‘06 Transcontinental first JUL JUN (ACH) to be in place by end of 2006 Rhode Island BFSB/AIBT/STEP release draft legislation on Private Trust and CBA) Companies BTCA (Amendments to BFSB invites nominations the for 2006 Observers Meeting of to the Experts UN on Committee International of Cooperation Matters, in and applies Tax for Observer Status BFSB representative for BFSB/BICA/BIFS launch plans for an Certificate Course Training Investment Funds The United Nations launches the Global Alliance for Information and Communication (ICT) and Development Technologies Company (BTC) Bahamas Telecommunications awards Canadian company Nortel a GSM of the expansion contract to triple the capacity network wireless BTC & Cocktail BFSB hosts Briefing Presentation at Bahamas High Commission in Reception London UK/Europe Briefing Visit – London, Geneva, Zurich, Lugano & Vienna Act review Trust BFSB launches Purpose 21st BFSB participates in Bahamas Mission of IDB Initiatives Sector on Private Team BFSB participates in Rhode Island/Bahamas State Partnership Programme meetings in BFSB announces plans for the Bahamas Bahamas for the plans announces BFSB Funds PWM and – combined Briefing Winter in Nassau Intermediaries for programme its releases Taxation on Forum Global OECD’s a Level Co-operation: Towards Report Tax on Assessment – 2006 Playing Field of The Bahamas. Mutual Evaluation CFATF BFSB Participates Information new Manual on OECD releases Exchange Hillary as Executive Deveaux is confirmed Commission Director of the Securities presents Minister & Minister of Finance Prime National Budget to Parliament Group Business Continuity Working BFSB’s to Disaster Recovery”releases a “Basic Steps guide Chicago Briefing Visit – Chicago. Office Forum 13th Annual Family BFSB Cosponsors, Exhibits and Presents 2006 International Shipping Posedonia Exhibition & Conference. Guide distributed MFSI releases Executive Summary of its Strategy & Branding Survey to Retreat and to BFSB members Participants Clearing that Geneva, Switzerland. BFSB BFSB Presents BFSB publishes the Bahamas Services – Financial Review 6 Vol. Bahamas Chamber of Commerce Globalization Conference. BFSB publishes a Maritime BFSB publishes a Maritime ‘06 ‘06 MAY APR payment new signs International Data First the Bank of with agreements processing Bank Fidelity and International Bahamas BFSB announces AGM and Elections and invites nominations for vacancies on the Board De Rio & Paolo Sao - Visit Briefing Brazil Janeiro BFSB’s Process Re-Engineering Sub Re-Engineering Process BFSB’s Committee for the Companies Registry presents its recommendations to the RGD/ OAG Economist Intelligence Unit (EIU) releases Economic Growth World 2020 – Foresight Report on its strategic plan BIFS presents to PIAWG BFSB conducts presentation on Regional Overview Central Bank Staff Training for Session industry input Economic Outlook annual IMF publishes World report BFSB coordinates Bahamas visit by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) re e-readiness and e-strategies The Basel Committee on Banking Supervision, for Bank for International Settlements issues public comment updated versions of its Core Banking Supervision for Effective Principles as Methodology well as the Core Principles Central Bank issues Supervisory Intervention Guide BFSB circulates draft Bill for Competition with distribution of annual Financial Sector Sector of annual Financial with distribution Surveys Visit Briefing Washington – Stamford, CMA Shipping Conference Connecticut. Guide for BMA Booth Visit Switzerland Briefing International Insurance, McKenzie & Baker Seminar – Switzerland. and Trust Tax participates Bill, 2006 and BFSB circulates Bankruptcy for industry Chemicals Bill, 2006 Precursor input Caribbean Optical-ring Americas Region System (ARCOS) network expands long- and ‘A- Standard & Poor’s affirms its ‘A-’ 2’ short-term on The Sovereign Credit Ratings Commonwealth of The Bahamas Bahamas Association of Compliance Officers Dinner (BACO) Awards AIBT/BFSB/STEP Working Committee Committee Working AIBT/BFSB/STEP work on draftcontinues Bill & PTC Regulations the Bahamas Central Bank of BFSB assists IMF releases its latest Global Financial Stability Report (GFSR) BFSB Co- BFSB BFSB Exhibits BFSB BFSB and AIBT Co- Final Retreat Report & Action Retreat Final Plans released The Independent Evaluation Office (IEO) of the International (IMF) releases Monetary Fund The Bahamas receives The receives Bahamas The Best Award as Banker Centre Financial International BFSB Exhibits ‘06 ‘06 ‘06

MAR FEB JAN

GB. – Freeport, Awards Trumpet GB (FSF) holds 15th Stability Forum Financial Releases Australia. Plenary meeting – Sydney, Group Report its OFC Review Act, and Response Disaster Preparedness 2006 passed in Parliament Beach Briefing Visit Palm West – Coral Summit & Tax IBC International Trust Gables, FL. Analysis Working Group Analysis Working BFSB launches its FSI Economic Impact BFSB Funds and Securities Working Groups and Securities Working BFSB Funds submit recommendations to SCB on securities investment manager/advisor registration Minister announces Cabinet The Prime Changes, including a new Minister of Financial Services Vincent and Investments, the Hon. and a new Attorney General, the Hon. Peet Allyson Maynard-Gibson BFSB appoints a Process Re-Engineering Sub Re-Engineering BFSB appoints a Process Committee for the Companies Registry Arthur Hanna the Hon. Governor General H.E. presents the Speech from the Throne STEP Caribbean Conference – Bermuda sponsor for Intermediaries in Special Programme Nassau – focusing on the private wealth management sector. Sponsors/Exhibits The Nassau Conference - “Wealth Management in a Diverse World”. Sector its latest Evaluation of the Financial (FSAP) Assessment Programme Economic Situation and UN publishes World 2006 Prospects Presents FL. GAIM USA – Boca Raton, Participates Bahamas Business Outlook. Draft for new External Bill and Regulations for industryInsurance Act circulated input. Lucaya, Freeport Bahamas Financial Services – Our Bahamas Financial Retreat announces furtherCentral Bank liberalisation Control Regime of Exchange BFSB releases first printed Annual Report first printed Annual BFSB releases Model Fund new SMART SCB introduces for a private banking structure (SFM005), individuals/families in the Western Hemisphere Western in the Grand Bahama Business Outlook – Freeport, US Department of State releases to Congress its 2006 International Narcotics Control Strategy Report (INCSR) Act is renewed USA Patriot The Central Bank of the Bahamas releases Conference – Nassau; hosted by SCB. BFSB BICA hosts CPE Seminars on International report on Gross Economic Contribution of the Presents Financial Reporting Standards Financial Sector in The Bahamas NOV ‘06 Bahamas Briefing – PWM and Immigration Sub-Committee launched by BFSB BFSB’s Business Continuity Working Group Funds Programme for participates with NEMA in IDB Consultations Intermediaries in Nassau PTC Draft Paper released by joint AIBT/BFSB/ relating to Natural Risk Prevention project STEP Working Committee proposed to be funded by Bank. Brazil Briefing Visit – Sao Paulo, Rio de Janeiro MAR ‘05 Global Family Office Summit – Ministry of Finance releases Bahamas FELEBAN Conference – Rio de Janeiro, Brazil. New York. BFSB participates Government Online (BGOL) logo and launches BFSB Exhibits Bahamas Laws Online site New Funds Application Guidelines issued by Bahamas Institute of Chartered Accountants SCB BFSB’s Insurance Working Group is (BICA) Week. BFSB Presents reactivated. Member Forum: Registrar General International Lawyers Network – Regional Department’s Focus Group on Registry Services Compliance Commission of the Bahamas Meeting of the Americas issues revised Codes of practice for the various European Briefing Visit - London, Geneva, industries and professions falling within its Private Trust Legislation (amendments to Zurich, Lugano and Luxembourg supervisory mandate, pursuant to the Financial Central Bank Act and Banks & Trust Companies Transactions Reporting Act Regulation Act) passes in Parliament BFSB member firms participate in the Annual Economic Survey of the Coalition of Private BFSB presents on Regional Market to FIU BFSB launches its Manpower Assessment Sector Organisations (CPSO) Working Group Domestic Outreach: BFSB Team appears on US Department of State releases its INCSR You and Your Money DEC ‘06 5th Annual International Trusts 2005, reporting on steps taken by The Bahamas Congress, London, England. to cooperate globally on AML/CFT initiatives AUG ‘06 ORIC invites industry input on BFSB Presents latest version of External Business Continuity Planning (BCP) Survey Insurance Bill and Regulations 5th Annual SHOREX Wealth Management disseminated Forum, Geneva, Switzerland. BFSB Presents Central Bank releases Guidelines for S&P releases positive Credit Report on The Independent Non-Executive Directors for Bahamas International Film Festival (BIFF) Bahamas, projecting 3.5% GDP growth in 2005 industry consultation The Financial Intelligence Unit (FIU) releases Alternative Investment Summit - BFSB Working Group provides input on CFATF draft “Suspicious Transactions Guidelines APR ‘05 Amelia Island, Florida. BFSB Mutual Evaluation Report Relating to the Prevention of Money Laundering Exhibits and the Financing of Terrorism.” Caribbean Commercial Law Workshop Brazilian Briefing Visit – Sao Paulo, Brasilia, – Cayman Islands. BFSB co-sponsors BFSB releases draft FSI Immigration Rio de Janeiro Framework, in collaboration with Ministry of Nomination launched for 2006 FSI Excellence Immigration, Labour & Training. BFSB’s Ebusiness Working Group provides Awards input to MOF/CAC on e-business strategies BFSB hosts Presentations Ceremony for 2006 The Joint Forum (Basel Committee, IOSCO, Essay & Speech Competition Winners Member Forum: European Union Savings IAIS) releases Paper on High-level Principles for Directive Roundtable Business Continuity” for banking, securities and BFSB launches its Financial Services Sector insurance sectors Economic Impact Assessment initiative ✪ Caribbean Financial Action Task Force (CFATF) Plenary - Guatemala BFSB hosts 2 Immigration Roundtables with JAN ‘05 GAIM USA 2005 – Boca Raton, industry representatives and Ministry of Florida. BFSB Exhibits Bahamas Institute of Chartered Accountants Immigration, Labour and Training (BICA) hosts Workshop on Risk Based “Fast Track” Guidelines for investment funds Approach to KYC and Auditing Requirements SEP ‘06 BFSB Annual General Meeting & that target accredited or sophisticated investors Election of Directors published by SCB Member Luncheon Forum: CARICOM Single Market and Economy BFSB launches proposal for FSI Economic BFSB consults with SCB and Registrar Impact Analysis General’s Department on procedures to 4th Annual International Yacht & Jet Show, facilitate the establishment of investment funds Paradise Island, Bahamas BFSB coordinates IDB Mission to The Bahamas as SACs as First Phase of Technical Cooperation Revised Draft Paper on PTC released by AIBT/ project on FSI benchmarking and strategy Bahamas Business Outlook. BFSB participates BFSB/STEP Working Committee development BFSB consults with members on amendments MAY ‘05 Member Business Seminar: 16th Financial Stability Forum (FSF) Meeting to the Foundations and Purpose Trust Acts Business Continuity Planning – Paris, France (BCP) Forum Bahamas Financial Services Retreat – Four IIR Anti-Money Laundering Forum – New York. Seasons at Emerald Bay. BFSB members and STEP Caribbean Conference - Florida BFSB Presents guests discuss key drivers for the growth of the industry 6th Annual Offshore Financial Services Summit New York Briefing Visit – London. BFSB presents FEB ‘05 The Nassau Conference. The OCT ‘06 ABA/ABA Money Laundering focus: “Achieving Excellence in European Briefing Visit -London, Switzerland Enforcement Conference – Wealth Management. Washington, DC. BFSB Presents BFSB cosponsors Member Forum: Strategy Briefing FSI Student of the Year Programme PWM Special Programme for Intermediaries Bahamas Institute of Financial Services (BIFS) in Nassau – talks on financial services and the Week of Seminars Careers Fest 2006 – Sandals Royal Bahamian opportunities and challenges for The Bahamas. AIBT and BFSB cosponsor Central Bank of the Bahamas issues “Draft BFSB launches its 2006 Essay & Speech Guidelines on the Prevention and Detection of Competition Bahamas as member of OAS Inter-American Money Laundering for Licensees” for industry Committee Against Terrorism (CICTE) renews consultation LATAM Hedge Fund Conference – Miami, commitment to combat and eliminate terrorism Florida. BFSB Exhibits and Presents – Trinidad Declaration CPSO releases Economic Outlook Survey Results FSI Excellence Awards Programme & Banquet FSI Branding Sub-Committee launched by BFSB Continued on page 17 Caribbean Group of Securities Regulators MESSAGE FROM THE MINISTER

HE GOVERNMENT OF THE BAHAMAS remains committed to providing prudent Tfiscal policy, political and economic stability and to promoting investor confidence, all of which are essential ingredients for a financial services industry.

Fundamental to the aforementioned is the unique spirit of cooperation that exists between the relevant stakeholders within the industry and the Ministry. This public private sector partnership continues to serve and promote our country. We received the acclaimed distinction earlier this year of being named “the leading financial centre in the Western Hemisphere” by The Banker magazine, an affiliate of the Financial Times Group.

Determined to ensure that we remain a jurisdiction of choice, the Ministry, with the assistance of the Bahamas Financial Services Board (BFSB), appointed PricewaterhouseCoopers to I encourage us conduct a Bahamas Strategy and Branding Survey. The results of this Survey provided the government and stakeholders with an up-to-date assessment of the state of the industry, all to remain and the branding of its products. A Working Group, comprised of industry partners, focused and was formed to analyse the Survey’s results. I look forward with great anticipation to the “ responsive to Group’s recommendations to the government. international The sustained and co-ordinated efforts of BFSB, the Association of International Banks and challenges... Trust Companies in The Bahamas (AIBT), and the Society of Trust and Estate Practitioners (STEP), the Central Bank of The Bahamas, my Ministry and other associations in upgrading relevant legislation resulted in the recent amendments to the Banks and Trust Companies Regulations Act and the Central Bank of The Bahamas Act. These revisions provide an attractive environment for Private Trust Companies. My sincere thanks and appreciation are extended to these committed individuals who are determined to make a notable difference within the industry. I salute your efforts!

In order to shape our future, we must have an appreciation of our past. While there is remarkable evidence to show that progress has been made, I encourage us all to remain focused and responsive to international challenges, changing marketplace requirements and trends in order to safeguard the industry. At the same time, I implore you to remain the catalyst through which positive change is affected to and within the financial services sector landscape of our fair Bahamaland.

Sincerely,

Hon. Vincent A. Peet, MP Minister of Financial Services and Investments

BAHAMAS FINANCIAL SERVICES REVIEW VOL. 7 | INCORPORATING 2006 ANNUAL REPORT |  MESSAGE FROM THE CHAIRMAN Michael Allen THE BAHAMAS year terms as directors of BFSB, corporate services offered from within the jurisdiction. FINANCIAL governance requires their demitting office; Inevitably there will be a corresponding SERVICES in circumstances as they are, leaving a enhanced opportunity for the increased BOARD has legacy of professionalism, articulation and development and deepening of certain skill continued the knowledge which some have observed have sets required by high net worth and ultra process of become components comprising BFSB’s own high net worth individuals and by blue chip advancing the distinctive brand of services. Their dedication organizations continually seeking creative international throughout the past year, along with the and reliable financial solutions. A more profile of The availability and commitment of the other sophisticated workforce capable of meeting Bahamas members of the Board of Directors and the the demand for complex solutions will itself as a leading Board’s CEO & Executive Director Wendy be able to demand increased compensation international financial centre, with the Warren, provided the context within which for services, with a spin-off positive result distinction of being the leader in providing we can with optimism anticipate continued for the broader Bahamian society.As regards exceptional private banking services among positive developments. the credibility of our jurisdiction, of note is a its competitors in the Western Hemisphere. BFSB has the distinction of being the Our experience BFSB is aware that no single variable can premier promotional agency of the Bahamian be identified as critical to the successful financial services industry to the global throughout the development of a first class financial services community. Confidence may rightly be past years has centre resulting in the emergence of the placed in the Board having regard to the jurisdiction as a destination of choice for the exceptional depth of talent represented “ strengthened our conduct of international financial business. across its membership and its board of belief that The Certainly, the commitment of government, directors. BFSB continues to be able to regulators and private sector stakeholders to draw on the insight and experience of Bahamas is indeed improving the timeliness and quality of their top executives of major stakeholders who individual and collective responses to the represent not only domestically rooted, the better choice. demands of the international investor does highly successful financial service providers play a part in the overall success. The net but also local branches and subsidiaries growing trend towards requiring transparency result of success, however, is also contributed of significant internationally-recognised and predictability in the operation of the to by a wide range of initiatives. These may financial institutions. Direct input by industry regulatory regimes which supervise financial involve the singular activity of effectively specialists with sensitivity to international centre activity. We must continue to training personnel by local service providers. markets and the demands of a twenty- aggressively pursue the maintenance of best The initiatives may also extend to high level first century global investor will continue practices in a fully compliant environment strategic development planning which results to be fundamental to the success of the whilst simplifying the process of introducing in international promotional efforts designed jurisdiction. new business to the jurisdiction. Once to market The Bahamas and its financial new business has settled into the local products to the global financial community. As we continue to gather and process environment we must be certain to facilitate empirical data on various unique aspects of the exploitation of the growth potential of Cognizant of the fact that there have been the nature and performance of our industry, each business by ensuring that together we commendable efforts on numerous fronts with a view to updating current systems and not only observe international standards of during the past year accordingly, I take strategies and devising new ones to maintain operation but are administering a regulator great pleasure in expressing thanks and a competitive edge among international regime rationalized on principles which are appreciation to the members of BFSB for financial centres, the analysis and instincts sensitive to business efficacy leading to their persistent commitment to enhancing of the industry’s elite will continue to be increased profitability. The Bahamas brand of financial services at among the most valuable of commodities both the domestic and international levels. available for our benefit. BFSB is also Our formula for success must include A proverb from the wise postulates that, “in committed to a position which recognises insisting that our service providers are able all labour there is profit”. Undoubtedly, the that first class communications capability to meet regulatory obligations and also sustained efforts of the government, private allowing investors and intermediaries stay competitive in a highly aggressive sector and regulators working together instant and global access across a variety of commercial environment. BFSB will continue on various past years’ endeavours have platforms is no longer a point of distinction its strategy of taking The Bahamas to begun to confirm not only that opportunity to be achieved among competitors, but the international investor. Our experience continues to exist for the expansion of a necessary given for any increase in throughout the past years has strengthened Bahamian financial services but that The favourable international recognition of The our belief that The Bahamas is indeed the Bahamas is in fact capable of seizing the Bahamas as a leading international financial better choice. We must however be cognizant day and exploiting those opportunities to centre. Additionally, as a complement to of the reality that our success will forever its advantage. The Bahamas Financial the jurisdictions efforts to ensure a highly be contingent on the international investor Services Board and the industry at large are skilled Bahamian work force capable of having an informed and comprehensive certainly indebted to those who unselfishly effectively interacting with the international appreciation for who we are and what we are have given time and effort on a volunteer community, The Bahamas must continue able to deliver. basis to assist in making the past year a to attract and accommodate, for optimum productive one. The exceptional talents and periods of time, international persons who Unquestionably, we are well positioned to insights of the outgoing Chairman Bruno possess unique qualifications, skills, business capture and maintain an even more enviable Roberts and Vice Chair Michael Paton have contacts and networking capabilities which position along side global leaders in financial provided inspiration and leadership resulting are fundamental to growing the industry services. Our progress is measurable. Our in the year’s advances. Having both from without. A growing industry will foster future is promising. I look forward to our completed their maximum four successive increased complexity in the nature of the working together to ensure the highest result. •  | BAHAMAS FINANCIAL SERVICES BOARD INDUSTRY NEWS Privy Council Courtesy Call on Minister of Financial Services & Investments Meets In Nassau JUDICIAL HISTORY WAS MADE in December 2006 when the Judicial Committee of Her Majesty’s Privy Council sat in The Bahamas, at the Court of Appeal in Nassau. It was the first time that the Privy Council, an institution in continuous existence since the 17th century, had sat outside the United Kingdom, where it normally sits at Chambers in Downing Street, London.

The Privy Council is the final Appellate Court for The Bahamas. Attorney General and Minister of Legal Affairs, the Hon. Allyson Maynard-Gibson marked the occasion during the Opening Ceremony for the Council’s visit and work in The Bahamas. ”The role of the Privy Council in the strength of our political democracy, and in the acknowledgement and acceptance of the rule of law, is very significant. The resulting certainty and L-R: Dennis Murray Govan, FirstCaribbean International Bank Bahamas; Suzanne Black, Black stability brought to our judicial system by the & Associates; Leslie Isaacs, Director of Financial Services, Ministry of Financial Services and Investments; Minister Vincent Peet; Sheila Carey, Permanent Secretary, Ministry of Financial Privy Council are acknowledged with thanks Services and Investments; Michael F. Allen, McKinney, Bancroft & Hughes (BFSB Chairman); Wendy and are deeply appreciated.” C. Warren, BFSB’s CEO & Executive Director; and Michele Yvette Thompson, Ernst & Young, (BFSB Treasurer). Lord Bingham of Cornhill, Senior Law Lord responded: 03.2006_Bahamas Financial Services Board_1.qxd 30/03/2006 17:30 Page 1 “Our unprecedented sitting here today reminds us that while the courts are not the only – or even the most important department of government – they have a crucial role to play and crucial duties to perform. It is the duty of the court first of Which international private bank all to interpret and apply the Constitution of The Bahamas. The courts must contribute to understands your world? the peace, tranquility and good governance Q by enforcing the law, punishing proven wrongdoers and seeking to ensure that public power is exercised reasonably, fairly, honestly and for proper purposes. They must try to ensure that rights are protected and duties The answer is nsbacher. performed.

“They must underwrite the wealth and prosperity by providing that legal certainty, For further information please contact: clarity and predictability which are the Paul Winder essential pre-conditions of a successful Anbacher (Bahamas) Limited investment, commerce and finance, ever PO Box N-7768, Ansbacher House Tel: +1 242 502 3689 more so in a shrinking world. And the Bank Lane, Nassau, The Bahamas Email: [email protected] courts are guardians of the rule of law. THE ANSBACHER BANKING GROUP The importance of the Judicial Committee PRIVATE BANKING | INVESTMENTS | FUND SERVICES | FIDUCIARY of the Privy Council sitting currently in Nassau cannot be overstated. The Judicial This advertisement is issued by Ansbacher (Bahamas) Limited and is approved by Ansbacher & Co Limited. Ansbacher & Co Limited which has its registered office and principal place of business at Two London Bridge, London SE1 9RA, is authorised and regulated by the Financial Services Authority in the United Kingdom for deposit taking and investment business. Committee of the Privy Council is the highest Not all products and services offered by the Ansbacher Group are available from all the jurisdictions in which Ansbacher operates. This advertisement is not directed at anyone who is in a jurisdiction where the promotion of the products or services described are prohibited or where Ansbacher is not licensed to promote such products or services in accordance court of appeal for United Kingdom overseas with local law. Private banking and investment services are only offered through the Ansbacher Group’s licensed banks in London, the Bahamas and the Channel Islands. territories and Crown dependencies, and for those independent Commonwealth countries, The Bahamas included, that have retained the appeal to Her Majesty in Council or, in the case of Republics, to the Judicial Committee.” •

BAHAMAS FINANCIAL SERVICES REVIEW VOL. 7 | INCORPORATING 2006 ANNUAL REPORT |  INDUSTRY REGULATION & SUPERVISION

related to resources and training. Bank Supervision And Regulation And this underscores the Central Bank’s By WENDY CRAIGG, Governor, Central Bank of The Bahamas ongoing efforts to strengthen its relations with foreign regulatory counter-parties via THERE ARE commitment is evidenced in statutory memoranda of understanding and a regular SEVERAL mandates for our licensees to maintain exchange of letters between the “home TOPICAL capital standards consistent with the 1988 country” regulators and ourselves. themes in the Basel Capital Accord (which we implemented area of bank in 1992). Consolidated Supervision / International supervision and Cooperation regulation – For our 143 unrestricted banking and/or – areas which trust company licensees, the current average Consolidated Supervision is closely related to continue to be capital adequacy ratio of 27% is well above the implementation of Basel II and somewhat high on the the stipulated 8% minimum—a position intertwined with the issue of international policy agenda which reflects, to a large extent, the liability cooperation. As you are aware, the Basel of the Central Bank of The Bahamas and driven nature of international banking in Committee intends that Basel II be applied likewise which affect bank management The Bahamas, coupled with the Central on a consolidated basis for banking groups. policies and objectives. And I might Bank’s requirement that a portion of a bank’s Many of our licensees belong to groups for underscore that these matters have even balance sheets be diversified into high which consolidated supervision is already the broader influence from the standpoint quality, liquid financial instruments which norm. This application will not present any of promoting greater safety, soundness attract low risk weights. particular challenges for the Central Bank and stability within the financial services either, as we have the legislative framework sector. Before doing so, I would like to The Central Bank has yet to implement the in place to co-operate with other regulators give a brief overview of the Central Bank, 1996 amendments to Basel I related to for the purposes of promoting effective which was established in 1974 and, apart Market Risk and Netting Arrangements, but consolidated supervision. from its monetary policy duties, is vested we have conducted a review of our licencees, with responsibility for the regulation and and determined that, approximately 25 or In fact, one of the major enhancements supervision of banks and trust companies. 17% of our unrestricted licensees have more to the legislative framework in 2000 The Bahamas supervisory landscape than 10% of their on and off-balance sheet allowed the Central Bank to facilitate the underwent tremendous change in 2000, assets in a form subject to market risk. The consolidated supervision of its licensees by at which time the role and functions of the Bank’s efforts have progressed to the stage permitting their home country supervisors to Central Bank were reinforced in line with where a comprehensive draft Market Risk conduct on-site inspections in The Bahamas international best practices. Guideline is being examined for practicality and by exchanging relevant regulatory in the Bahamian context, and plans are information for specified purposes with The Bank is a fully independent regulator; underway to secure a consultant to assist in home country supervisors––while protecting the law vests in the Governor authority to the implementation and capacity building the confidentiality of individual customer license and revoke banking and trust licenses exercise. information (including information on within this jurisdiction. Our existing policy individual customers). The Bahamas has requires full physical presence on the part Being host regulator to a number of frequently accommodated onsite inspections of all those who seek to offer banking and US and EU banks, the Central Bank by home country regulators; in 2005, we trust services to the public. In terms of staff, continues to monitor the positions taken facilitated 6 inspections and as of the end of there are some 51 banking supervisors and by these countries with respect to Basel II October 2006, 4 inspections have occurred. examiners who carry out the full range of implementation and we have observed that oversight and supervisory work with respect the US intends to require only the top 20 of How have we sought to promote this to our licensees. its banks to adopt the advanced approach, relationship? In instances where the Central while the EU has mandated that all banking Bank serves as the consolidated supervisor, Today, The Bahamas is host to 248 entities within its borders will be required to we have fostered relationships with host banks and trust companies from some 30 adopt the advanced approaches. regulators via letters or memoranda of countries—underlying the importance of understanding. As consolidated supervisor us ensuring that our supervisory regime is While our goal is to fully implement to 3 licensees, we mandate that the overseas predicated on international principles and Basel II by 2010, we anticipate that our units conform to regulatory standards on par best standards. Of the 248 licencees, 143 licensees will be allowed to use a range of with or above that observed by their parents, are unrestricted bank and trust companies. approaches, as appropriate to their size and and these institutions are subject to onsite complexity, while also taking into account examinations and reporting requirements. Basel II the approaches of their parent banks, The Bank currently has memoranda of where applicable. And, we expect that, for understanding with five countries – Panama, The first theme I wish to address is Basel those stand-alone banking licensees, which Peru, Costa Rica, Guatemala and Brazil. II, which is by far one of the most topical are solely incorporated in The Bahamas subjects in recent years –– and one which and where The Bahamas serves as home The Bank is also a party to multilateral the Central Bank has been closely monitoring regulator, the simplified or standardized memorandum of understanding with as capital adequacy is an important yardstick approaches will be the most suitable in the CARICOM member countries and the in assessing the strength of a bank. The short term. Cayman Islands, British Virgin Islands and Central Bank always has been committed the Netherlands Antilles. to implementing a capital adequacy Although there are advantages to the regime consistent with the promotion of a implementation of the new Accord, the Continued on page 5 strong international banking centre. This Bank is also mindful of important challenges

 | BAHAMAS FINANCIAL SERVICES BOARD Continued from page 4 The Europeans, on the other hand have at a disadvantage –– lacking the necessary taken a different approach, one which places information to make quality contributions to The Bank continues to cooperate with emphasis on voluntary compliance with a the board. its international bank regulatory network code and the application of principles. On to ensure that our jurisdiction is not the local front, the Central Bank, as part Apart from clarifying the expectations of used by undesirable parties to escape of its proactive approach in the regulation the Central Bank, the draft guidelines proper oversight and equally to ensure and supervision of banks and trust also specify elements that constitute that institutions established and based companies, issued Corporate Governance independence, outline activities that INEDs in The Bahamas comply fully with Guidelines (CGG) in December 2001 to are prohibited from performing because of internationally accepted standards and enforce international best practices for the potential conflict of interest, and identify norms of bank management. We have management and operation of all licensees. and discuss issues which may influence the received and responded to 33 requests for effectiveness of INEDs on the board. These information from various foreign regulatory These guidelines are not intended to guidelines represent important tools in the authorities from 20 countries in 2005. be prescriptive but to provide direction Bank’s arsenal for fulfilling its mandate The corresponding stats for 2006 are 26 and outline basic corporate governance of promoting the safety and soundness of requests from 10 countries—many of which principles from which directors and senior licensees and the financial industry as a relate to securities matters where the Central management of licensees can develop and whole. Bank works closely with our colleagues at implement processes which are appropriate the Securities Commission. to the unique character of each licensee. For Relations with External Auditors example, the Board of a licensee is required to carry out an annual review which should A fourth area that has received focused The Bahamas involve the examination of the licensee’s attention by the Central Bank is the whole continues to overall risk profile, policies and procedures, issue of its relationship with external internal controls, management information auditors, which is in itself vital to the be viewed as a systems and accounting records, corporate corporate governance process. In September, responsible and values and ethical standards. The Board is 2006 the Central Bank issued guidelines “ then to certify to the Inspector of Banks and on the appointment of external auditors serious business Trust Companies that, using the advice and of licensees and the relationship between assistance of management, it has assessed the Central Bank and external auditors. environment for and documented whether the licensee’s One of the objectives was to underscore financial services. corporate governance process is effective ways in which the relationship between and that it has successfully achieved its bank auditors and supervisors could be objectives. strengthened to their mutual advantage. Corporate Governance As part of the Annual Certification,136x212.qxd the 25.8.2006Continued 17:38 on page Pagina6 1 A third theme that occupies the policy Board of each licensee agenda of the Central Bank is that of is also required to report Corporate Governance –– that matrix any material deficiencies of relationships between a company’s and problems that SWISS BANKERS SINCE 1873 management, its Board, its shareholders are identified with and other stakeholders. We are all familiar the licensee, along with the high profile collapse of corporate with action plans and giants such as Enron, WorldCom and timetables for their Global Crossing, which have spawned an correction.Supplemental intense focus on corporate governance to the Guidelines, the world wide. In each case, there appeared Central Bank in August to be irregularities in accounting or of this year released, for financial reporting as well as inadequate consultative purposes, internal controls and risk management – a separate guideline, – shortcomings which caused regulators which addresses the to question the adequacy of regulation and role of the independent whether more could have been done to non-executive director prevent the failures. Country responses to as it relates to corporate these challenges have certainly differed. governance as a whole. For example, the United States took a Values travel through time. statutory approach with the enactment of The Central Bank the Sarbanes-Oxley Act (SOX) which is seen recognises that INEDs as a more prescriptive rules-based approach, often find themselves in We watch over them. emphasizing such areas as: a dilemma, in that, even though they are legally • CEO/CFO certifications liable in the same way as www.bsibank.com • assessment of internal controls executive directors and increased disclosures have the same fiduciary • audit committee requirements; and duties to the company • restrictions on the types of non-audit as well as the duty of BSI Overseas (Bahamas) Limited Bayside Executive Park - West Bay Street work carried out by an audit firm for skill and care, they may P.O. Box N - 7130, Nassau Bahamas its clients. at times find themselves

BAHAMAS FINANCIAL SERVICES REVIEW VOL. 7 | INCORPORATING 2006 ANNUAL REPORT |  INDUSTRY REGULATION & SUPERVISION Continued from page 5 AML Guidelines The FIU: A Local Earlier in 2003, the Auditor’s Advisory The Central Bank’s AML guidelines for Committee, comprising Central Bank banks and trust companies, which were & International representatives and senior members of the finalised in October, 2005, incorporate both auditing profession, was formed to provide the mandatory minimum requirements of Perspective a forum for discussion on accounting, the FTRA and industry best practices, and By ANTHONY M. JOHNSON auditing and reporting matters pertaining provide extensive guidance on the proper Director, Financial Intelligence Unit to licensees, and today is considered to systems and procedures to be implemented be a key resource in the area of policy to substantially eliminate the risk of money CONCERNS development. laundering and terrorist financing schemes. EXPRESSED BY Our licensees are expected to adhere to THE FATF and Anti-money Laundering these guidelines in developing responsible FSF in June 2000 procedures suitable to their business in order resulted from the Finally, the theme which has perhaps to prevent money laundering and terrorist perception of The had the most significant impact on the financing, and the Central Bank utilizes Bahamas as a architecture of bank supervision and these guidelines in its assessment of their “non-cooperating regulation in the last six years has been respective systems. jurisdiction” in that of anti-money laundering and terrorist the fight against financing. Conclusion money laundering, as well as perceived weaknesses in our As the regulatory authority for banks and The very nature of these themes highlights financial laws and regulatory framework trust companies, the Central Bank has the dynamic and ever changing landscape for financial services. The establishment of pursued a strategy since 2000 to keep for bank supervision and regulation, and the Financial Intelligence Unit (the “FIU”) abreast of international best practices as underscores the responsibility we have was one of many far reaching legislative regards anti-money laundering and the as regulators in a major international initiatives subsequently implemented by growing level of sophistication by which financial jurisdiction to take a broader view the Government, in order to meet the new would-be criminals seek to infiltrate of events in developing our architecture. regulatory and AML standards. legitimate banking systems. In this regard, The principal objective of regulation in the Central Bank embarked on several our jurisdiction is to protect the interest of The Bahamian Parliament approved the initiatives, which were primarily to:- those who do business with our licensees Financial Intelligence Unit Act, 2000 and to ensure that The Bahamas continues (the “Act”) in December 2000. The Act • seek to influence the evolution of to be viewed as a responsible and serious established the FIU as an independent, international standards in this area business environment for financial administrative agency with authority to: through participation in FATF meetings services. We believe that we have in place (such meetings would have included a robust regime and are committed to • Receive all disclosures of information the FATF plenary and review group enhancing our capacity, strengthening our made pursuant to the Proceeds of meetings held to discuss revision and/ prudential framework and enhancing our Crime Act, including information from or development of standards); product offerings to ensure that we remain a Foreign Financial Intelligence Unit • participate in meetings of assessor competitive. • (FFIU); bodies such as the Caribbean Financial • Order the freezing of transactions on Action Task Force; Wendy Craigg was appointed Governor and accounts for a period not exceeding • enunciate up-to-date guidelines for Chairman of the Board of Directors of the 72 hours; our licensees on AML and terrorist Central Bank of The Bahamas on June 1, • At the request of a Foreign Financial financing; 2005, having served as Deputy Governor Intelligence Unit or law enforcement • implement a comprehensive integrated and a member of the Board of Directors, authority, including the Commissioner approach for off-site and on-site since 10th September, 1997. of Police of The Royal Bahamas Police supervision of licensees to better Force, order the freezing of account transactions for a further five days; facilitate a risk-based approach to Prior to her appointment as Deputy and assess the safety and soundness and Governor, Mrs. Craigg headed the Research • Require the production of such AML compliance of our licensees; Department of the Bank where she information, excluding information the • issue regular anti-terrorist warnings to commenced her employment with the Bank subject of legal professional privilege, licensees, requiring them to respond to on 17th July 1978. A career central banker, that the FIU considers relevant to questions as to whether they hold or Mrs. Craigg has been closely involved in fulfill its functions. have held accounts for named terrorist a number of initiatives to enhance the suspects; delivery of domestic banking services From inception, the FIU was the focus of • issue public warnings (including a including the ongoing payments system much attention locally and internationally, regularly updated page on the Central modernization initiative. given its functions and the circumstances Bank’s web-site) on unauthorized under which it was established. There was banks allegedly operating out of The no question that the Unit had to prove Bahamas; and itself capable of dealing with its statutory • articulate and engage the public mandate as well as public perception regarding our policies, guidelines and locally and abroad. In this context, the draft regulations, etc., in a transparent Management Team of the Unit was carefully manner via its website. Continued on page 7

 | BAHAMAS FINANCIAL SERVICES BOARD THE FIU of the FIU’s major functions is its role as Performance To Date Continued from page 6 the national agency tasked with receiving, analyzing, obtaining and disseminating The FIU is now into its sixth year of selected and the Unit commenced operating information which relates to or may relate operation and has come of age. To on 29th December 2000 without fanfare. to the proceeds of offences specified in the date, it has risen to all of the challenges The Bahamas was eventually removed from Second Schedule of the Proceeds of Crime encountered. These include securing the various lists in 2001 as a result of this Act 2000 and subsequently the Anti- adequate operational funding from the and various other initiatives taken by the Terrorism Act 2004. central government, establishment of sound Government. internal systems and controls, recruitment Most STRs filed to date with the FIU have of competent Bahamian staff, gaining the Egmont Membership been received from financial institutions, confidence of stakeholders in financial which are “suspicious” about the possible services, defending against early legal Attainment of membership in the Egmont use of their facilities by clients for money challenges to the use of its statutory powers Group of Financial Intelligence Units was laundering purposes or terrorism financing. and attainment of membership for The one of the many steps taken to ensure a The STR is critically processed by a trained Bahamas in the Egmont Group of FIUs. comprehensive framework for the prevention Analyst, additional relevant information/ and detection of money laundering. The documentation is requested, if necessary, Though smaller in size, the agency has Egmont Group is the international umbrella from the reporting institution and/or any gained the respect and support of all the organization for FIUs. other entity and a final report is prepared, other local regulatory agencies involved recommending any further action as may be in financial services as well as law required, including referral by the Director enforcement and the various governmental So far, the FIU of a report to the Commissioner of Police for departments. Like other regulators, it is further investigation.Closely related to the firmly committed to protecting the reputation has attained high process of analysis is the use of Restraint of the jurisdiction by assisting in keeping the visibility within the Orders and Freeze Orders, respectively, financial services sector free of dirty money to investigate suspected transactions or and criminal elements. The agency has no “ industry. accounts. The FIU has authority under police powers, especially for purposes of section 4 of the Act to restrain a financial investigation, however, referral of cases to institution from completing a transaction for the Police for further investigation, based on Membership in Egmont is an unequivocal a period of up to 72 hours. Further, the FIU the FIU’s analysis, is an important step in statement by any jurisdiction to the world can order a financial institution to freeze a following the trail of dirty money back to its of its commitment to preventing the use suspected bank account or facility for an source or intended illicit purpose. of its financial system for the purpose of additional period of up to five days. Invoking money laundering and financing of terrorism. such powers is a decision which is not taken Support for the work of the Unit among There are currently 101 countries and lightly by the Director of the FIU. “financial institutions,” as defined in the Act, territories with membership in Egmont. has increased since inception, but does not The Bahamas achieved membership in the Another important function is that of appear to be uniform, based on statistical Group in June 2001 as its 54th Member, registration of Money Laundering Reporting records maintained by the Unit. Over 90% of and has maintained an active and fully Officers (MLRO). The MLRO is the “official” the STRs filed with the agency to date have compliant membership status ever since. point of contact between the FIU and come from the banking sector. However, the The Bahamas’ stature in this august body the financial institution. Within each number of STRs filed may not necessarily is indicated by the fact that it subsequently financial institution, the MLRO is ultimately provide an accurate measure of the level and successfully sponsored the applications responsible for filing or not filing an STR of public support for the agency. Given the of the majority of countries in the Caribbean with the FIU and it is the MLRO to whom size of the financial services sector, possible region for membership in Egmont. Further, the FIU will submit Production Orders for reasons for the variation in the level of STRs the Deputy Director of the FIU currently additional information or documentation. filed may include a lack of appreciation serves as the Vice Chair of the Outreach Accordingly, the FIU maintains a current for the purpose and work of the Unit. Working Group, Co-Representative for The register of MLROs and their respective Management and staff of the FIU are aware Americas Region, Member of the Egmont institutions and closely reviews the of the unique role of the FIU in financial Committee as well as the Chairperson for credentials of new applicants for registration. services and are committed to ensuring that the Implementation Committee for Egmont If an applicant lacks requisite competence the Unit fulfills it mandate effectively and as the Group transitions to an International for the role of MLRO, the registration will be efficiently. Organization by 2008. declined. Public Perception Membership in Egmont is predicated The FIU is also mandated to issue on each jurisdiction’s commitment to “Guidelines” relating to suspicious Like local regulators, the FIU is committed upholding the Egmont Group “Statement transactions from time to time, to assist to serving the industry as well as strict of Purpose” which is reinforced by the financial institutions in maintaining vigilance enforcement of the provisions of the Act and Groups’ “Principles for Information Exchange as well as staying abreast of new trends in the Regulations. Service and enforcement, Between Financial Intelligence Units for money laundering and terrorism financing. however, are not mutually exclusive Money Laundering and Terrorism Financing The Guidelines currently in effect were undertakings and maintaining a balance Cases.” In this regard, The Bahamas has issued in 2001 and are being updated to between both is an ever-present challenge spoken clearly. be re-issued very shortly. The Guidelines for the Unit. are provided free of charge. Anti-Money Responsibility/Mandate Laundering Training for the staff is another So far, the FIU has attained high visibility service provided by the FIU to financial within the industry. Good intelligence, i.e. information, is critical institutions free of charge. to the work of the FIU. In this regard, one Continued on page 8

BAHAMAS FINANCIAL SERVICES REVIEW VOL. 7 | INCORPORATING 2006 ANNUAL REPORT |  Continued from page 7 FIU’s ability to perform its functions, Evaluation Teams conducting formal peer notwithstanding its autonomy and statutory review exercises on countries in a given This was unavoidable, given its hands on powers to act independently. Based on geographical region. These reviews are involvement as the only national agency, feedback received from the various groups carried out under the auspices of the FATF other than the Police, for the processing of to date, it is fair to say that the Unit has and/or FATF Regional Style Bodies (FSRBs) STRs, as well as the promotional and other achieved a satisfactory working relationship in order to ascertain a jurisdiction’s level of support received from industry bodies such with the majority of players involved in compliance with the FATF’s Forty plus Nine as Bahamas Association of Compliance financial services. Special Recommendations on prevention of Officers (BACO), The Bahamas Financial Money Laundering and Terrorism Financing. Services Board (BFSB) and the various local International Monitoring regulatory agencies. Reputation Enhanced Globalization has further served to In various quarters, consequences of the underscore the importance of the Bahamas’ In its relatively short history, the FIU has Unit’s high visibility to date have ranged FIU as an effective vehicle for international fulfilled and continues to fulfill all aspects from full support to limited engagement, cooperation as well as maintaining of its mandate. In the process, it has the latter presumably borne out of a standards. The former is facilitated via made a positive impact on Bahamian misconception of the role of the Unit. established protocols between FIUs. One financial services, thanks to the support Addressing such misconception may important feature is the requirement that of all stakeholders. All indications are that require formulation of creative solutions information is held in a very confidential this agency will continue to evolve as the via a collective partnership between the manner and used for analytical purposes industry evolves, and the Egmont Group FIU and the various stakeholders already only and may not be passed to other arms takes on greater prominence in financial aforementioned. of government. Such protocols enable the services globally. • FIU to access or share information with its Relationships foreign counterparts without delays that Mr. Johnson is an experienced Bahamian may be associated with formal diplomatic/ professional, who has been employed in the The many stakeholders in financial services legal channels, or any reservation about banking and trust sector for approximately means that the FIU must always be possible misuse of any of its information. twenty seven years. He has been associated mindful of the interests and needs of the Violation of these protocols holds with financial institutions, both onshore jurisdiction as well as those of each group serious consequences for a jurisdiction’s and offshore, in the public and private for the purpose of providing advice and membership. In addition, the effectiveness sectors, at senior and middle managerial feedback, formulating or changing policies, of an FIU within its country or jurisdiction levels, in various areas such as credit developing training initiatives or even taking provides invaluable insights about the health and marketing, operations, regulatory enforcement action. As with everything of a jurisdiction’s framework for processing oversight, compliance, risk management, else in business, effective management of Suspicious Transactions Reports (STRs). money laundering prevention and corporate of key relationships directly impacts the This information is important to Mutual secretarial.

The Insurance Industry By ROGER BROWN Registrar of Insurance

THE OFFICE OF THE REGISTRAR of Insurance Companies is poised to act on the framework established by The Government on reforms needed for the local insurance industry. The Domestic Insurance Act recently was passed through Parliament, and now is awaiting enactment into law. The new Act contains provisions for moving the regulation of insurance business in The Bahamas into the twenty-first century.

Standards on which the Act is based are Core Principles of the International Association of Insurance Supervisors, the sister organization of the Basle Committee for banks, and the International Organisation of Securities Commissions (IOSCO) for securities.

It is the intention of The Office of the Registrar of Insurance to work along with the industry to raise the standards of corporate governance, internal controls, and professionalism.

The proposed new External Insurance Act and Regulations are now with Cabinet. When passed, they will provide a competitive legislative framework which would reinforce this jurisdiction as a first-rate destination for captive insurance. •

 | BAHAMAS FINANCIAL SERVICES BOARD INDUSTRY REGULATION & SUPERVISION The Securities Industry By HILLARY DEVEAUX, Securities Commission of The Bahamas

THE BAHAMAS On the local side, the Disciplinary Committee Enforcement bolsters good regulation which ADOPTED established pursuant to Section 34 (3) of is essential to vibrant capital markets. ENHANCED the Securities Industry Act, 1999, began enforcement as its functioning. This Committee provides for the With regards to market activity, the total focus for securities examination of alleged breaches of securities number of Bahamas-based investment funds regulation in legislation, including market abuse. Given grew only marginally over the nine month 2006. This was in its mandate, this Committee constitutes period ended 30 September, 2006 – from keeping with the an important weapon in the Commission’s 749 to 760 or some 1.5%. The value of international thrust regulatory arsenal as it allows the these funds increased by 7.2% or US$12.76 to effectively manage Commission to pursue sanctions and other billion to a total of $190.69 billion, during the repercussions of the increasingly global disciplinary measures against registrants the same period. This figure is expected to nature of capital markets, coupled with who may have contravened provisions in our reach the US$200 billion level by the end of its commitment to ensuring the integrity securities laws. the year. of the financial services industry and that it is operating at acceptable international The Commission The number of registered market participants standards. showed little change during the first is satisfied that nine months of 2006. Investment fund In this context, the Securities Commission enforcement is an administrators increased from 59 to 60, of The Bahamas (the Commission) has broker-dealers increased from 65 to 67, and under active consideration the requirements “ effective deterrent to securities investment advisors from 40 to 43. to become a signatory to the IOSCO market abuse. Multilateral Memorandum of Understanding Going forward, the Commission will keep as on Consultation, Cooperation and Exchange The Commission is currently drafting new a priority a focus on evolving international of Information in advance of the deadline of securities legislation to replace the existing standards for securities regulation in order to January 1, 2010. As technology enables Securities Industry Act, 1999. In addition to ensure that their impact on the growth and markets to transcend national boundaries, creating a more comprehensive regulatory development of The Bahamas is positive, regulators are compelled to equip themselves regime, the draft legislation also provides for contributing to the maintenance of our with the strategies and tools to forestall and enhancement of the disciplinary authority of position as a leading international finance minimize cross-border market abuse, and the Commission. The Commission is satisfied centre. • its by-products of money laundering and the that enforcement is an effective deterrent to financing of terrorism. market abuse.

in profitability and made it a leader in the Financial Services Consultative Forum, INDUSTRY SNAPSHOT provision of financial services for Bahamians. the Blue Ribbon Commission on National His financial services career began in 1981 Health Insurance, the Steering Committee PEOPLE POWER with Chase Manhattan Bank N.A., where on Government’s Online Initiative, and the he rose to the post of Second Vice President Business Improvement District Committee, following postings in several international and on MFSI’s Branding Committee. Civic The following are the recipients of BFSB’s branches. He joined Bank of The Bahamas, Positions include the chairmanship of St. 2006 Excellence Awards. still in its infancy, as Senior Credit Manager Augustine’s College and membership in the in 1993, and was promoted to Deputy Young President’s Organisation. He also EXECUTIVE OF THE YEAR Managing Director in 1996. Four years serves as Honorary Consul of the Dominican later, he became Managing Director. Republic, Diplomatic Corps. PAUL J.I. MCWEENEY Under his direction, the BOBI has enjoyed His vision has won international recognition A 25-year veteran of phenomenal growth, setting records and for the bank – and for The Bahamas. In the banking industry establishing a number of firsts. Assets have 2005, Bank of The Bahamas became the with experience climbed steadily from $279 million to first bank in this country’s history to win the in international nearly $600 million. In two share offerings, prestigious Bracken Award, presented by The markets and in his one preferred, one common, he broadened Banker, a member of the Financial Times native Bahamas, ownership and helped raise capital to sustain Group. In 2006, Bank of The Bahamas Mr. McWeeney growth. became the first Bahamian bank to win became the youngest a similar country bank of the year award Managing Director of Mr. McWeeney is Immediate Past Chairman presented by Euromoney magazine. Also this a Clearing Bank in of the Clearing Banks Association as well as year, Paul McWeeney was named Banker of The Bahamas when Immediate Past President of the Bahamas the Year by Jones Communication and the he was named to that post at Bank of The Institute of Financial Services. He is Toastmasters Club 1600. • Bahamas International (BOBI) in 2000 at the also Chairman of the National Payments age of 39. In the nearly seven years since, he Council, a member of the Government’s has guided the Bank to a dramatic increase

BAHAMAS FINANCIAL SERVICES REVIEW VOL. 7 | INCORPORATING 2006 ANNUAL REPORT |  INDUSTRY SNAPSHOT - PEOPLE POWER

PROFESSIONAL OF THE YEAR services for family-owned businesses demonstrated on numerous occasions when as well as Senior Audit Manager with she has been required to take on multiple LISA DENISE GIBSON, TEP PricewaterhouseCoopers. roles, covering for staff out on study leave as an example. She is an outstanding Currently serving as Lisa Gibson joined Ansbacher (Bahamas) professional who is credited with assuming a Compliance Manager Limited in 2001 as Client Accounting leadership role in any circumstance; although for Ansbacher Manager, in charge of client financial particularly demonstrated in her field of (Bahamas) Limited, statements. When the position of compliance, Ms. Gibson’s colleagues say Lisa Gibson has Compliance Manager became available in that her knowledge, confidence, research responsibility for 2005, she jumped at the opportunity to capabilities and analytical skills all provide ensuring that experience a more challenging area in the a level of trust in her strong judgement on procedures are in Bank. For a few months, she performed non-compliance issues as well. Ms. Gibson place to enable duties in both capacities, until Ansbacher recently completed the International Anti- business units finalised its choice for her replacement in Money Laundering and Compliance Diploma to comply with current legislation and the Client Accounting Manager position. (with Merit) and is one exam away from regulations. She monitors compliance with This was a challenge – to learn her new completing her Bachelors in Law (LLB). She such procedures and produces regular reports role and to continue with her previous has been a Certified Public Accountant since to Head Office in London and to the Board responsibilities, but she demonstrated 1989. This year, she obtained her Trust and of Directors. Also serving as Ansbacher’s complete professionalism, increasing her Estate Practitioners designation from the Money Laundering and Reporting Officer work hours to accomplish assigned tasks. Society of Trust and Estate Practitioners by (MLRO), she has oversight for all anti-money Her employers describe her as a diligent, way of the Experienced Practitioners route. In laundering activities and is the key person in industrious employee who takes on any addition to STEP, she also is a member of the the Bank for the implementation of related challenge given to her, and performs at the Bahamas Institute of Chartered Accountants strategies and policies. Previous employment highest level, even if tasks are outside of and the Bahamas Association of Compliance has included accounting and consultancy her assigned responsibilities. This has been Officers.• ACHIEVER OF THE YEAR participates in conducting testing on behalf of the client needs. Very knowledgeable GERMAINE E. SIMMONS-DEAN of the Wealth Management department. on regulations, she strives to understand complex issues to the last detail, and has Described as a dedicated, hard-working provided cross-functional support to other Ms. Simmons-Dean employee who delivers even when under areas when needed, as well as to the CEO is a Senior Assistant extreme pressure, she is always focused and Senior Management. Client Advisor at UBS and keen on professional development. Her (Bahamas) Limited, employers say she is an excellent team She is an active member of the firm’s High and has been working player who is happy to share know-how and Potential Pool, and has displayed interest with the European knowledge with others; in this connection in other cultures and working practices, Desk for the past 5 she has become the first point of contact for with particular high interest in employment years. As a Senior new team members. diversity. UBS has advised that she will Assistant, she co- become an International Assignee on a manages client portfolios; processes payment Since joining UBS, she has demonstrated 2-year secondment in Switzerland in early and security orders and confirmations and great loyalty towards the company and was 2007. She has a BA in Information Systems client statements; and maintains the client a critical employee for her department during Administration and has completed various database. Additionally, her responsibilities a period when it lost key staff to competitors. sector-relevant training programmes, include preparation for client visits and She is credited with a capacity for learning including the Series 7, and the Introduction meetings; proposals (e.g. bonds); account from setbacks and turning these into to Mutual Funds and Quality Customer openings; order dealings (e.g. foreign positive action. Exhibiting top professional Service courses. She is a member of the exchange, money markets, deliveries/ behavior, Ms. Simmons-Dean is extremely International Association for Administrative receipts, FTD & Buy/Sell orders); and KYC client focused with a sound understanding Professionals (IAAP). updating. As part of the IT project team, she •

FIN. SERVICES STUDENT OF THE YEAR Mention for Outstanding BGCSE results and in Banking and Finance at COB. While AISHA MELVINA JOHNSON she received 9 out of 12 Class Awards at continuing to work full time, she completed Graduation. During her school years, Aisha this degree, and graduated in the Spring, also participated in numerous activities 2006. Between April-June, 2006 she A graduate of C.R. including the Alpha Kappa Alpha conference worked with Credit Suisse-Zurich, obtaining Walker Senior High, for young women, and the College of the exposure to back office functions and account where she continuously Bahamas Conference of Youth Leaders. management. Aisha has completed the attained the Principals Series 7 course and plans to take the Series List distinction, Aisha Aisha earned early acceptance into the 7 exams abroad to become internationally also was recognized College of the Bahamas, and also received certified. She also plans to study towards during her secondary the Apprenticeship Scholarship of Credit the CFA designation. level school years for Suisse (Bahamas), which allowed her to helping students who attain her Associates of Arts degree in She currently is a Senior Securities Executor were considered under achievers. She served Banking - with credit - while working part at Credit Suisse (Bahamas) Ltd. Her as a Study Hall Tutor for 4 years. While at time to gain experience. At the completion employers describe her as “having sharp C.R. Walker, she also was on the Student of the apprenticeship program, Aisha worked organizational skills and the ability to multi Council, a 1998 Debutante, 1998 Class full time with Credit Suisse for a year before task very well,” and as “demonstrating an Valedictorian and 1998 Head Girl. Her enrolling in the Bachelor of Arts Program ambition for excellence”. academic achievements included Honourable •

10 | BAHAMAS FINANCIAL SERVICES BOARD FSI DEVELOPMENT Highlights that reflect sector development MINISTER’S AWARD & PROMOTION AWARD include: PHILIP STUBBS BANK OF THE BAHMAS Since 2002, • Conducting the first major mortgage the Minister of fair, involving partners in real estate, Financial Services insurance, furniture and other and Investments homeowner needs and generating has presented this thousands of mortgage application award as part of the This young and progressive institution born requests, 2004; Financial Services in 1988 has advanced financial services • Writing more mortgages leading to Industry Excellence for individuals and for institutions, and has more broad-based home ownership Awards programme, brought prestigious honour to The Bahamas than any other bank in The Bahamas, recognising stellar financial services sector through back-to-back 2005; performance within the industry. The 2006 awards for Country Bank of the Year from The • IPO and two rights offerings, one Recipient was Mr. Philip Stubbs, Managing Banker, 2005-2006, and Euromoney, 2006. preferred shares, one common, to Partner of Ernst & Young. In announcing his No Bahamian bank had ever won either of broaden shareholder base; selection, the Minister described Mr. Stubbs those coveted awards before. • Steadily increasing shareholder value as someone who has helped to ensure that with equity increasing from $19 the financial services sector in The Bahamas remains strong and that it continues to grow No Bahamian commercial bank had ever million in 2000 to $95 million in and develop. “He is an encouraging mentor offered trust services for Bahamians before 2006; to those younger persons entering into the Bank of The Bahamas recognised the • Creating Business Development accounting profession, exemplifying the need and launched its trust subsidiary Department rather than traditional values celebrated by this award and is a in the year 2000. No bank had issued marketing division; fitting example of the spirit of commitment to VISA pre-paid and gift cards; nor offered • Recognising that partnerships empower (BTC, Mt. Tabor, MailBoxes, Etc.); excellence for this sector,” said the Minister. three-day clearance of US dollar deposits; Mr. Stubbs attended the Government High nor cheque imaging as part of its online • Introduction of private banking services scheduled for late 2006. School and the Atlantic Provinces Association banking product; nor dreamed of opening a of Chartered Accountants, Halifax, Nova branch in South Florida to serve the needs Scotia. He is a member of the Executive of Bahamians who do business there every Despite its youth and relatively small size, Bank of The Bahamas reached out in the Board of Ernst & Young Bahamas-Bermuda- day of the year. This last move alone, nearly Cayman Area Practices with over 35 years five years from initial approval in principle to aftermath of Hurricanes Frances and Jeanne in The Bahamas and Katrina in the U.S., of experience in accounting, auditing and what is expected to be the opening date in business advisory services. early 2007, caused a re-write of regulatory leading a telethon fund-raising drive, and donating over $100,000 to hurricane relief laws, paving the way for other financial Mr. Stubbs is a member of both the Canadian efforts in one year. institutions to follow its lead and making and Bahamas Institute of Chartered conducting business abroad easier for all. Accountants and has served on various From a 2% market share only a few years Institute Committees as well as serving in The explanation of the Bank’s success can ago to 8% today, from $279 million in the past as Council member, treasurer and be summed up in the one word title of its assets to nearly $600 million six years later, secretary. He is a member of the Kiwanis 2006 Annual Report: Innovate. From “out of Bank of The Bahamas has demonstrated Over-the-Hill Club and was President of that the box” thinking to “over the top” training, that caring about community, nurturing staff, organisation from 1982 to 1983. He also from a multi-million dollar investment in growing through teamwork and meeting served as Lieutenant-Governor of Merit for sophisticated software that is allowing it customer needs – even before they are Kiwanis Clubs in The Bahamas from 1986 to re-train and re-position staff for more recognised by customers themselves - help to 1987. Mr. Stubbs is Treasurer and an meaningful careers, Bank of The Bahamas not just the business of one institution, but Executive Board Member of the Children’s has demonstrated the benefits of innovation the growth of the sector itself. • Emergency Hostel, and a member of the in financial services. Public Disclosure Commission. •

FCF Board Committee, comprising sub groups of Careers Fest, FSI Student of the Year, and Industry Awards. L-R: Wendy Warren (BFSB); Suzanne Black (FCF Board); Cyprianna L. Bethel (FSI Student); Errolee Conliffe (Careers Fest- MFSI); Robin Hardy (Careers Fest); Joan Pinder (FSI Student); Kim Bodie (Industry Awards); Nadine Frazer (FSI Student); Dexter Fernander (Careers Fest-MOF); Anastacia Johnson (Industry Awards); Michaela Theophilus (Industry Awards); and Catherine Gibson (FCF Board).

BAHAMAS FINANCIAL SERVICES REVIEW VOL. 7 | INCORPORATING 2006 ANNUAL REPORT | 11 JURISDICTIONAL DEVELOPMENTS Absolute Return: Back to the roots of Private Banking By MIGUEL GONZALEZ, Managing Director, SYZ & CO Bank & Trust Ltd.

DURING THE creating a major misunderstanding with their Adapt the bank to the client rather than the FIFTEEN YEARS investors. opposite before the burst of the stock Diverging objectives In our view, the main explanatory factor for market bubble this disappointment can only be based on in 2000, relative With relative asset management, success the fact that relative investing remains a investing became is measured in terms of under- or over- theoretical construction that might well be the undisputable performance in relation to the/a benchmark. appealing for its apparent objectivity and dogma and was Results are deemed satisfactory if they academic backing but it just does not meet considered the are superior to the benchmark, regardless investors’ real expectations. In other words, only rational of whether they are positive or not. Every because relative investing might have a way to manage money. Private banks that investment decision is taken relatively to the number of advantages for the fund manager, followed the less trodden path of absolute market, in terms of under- or overweighting it’s just not what the investor needs. return were considered a relic from the past and, for the asset manager, the risk-free and unfit to manage “serious” money. The position is to be invested in exactly the same Often enough, financial industries have heavy losses incurred by passive managers way as the index. This is a key element as it tended to implement investment processes during the 2000-2003 period and public establishes a divergence of interests with the based on organisational or rationalisation interest brought by the Nobel prize awarded investor on which I will elaborate. reasons, rather than have them correspond to works on behavioural finance have brought to clients’ needs. The better approach could a greater awareness of real investors’ needs As far as private banking is concerned, be precisely the opposite: banks should and a return in favour of absolute return. this new approach has rocked centuries only implement their investment strategy of tradition. Relationship managers have after having truly understood their clients’ The Benchmark struggled to explain to their clients the investment needs. In our opinion, banks reasons for such a change, accustomed should adopt a goal of absolute performance The Modern Portfolio Theory developed as they were to giving priority to capital simply because it corresponds to investors’ by Harry Markowitz in 1952 and Fana’s preservation and a traditional absolute real expectations because of the priority it Efficient Markets Hypothesis gained performance objective. Confronted with the puts on capital preservation. acceptance with the public. Academic apparent irrefutability of the mathematical theories have gone out of University demonstrations, clients finally converted to In order to achieve this goal, there is sadly campuses to become standard investment the demands of this new thought police, no mathematical demonstration, no sure- practice with most asset managers. without always being entirely convinced. hit formula, but rather a combination Indeed, under pressure from institutional Unfortunately, if the divergence of objectives of investment common sense, constant investors and pension funds wanting a more was not clear when markets were rising, monitoring, talent, and a number of quantitative approach to asset management they were evident when the stock market guidelines: that would provide investors with the comfort collapsed in 2000. of objectivity and turn investment into a 1. Clarify the objective. The first and science, investment professionals during Following the most recent and one of the foremost rule is simply to set the the mid eighties began adopting investment longest and deepest stock market falls, proper course before leaving harbour. models based on relative performance. institutional and private investors were In other words, the client’s objectives rapidly forced into the realisation that their have to be clearly defined before A number of studies tend to show that objectives were not relative but rather even beginning the management of a most asset managers are unable to beat absolute. Whilst the asset manager might portfolio. If the objective is absolute their relevant market index (for instance be satisfied with only losing 28% against return, then the risk-free position is the S&P 500 index for a US equities the 30% fall of the index, this certainly was cash and cannot be the index. manager) over the long term and as a untrue for the investor for whom beating the 2. Align interests. To ensure that all result indices have become the ultimate benchmark was not a great comfort. After all, interests are fully aligned, managers performance benchmark. Indexed funds at the end of the day, the investor’s bottom should be appraised and rewarded in simply aim to reproduce index weightings, line is always in dollars, francs or euros and relatively to this objective. therefore obtaining similar performance, not in percentages of an intangible index. As 3. Minimise losses and control volatility. while even the most active managers define Warren Buffet very truly said: “You cannot This might seem obvious, but the their investment objective in terms of out eat a relative sandwich”. best way to win is first to avoid loss of performance in relation to the index. capital. In order to achieve this, it is The disappointment surrounding relative important to utilise extensively hedging Based on figures and statistics, the relative investing occurred with institutional techniques and risk management. It approach appears reassuring thanks to its clients that had requested a change in the also means that, although long-term apparent objectivity. It has been adopted at investment philosophy from the beginning. objectives are important, short-term lightening speed by banks that have widely Insurance companies and pension funds movements are also important. After applied it to their institutional clients. quickly learnt that their liabilities were also all, as quoted by Keynes: “In the long absolute, since they are obliged to pay out term, we are all dead”. Later, and in order to harmonise and pensions and insurance claims in dollars, rationalise their investment processes, banks euros or francs. The manner in which they extended this approach to investment funds are to manage their assets has to match their Continued on page 13 and private clients, unaware that they were liabilities.

12 | BAHAMAS FINANCIAL SERVICES BOARD Continued from page 12 Easier said than done: Obviously, such an Miguel Gonzalez is the Managing Director investment philosophy is more difficult and of SYZ & Co. Bank & Trust Ltd. and is Head 4. Adopt an active and non-indexed style. demanding for the asset manager. Indeed, of Client Relationship and Investment If a manager thinks the market is going rather than mathematical formulae it can Management. After graduating in Economics to drop, then he should act accordingly. only rely on talent, a very limited currency. and Law from the University of Geneva Most asset managers are imposed strict Moreover, it suffers from a size constraint: in Switzerland, Miguel Gonzalez began investment guidelines that oblige them active asset management, hedge funds his career with CGBC S.A., now Fortis to be 100% invested at all times or investing and hedging techniques are all Banque (Suisse) S.A. in Geneva as Client that require low tracking errors. While trickier to implement in large amounts, due Relationship Manager. Between 1997 and this ensures that the performance will to liquidity problems. This is why hedge 2001, he worked at Pictet Bank & Trust Ltd. not differ too much from the index, funds tend to close access once they’ve as Vice President before joining the Swiss it actually prevents any protection of reached a certain size. In this case, and banking group SYZ & Co. in 2001. capital when markets fall, as managers contrary to belief, small can be beautiful. cannot sell the assets and place them Founded in 1996 by Eric Syz, Alfredo in cash positions. Of course, an active Although more difficult, such a “humanist” Piacentini and Paolo Luban, SYZ & Co. style is not a guarantee against wrong approach is clearly the way of the future as has, in just a few years, built a reputation decisions. But if a client were to excuse it is the only way to satisfy investors’ needs. as a highly respected asset management errors, he will frown on a lack of action. Inserting the human factor at the nucleus of specialist in Switzerland. SYZ & Co. offers a 5. Use alternative products (or “hedge the financial equation is the basis of a new new approach to asset management based funds”) or structured products, which field in academic research: the so-called on investment performance combined with all have absolute return objectives. “behavioural finance”, which recently came personalized service. While benefiting Conventional investment methods can under the spotlight with the Nobel Economy from all the resources of the SYZ & Co. only yield profits when markets rise. prize awarded in 2002 to Kahneman and Group, SYZ & Co. Bank & Trust Ltd. is an Alternative funds, however, can deliver Smith for their work in this field. Adopting independent legal entity from the Swiss- positive results even when markets an absolute return model by no mean based bank. In addition to the Bank’s stagnate or fall, through a variety of implies going back to the old-fashioned headquarters in Geneva, the Group also has strategies that include short selling private banking of yesteryear, but simply offices in Switzerland in Zurich, Lugano, and arbitrage techniques. Structured to put the high-tech tools and techniques Locarno, as well as abroad in Milan, London, products allow upside exposure to available today at the service of a realistic Luxembourg, Salzburg and Nassau. financial markets without downside objective and to place investors back where risk. they belong: right at the centre of a bank’s attention. •

BFSB 2004-2006 Directors: Front Row: Ken Brathwaite, Paul Winder, Michael Paton, Wendy Warren, Suzanne Black, Sean Longley; Back Row: Christian Coquoz, Andrew Law, Bruno Roberts, David Sussman, Alyson Yule, David Thain.

BAHAMAS FINANCIAL SERVICES REVIEW VOL. 7 | INCORPORATING 2006 ANNUAL REPORT | 13 JURISDICTIONAL DEVELOPMENTS - FOUNDATIONS

We also have a client who has a foundation Bahamas shall be the address of the THE BFSB INTERVIEW in Panama and who is now considering Secretary to the Foundation, to which having it redomiciled here which we believe all communications and notices may be BFSB interviews Linda G. Williams, can be done quite easily in order to have a addressed. (13) (1) Manager, Private Banking at CIBC ‘one stop shop’. • An appointed Secretary to the Trust, whose company has formed more Foundation should consent in writing Foundations than any other service (12 (2) (b) provider in The Bahamas • Every Foundation must hold at least one meeting of the Officers as its BFSB: What is the process for setting up a Annual Meeting in addition to any Foundation here in The Bahamas? others (35) (1) • Seven days Notice and Agenda should Linda Williams: The ‘practical’ side of be sent to the Founder, members of establishing and administering a Foundation the Foundation Council and any other can be a very simple process and is similar supervisory person. (35) (2) to that of an international business company • Minutes or copies of the minutes of (IBC). The Foundation Charter or Articles, proceedings of any meeting of the which governs the administration of the officers of a Foundation shall be kept at Foundation, can be tailored to suit the the registered office of the Foundation. Client’s needs, be it estate or tax planning, (39) (1) confidentiality or charitable purposes. • A Beneficiary who has an interest in a This document can be as simple or as Foundation’s assets shall be notified in complicated as desired. Once the relevant writing by the Officers of his interest documents have been filed with the Registrar (41) (1) General, a Certificate of Registration will be issued. Clients are also The Officers of a Foundation shall (unless waived in writing by the Foundation Council BFSB: Why do your clients find the pleased with the or other supervisory person) every year Bahamian Foundations attractive? at a meeting lay before the Foundation a reduced time in statement of accounts along with a report LW: We have found that our Clients find the “ the execution of by the Officers with respect to the state benefits and flexibility of foundations quite their requests as of the Foundation’s affairs in relation to attractive as it allows them to have more the achievement of the objectives of the control in the management of the foundation. they do not have to Foundation. (43) (1) (2) The Founder (who may be the Client) may provide to the Foundation Council written wait for the trustee Editors Note: instructions for the management of and committee to the disposition of the foundation’s assets. The passage of Foundations legislation was The Founder or person appointed also has deliberate. considered a milestone for the financial the authority to direct investments, make services sector because The Bahamas distributions etc. without prior approval from became the first common law jurisdiction a trustee. In most cases one or more IBCs BFSB: Can you provide some more details with legal provision for foundations. (which are placed under the foundation) are on the Foundation Council? Government and the private sector identified used to hold the assets, which provides even the new product as an important component more flexibility in administration. LW: Sections 14 and 40 of the legislation of the overall strategy for the development of deal with this. The Foundation Council may the sector in The Bahamas. Some Clients may not like the idea of giving consist of two or more natural persons or a up ownership or control of their assets, legal person and one or more natural persons Foundations represent an expansion of The so the foundation is a viable alternative to or a legal person by itself. The Foundation Bahamas’ capability to service a new client trusts with the same benefits. Clients are Council must consent in writing to act as base and the jurisdiction’s commitment to also pleased with the reduced time in the such. remain relevant to new and potential clients execution of their requests as they do not domiciled in civil law countries. have to wait for the trustee committee to One member of the Foundation Council may deliberate. call a meeting of the Council, which requires Initiatives such as this keep The Bahamas at seven days’ notice in writing to the Founder the forefront of private wealth management, BFSB: Are there many applications for the and every member of the Foundation not only in the “international” world, but in use of Foundations? Council. financial centres generally. •

LW: We currently manage a number of BFSB: What are the major points to foundations that were established for:- be considered when establishing and Linda G. Williams is employed with CIBC administering a Bahamian Foundation? Trust Company (Bahamas) Limited and • estate planning / forced heirship issues currently holds the position of Manager, • charitable purposes LW: Listed below are some of the Private Banking. She is a member of STEP • to hold the shares of operating considerations (not exhaustive): and an ACIB. CIBC Trust is a subsidiary of companies Canadian Imperial Bank of Commerce, a • A Foundation’s registered office in the major Canadian Bank.

14 | BAHAMAS FINANCIAL SERVICES BOARD JURISDICTIONAL DEVELOPMENTS - FOUNDATIONS Private Foundations By HEATHER THOMPSON, Partner, Higgs & Johnson The Charter may include inter alia the THE the main purpose(s) of the Foundation (s. 4). reservation of rights or powers to the FOUNDATIONS Founder. ACT 2004 (the Establishment “Act”) came Articles into force in The In order to establish a Foundation in The Bahamas on Bahamas there must be: (i) a foundation The Foundation Articles (the “Articles”), also October 22nd, charter (or a duly executed will); (ii) called Regulations or Bylaws, are optional. 2004. The Act registration; and (iii) the issuance of a If the Founder chooses to have Articles, they provides for the Certificate of Registration. Once these can provide, inter alia, for: creation of a requirements are fulfilled, the Foundation is private foundation formed. 1. the distribution of assets made, or to be in The Bahamas. Foundations have their made, by the governing bodies of the origins in civil law countries, where the The Charter Foundation; Church was a “Divine Foundation” and 2. the identification of any initial had the legal capacity to manage assets The Act requires the Charter document of the beneficiaries or any to be designated at with which it was endowed. These public Foundation to include (s. 6): a later date of the Foundation; foundations were non-profit charitable 3. the identification of the remaining organizations created by individuals for the 1. the name of the Foundation with the beneficiary upon a winding up of the benefit of society as a whole. word “Foundation” in English or in a Foundation; and foreign language (at the discretion of the 4. the regulation of any governing bodies of In 1926, Liechtenstein created the Family Registrar) as the last word of the name; the Foundation. Foundation by the Law of Persons and the name of the Foundation is restricted Companies. Family Foundations, unlike by the Act; it cannot include certain Registration public foundations, were designed for the terms such as “limited” (s. 17); personal benefit of members of one or more 2. the name and address of the Founder To register the Foundation, the documents families. Based on the Family Foundation, or if the Founder is a legal person the that must be submitted to the Registrar with in 1995 (Law No. 25 1995) the government number and place of registration of the the application for registration and fees are: of Panama developed the Panama Private legal person and the address in The Interest Foundation, and although the Bahamas for service of documents on 1. a statement signed by the secretary Panama Private Interest Foundation served the Founder; or attorney that includes the following as a conceptual model for the private 3. the purpose(s) and objects of the particulars: the Foundation name, the foundation in The Bahamas, the Bahamian Foundation; date of the Charter, the Foundation foundation law is more detailed. 4. the endowment of the assets to be the purpose(s) and objects; the name and initial assets of the Foundation upon address of the Founder, Secretary, the What is a Foundation? registration and a statement of those Foundation Council (the “Council”) and assets; registered office; a statement that the The Act defines a private foundation (the 5. the designation of the beneficiary or Foundation’s assets are not less than “Foundation”) as an entity established by a the identification of a body by which US$10,000.00 or the equivalent in foundation charter (the “Charter”) and which the beneficiary can be ascertained, or a another currency; is registered. It is a legal entity, is resident statement that the foundation has been 2. a list containing the names and and domiciled in The Bahamas and is able formed to benefit the public at large; addresses of the first officers of the to sue and be sued in its own name (s. 3). 6. a statement as to whether the Foundation; Once assets are transferred by the founder Foundation has been established for an 3. a statutory declaration by the Secretary (the “Founder”) to the Foundation by way of indefinite period or for a definite period; or assisting attorney of compliance with an endowment, they cease to belong to the and if for a definite period it must state the Act. Founder and do not become the property of the length of the period. any beneficiary until they are distributed. 7. the name and address in The Bahamas It is important to note that the Charter and The Foundation manages the assets, of the Secretary to the Foundation (the Articles do not need to be filed with the investing them or otherwise, in accordance “Secretary”) and the address of the Registrar. with the objects or purposes specified in the registered office in The Bahamas of the Charter by the Founder (s. 3). Foundation, which must be the same Officers address as the Secretary; Purpose of a Foundation 8. a statement that the Foundation’s total Prior to Registration, the Founder(s) must assets are not less than US$10,000.00 appoint at least one person (natural or legal) The Foundation can be used as a vehicle or the equivalent in another currency; to be an officer (an “Officer” or in the plural for the holding of private assets endowed and “the Officers”) of the Foundation. An Officer on the Foundation for the benefit of 9. the signature of the Founder in the of the Foundation may be a legal person. identified persons or classes of persons. The presence of a notary public or the The Act lists those persons who cannot be Foundation may, if necessary for the proper Secretary or if the Founder is a legal Officers, such as an undischarged bankrupt management of the assets, buy and sell person the signature of the authorised (s. 10). assets and engage in any other administrative person(s) in the presence of a notary activity not prohibited by law; however, public or the Secretary. Continued on page 16 business transactions must be secondary to

BAHAMAS FINANCIAL SERVICES REVIEW VOL. 7 | INCORPORATING 2006 ANNUAL REPORT | 15 Continued from page 15 appointed as members of the Foundation Seal Council (s-14(3). The Officers, in the absence of the Council, A Foundation may, but is not required, to are the governing body of the Foundation. Registered Office have a seal for use in The Bahamas (s. Their duties are primarily administrative 29). If the Foundation has a seal, it must rather than fiduciary in nature. Prior to registration, the Foundation must be affixed in the presence of an officer of the have a registered office in The Bahamas, Foundation. Officers must exercise reasonable care which is to be the address of the Secretary. and skill in the conduct of the affairs of Capacity Confidentiality the Foundation, including exercising due care and skill in the management and The validity of an act done by the Any person connected with the management investment of the Foundation assets, and Foundation cannot be challenged on the of the Foundation, i.e. an Officer, a protector, must act in accordance with the Charter and ground that it is outside the ambit of a member of the Foundation Council, a Articles. No officer of the Foundation shall the Charter. However, a member of the member of any other governing body of a be personally responsible for any liability of Foundation or a beneficiary can bring foundation, any other supervisory person, the Foundation unless the liability is incurred proceedings to prevent acts which are a counsel and attorney for a foundation or as a result of his own gross (s.33(1) beyond the capacity of the Foundation (s. an auditor of a foundation, has a duty of negligence, wilful default or misconduct, 26). confidentiality to the Foundation and the fraud or dishonesty. A court also has beneficiaries and a breach of the duty will Meetings discretion to relieve an officer from liability mean that such persons may be liable on (s.33 (5). The Foundation is required to hold at least summary conviction to a maximum fine of one meeting of the Officers each year $50,000.00 or to imprisonment for a term Secretary (the “Annual Meeting”) (s. 35(1)). The not exceeding 3 years. Founder(s), members of the Council and any A Secretary must be appointed in respect of Forced Heirship the Foundation; the Secretary is an officer other supervisory person are required to be notified of the annual meeting. of the Foundation. If a person ceases to The Act (s. 68) contains similar provisions be Secretary, any liability incurred by him Beneficiary’s Right To Information to those in the Trusts (Choice of Governing while acting as Secretary is still enforceable Law) Act, with respect to the non recognition against him by the Foundation. The A beneficiary who has an interest in and enforcement of forced heirship claims. Secretary must be either (i) duly licensed all or some of the Foundation’s assets as a provider of financial and corporate must be notified in writing by the officer Life of Foundation services under the Financial and Corporate of his interest and is entitled to receive Service Providers Act or as a trust company information on request from the Foundation A Foundation may be established for an under the Banks and Trust Companies regarding the fulfilment of the objects of indefinite or a definite period. Regulation Act. The regulatory oversight the Foundation and to inspect and copy the of the Foundation will be conducted by the constitutional documents of the Foundation, Indemnification Regulator that has licensed the Secretary any audit report and any minutes of any (s.2 (14). meetings of the officers of the Foundation The Act provides for the indemnification Council or any other supervisory body. of every Officer, Council Member, other Foundation Council supervisory person and protector of the If the Charter provides for a Council, it may A beneficiary may apply to the court for an Foundation who acts honestly and in good consist of two or more natural persons, order of compliance if the Foundation does faith against all costs, charges, losses, a legal person and one or more natural not supply the requested information or expenses and liabilities incurred by him in persons or a legal person by itself. The allow inspection of the documents. the performance of his duties; the amount Council must ensure that the Foundation required for the indemnification attaches complies with the provisions of the Charter, As the assets of a foundation are its own, as a lien on the property of the Foundation, the Articles and the Act. The Officers are it appears that the entitlement of the which has priority over other claims of required to follow the instructions of the beneficiaries to information is akin to those the Foundation (s. 65). The indemnity is Council. The Council has the power to of beneficiaries with a vested interest under not available where such person has been access the books, records and accounts of a trust. guilty of gross negligence, wilful default or the Foundation. It has the further right to misconduct, fraud or dishonesty. Financial Records (s.15): In Terrorem Provisions The Act requires the Foundation to keep 1. be informed of all meetings of the proper books of account at the registered Officers; The Act permits the Charter or Articles of office or some other location designated by the Foundation to provide for a beneficiary 2. attend and be heard but not vote at the officers with respect to: meetings; to forfeit his benefit if he challenges the 3. be included in the circulation of the establishment of the Foundation, the 1. all sums of money received, expended endowment of the Foundation’s assets, the Foundation business documents when and distributed; they are circulated to the Officers; Charter or Articles or any decision of the 2. all sales and purchases; Council or other supervisory persons (s. 66). 4. be informed of any delegation of powers 3. all assets and liabilities (s. 42). to Officers; The Act also provides for the administration 5. appoint an auditor. of assets, redomiciliation, liquidation, The Act prescribes the information which restoration and the ability to allow for must be set out in the books of account Officers and auditors of the Foundation (s.43, s.44, s. 45, 46) and the signing of Continued on page 17 (and related parties) are not eligible to be the Foundation’s balance sheet (s.47).

16 | BAHAMAS FINANCIAL SERVICES BOARD Continued from page 16 There is also a process for restoration (s. to enable private foundations. Private 55). foundations can be viewed as a hybrid of instruments of disposition to a beneficiary to companies and trusts, combining the best include restrictions against alienation. Penalty asset protection elements of each. • Certificate of Good Standing An officer of a foundation will be guilty of an Heather L. Thompson is a partner at offence punishable on conviction by a fine Higgs & Johnson in Nassau with extensive A Certificate of Good Standing (the of $10,000 or imprisonment for 2 years or experience in foundations, international “Certificate”) can be obtained from the both if he: trust and company administration, Registrar which certifies that the name of counselling individual and corporate the Foundation is on the register and that (a) falsely represents the financial position clients on the creation of trusts and the Foundation has paid all applicable fees. of the Foundation to anyone; ownership structures, and giving advice The Certificate would also indicate whether (b) withholds financial information to which to trust companies on the development of or not the Foundation is in the process of any person is entitled; and new services and issues arising in trust being liquidated, wound up, dissolved or (c) falsifies any document to be delivered to administration. removed from the register. the Registrar or required to be prepared in respect of the Foundation (s.72). Removal and Restoration to the Register She has served as a consultant on several important pieces of financial services Uses If the Registrar has reason to believe that legislation, including Acts relating to the Foundation registered under the Act no There is no doubt that private wealth Purpose Trust, Foundations and Private longer satisfies the requirements set out advisers will see many advantages to the use Trust Companies. in s. 4(1) and 5, the Registrar must serve of foundations. These include: charitable on the Foundation a notice that the name purposes, estate planning, preservation of of the Foundation may be removed from family wealth and confidentiality. the register. The Act then prescribes a procedure which allows the Foundation to Conclusion respond to the notice. Failing a satisfactory reply, the Registrar will remove the name The Act has positioned The Bahamas as of the Foundation from the register (s. 54). one of the first common law jurisdictions

Continued from page 3 JUL ‘05 European Union Tax Savings Directive comes into effect OCT ‘05 BIFS Annual Awards UK-based Friends of The Bahamas launches Ceremony plans for Scholarship Programme Central Bank of the Bahamas invites participation in Survey on Economic Activity Tax Symposium – “Tax as a Driver of Budget Communication in presented in (SEA) for first half of 2005 Wealth Management”. Cosponsored by Parliament BFSB, BBA, BICA, BSFA Amendments to Purpose Trust and Bills to amend the Purpose Trust and Foundations Act are passed in Parliament Seatrade Int’l Maritime Convention Foundations Act are tabled in Parliament – London. BFSB Exhibits (with BMA) BFSB launches Nominations Process for Careers Fest 2005. Hosted by BFSB, JUN ‘05 Transcontinental Trusts 2005 FSI Excellence Awards Conference – Geneva. BFSB Rotary Club of East Nassau, Rotary East, and the Ministries of Education, Finance, participates AUG ‘05 Strategy Briefing hosted by BFSB and Financial Services and Investments European Briefing Visit BFSB Funds Sub Group commissions a Annual Financial Services Industry Chicago Briefing Visit Legal Opinion on the Impact of the EUSD Excellence Awards Banquet on the Bahamas Funds Sector. Northern Bahamas AML Conference – Grand International Trust & Tax Planning Summit, Bahama. BFSB presents 7th Annual Caribbean Commercial Law Coral Gables. BFSB Exhibits Workshop. BFSB cosponsors AIBT/BFSB submit comments on Central FATF Plenary – Paris, France Bank’s AML Guidelines BFSB AGM SEP ‘05 NOV ‘05 BICA Week BFSB Issues Memorandum on EUSD Brazilian Briefing Visit – Sao Paulo Eastern Europe Briefing Visit FATF Plenary - Singapore STEP/ITCA hosts Policy Symposium: Beyond the Level Playing Field – London. BFSB Offshore Alert Due Diligence Conference, EUSD Green Light Note adopted by EU Miami Beach. BFSB presents Council of Ministers presents OECD’s Pre-Meeting with Non Member 1st Annual Family Office for Latin American Group of Financial Services Regulators Families. BFSB Exhibits (GFSR) releases Handbook on Information Economies on the Global Forum on Taxation Sharing Arrangements in The Bahamas Legalease Conference - British Colonial OECD Global Forum on Taxation- Melbourne Hilton - Nassau. The two day event focuses Caribbean Financial Action Task Force MFSI launches its Strategy & Branding (CFATF) – IMF/World Bank Training Seminar on Practical Issues in Company and Trust Administration Survey. BFSB co-ordinates industry for Evaluations – San Jose, Costa Rica participation Egmont Group of Financial Intelligence Units Anti-Money Laundering Audit & Compliance Forum, New York. BFSB presents DEC ‘05 International Trust Congress – Plenary – Washington, DC London. BFSB presents Member Forum: International Cooperation Offshore Group of Banking Supervisors Bahamas International Film Festival (BIFF) (ORBS) Annual Meeting – Cayman Islands Foundations Guide is published by BFSB • BAHAMAS FINANCIAL SERVICES REVIEW VOL. 7 | INCORPORATING 2006 ANNUAL REPORT | 17 JURISDICTIONAL DEVELOPMENTS - PROFESSIONAL BRIEFS M&A Activity in the Private Banking Market By SIMON J. S. TOWNEND and DIVEANE BOWE, Partners, KPMG BANK CONSOLIDATION IS A continuing activity in the Bahamian market during 2006 trend in the Caribbean and the Bahamian was on the rise with transactions such as the private banking industry as a result of announcement by UBS during May of 2006 merger and acquisition (“M&A”) activity. In that it would acquire the assets of Brazilian an effort to gain market share and diversify based, Pactual Offshore Bank and Trust their products and services, many of the Company (“POBT”) via a US$2.5 billion players in the private banking industry are purchase to form a new entity, Bank UBS seeking opportunities to grow their portfolio Pactual. This transaction was completed of business. The private banking industry on December 4, 2006 with the new bank has been viewed as a fragmented one operating under the name UBS Pactual after with players either being small to medium having received all necessary approvals to sized private wealth specialists or offshoots finalize the transaction. Two banks with offer to be made to all shareholders of of larger international general banking a presence in the Bahamas have been in FirstCaribbean. operations. This perception is changing as acquisition mode. In May of 2006, the Bank international banks seek to move into this of Nova Scotia acquired El Salvador’s fourth M&A activity in the global private banking stable and high margin business to achieve largest bank, Banco de Comercio for $178 and wealth management industry is also economies of scale either by acquisition or million and in June announced that it would booming according to research released organic growth, thereby putting pressure on buy Costa Rica’s fourth largest bank, Interfin by KPMG International, with 258 deals small competitors to consolidate. for $293.5 million. During July HSBC completed in 2005, an increase of 80 Holdings Plc agreed to pay $1.77 billion percent on the previous year, which was itself Over the past three years the Bahamian for Grupo Banistmo, which has over $9.12 a record. This level of activity is likely to private banking industry has had its share billion in assets and operations in five Central persist as the research also found that over of M&A activities. The table below outlines American countries and Colombia. 90 percent of private banks believe that there mergers and acquisitions that took place Finally, on December 27, 2006 Barclays are good growth prospects for the industry between 2003 and 2005. This includes PLC (“Barclays”) announced the sale over the next three years and 89 percent are the Bank of N.T. Butterfield & Son Limited’s of 599,401,230 of its ordinary shares either actively seeking acquisition targets or would consider acquiring if the right opportunity arose. Mergers between 2003-2005 NAME MERGED WITH/ACQUIRED SURVIVING ENTITY The study is the third in the 2003 annual series “Hungry for More – Acquisition appetite BSJ Int’l Bank & Trust Co. Ltd. UP Bank & Trust Ltd. BSJ Int’l Bank & Trust Ltd. and strategy in the global Bank of Butterfield (Bahamas) Ltd. Leopold Joseph (Bahamas) Ltd. Bank of Butterfield (Bahamas) Ltd. private banking and wealth Thorand Bank & Trust Ltd. management industry” and United European Bank & Trust BNP Paribas Private Bank & Trust United European Bank & Trust is based on interviews with (Nassau) Ltd. (Bahamas) Ltd. (Nassau) Ltd.1 147 private banks around 2004 the world. The underlying survey was conducted by the J.P. Morgan Trust Co. (Bahamas) Ltd. The Chase Manhattan Trust Cop. J.P. Morgan Trust Co. (Bahamas) Ltd. Economist Intelligence Unit. (Nominees) Ltd. J.P. Morgan Trust Co. (Bahamas) Ltd. Morgan Guaranty Nominees J.P. Morgan Trust Co. (Bahamas) Ltd. The huge increase of corporate (Bahamas) Ltd. activity in private banking is Bank of America N.A ITK Trust Co. Ltd. Bank of America N.A. the result of a perfect storm 2005 of contributing factors. There has been an explosion of Bank of America N.A ITK Trust Co. Ltd. UBS Trustees (Bahamas) Ltd. personal wealth, particularly in Asia, continuing growth in The table above only reflects mergers and acquisitions between licensees of Central Bank of The Bahamas and excludes other private banking revenues and mergers and acquisitions outside the jurisdiction that may impact Bahamian licensees. Certain mergers and acquisitions increased regulatory pressures took place at the parent company level of several Bahamian licensees not listed here but for which no obvious change to the leading to a desire to seek out status of the Bahamian licensee is apparent. Occasionally, the name of a licensee may change to reflect new parentage. economies of scale. Private banks have tended to react 1 Editors Note: As a result of the merger of UEB (Switzerland) with BNP Paribas (Suisse) SA, United European Bank & Trust in two ways. The favourable (Nassau) Limited changed its name to BNP Paribas (Bahamas) Limited, effective as of October 2, 2006. market has allowed many to grow organically, but nearly a third of private banks reported acquisition of the entire share capital of in FirstCaribbean International Bank acquisitions over the past three years. These Leopold Joseph (Bahamas) Limited in 2003 (“FirstCaribbean) to Canadian Imperial Bank acquiring banks have not rested on their . 2003 also saw Scotiatrust Bahamas’ of Commerce (“CIBC”). The amount payable laurels, they tend to be serial dealmakers, (“Scotiatrust”) acquisition of MeesPierson by CIBC of US$989 million was settled completing on average almost a deal every (Bahamas) Limited, making Scotiatrust one entirely in cash. Barclays intends to offer its year. of the largest private banks in the country remaining 66,600,137 ordinary shares in with over $193 billion in assets. Local M&A FirstCaribbean in a subsequent mandatory Continued on page 19 18 | BAHAMAS FINANCIAL SERVICES BOARD Continued from page 18 be an issue for deals that were completed. of the scale, there is no doubt that there will Fully two thirds of respondents lost some be more consolidation to come; for example The high levels of activity will only increase if proportion of the acquired company’s client via merger or due to non-core businesses of the seventy percent of non-acquisitive banks base within one year of completing their the international retail and corporate banking join the M&A market. largest acquisition. 39 percent of private entities being spun off. The odds are in banks lost over 10 percent customer base. favour of more M&A activity to come in The Domestic acquisitions rather than Bahamas financial services arena. • international acquisitions continue to Integration issues are a key risk factor for the dominate the sector at 78 percent of all wealth management industry, the key danger Simon is an FCA, a qualified CF practitioner deals in 2005. The average deal size being that if you get it wrong clients will with the Institute of Chartered Accountants (ignoring the five largest deals) remained walk. However, it does not appear to have in England and Wales, and member constant from the previous year at US$103 impacted the overall performance of deals of The Bahamas Institute of Chartered million. Although Asia is the hottest region, as more than 80 percent of respondents Accountants. He is responsible for KPMG’s little international money is flowing into the said their recent acquisitions had increased regional corporate finance services, and has region. Most of the players already have shareholder value. Despite all the activity we wide experience, having been involved in a footprint in the region and virtually all have seen there will be considerably more corporate finance advisory services in 20 the activity comprises regional or domestic consolidation in the private banking market countries in the Caribbean. deals in an attempt to increase market as there is a wall of money still to hit the share and economies of scale. The burst market. Almost 22 percent of respondents Certified Public Accountant Diveane Bowe of activity in the M&A market also raises its expect to spend more than US$1 billion has more than 14 years of professional own challenges. Vendor’s price expectations on acquisitions over the next three years. audit, accounting, and advisory experience is cited by half of the respondents as an So what does all of this suggest for The gained with KPMG member firm offices in obstacle to M&A activity and of the deals Bahamas? There is no doubt that The Atlanta, Georgia and Nassau, Bahamas. that failed to be consummated four out of Bahamas represents a very important cog in His work has included a wide range of ten of these also faltered on the seller’s price the global private banking wheel. There are businesses with an emphasis on providing demands, the highest single cause of failure. a number of smaller players with excellent auditing and advisory services for clients in Integration issues caused almost a quarter client portfolios who will either seek out the banking, investment and mutual funds (23 percent) to flounder and continue to buyers or attract the same. At the larger end industries.

Instrument. Assets and Segregated Accounts Companies liabilities are linked By DAVID F. ALLEN, Associate, McKinney, Bancroft & Hughes to the segregated account when they A SEGREGATED ACCOUNTS COMPANY private wealth management, by permitting are linked to it in the (“SAC”) may now be registered in The companies other than insurance companies Governing Instrument. Bahamas, thanks to the coming into force and investment funds to register as SACs. While each of the Segregated Accounts Companies Act, segregated account 2004 (“SAC Act”). The Bahamas financial Characteristics of an SAC: An SAC is a is not a legal person services industry has embraced this new derivative form of the traditional company, separate from the vehicle, and increasing numbers of SACs and The Bahamas Companies Act and company, the SAC Act permits the operation have been registered in The Bahamas. SACs International Business Companies Act apply of internal transactions and contracts are creatures of statute and have modern mutatis mutandis in relation to an SAC; an between segregated accounts to be treated origins. They were created to resolve a SAC must be incorporated as a company in the same manner as if entered into by deficiency in the captive insurance industry before it is registered as an SAC. the company and a third party. Further, in certain international financial centres. each segregated account may itself enter The rent-a-captive structure was unable Like a traditional company, an SAC has into transactions and establish contracts to guarantee that assets provided by a an Offering Memorandum and Articles with third parties. The benefit of having participant company to the rented captive of Association. Additionally, an SAC has segregated accounts is that assets and would not be used to cover unjustified a Governing Instrument. A Governing liabilities linked to one segregated account claims of another participant company. SACs Instrument is defined by the SAC Act as one are statutorily separated from assets and allowed for “risk” fencing within the rented or more written agreements, instruments, liabilities linked to another segregated captive. Memorandum or Articles of Association, account. In an action or claim in an prospectuses, resolutions of directors, insolvency, account owners and creditors of Along with success in the captive insurance registers or other documents (including a segregated account will not have access industry, SACs have found popular use in electronic records), setting out the rights, to assets of any other segregated accounts. the investment fund industry. Prior to the obligations and interests of account owners. Account owners and creditors are limited to utilization of SACs, umbrella funds were set The term “account owners” is the name assets linked to the segregated account that up by incorporating separate subsidiaries for given to the registered holders of shares in they have specifically transacted/contracted each sub-fund, which were held in a parent the SAC. with. holding vehicle. Each separate subsidiary was designed to keep assets segregated The shares are typically linked to a Requirements of an SAC: Because an SAC and protected from an action or claim in segregated account. The Governing may limit the ambit of an action or claim in an insolvency by creditors. SACs allow for Instrument must be governed by the laws of an insolvency, an SAC is required to inform a single legal entity to operate in a way The Bahamas. Like a traditional company, persons with whom it deals that it is an SAC equivalent to a corporate group comprising an SAC is a single legal person. However, and must identify the specific account to parent and subsidiaries. The Bahamas along with a general account, an SAC has which the transaction relates. financial services industry has provided segregated accounts. A segregated account for additional use of the SAC structure in is created when it is named in the Governing Continued on page 20

BAHAMAS FINANCIAL SERVICES REVIEW VOL. 7 | INCORPORATING 2006 ANNUAL REPORT | 19 JURISDICTIONAL DEVELOPMENTS - PROFESSIONAL BRIEFS Continued from page 19 order to address the concerns of minority requisite Primary Regulator and a copy of shareholders, if at least 20% of shareholders the Governing Instrument attached. If the Further, it must include a reference to the and creditors object to the registration of the company has carried on prior business, the fact that it is an SAC on its letterhead and in company as an SAC, they may apply to the consent of shareholders and creditors and its contracts. Directors are made personally Bahamas Courts to annul the registration of the Statutory Declaration should also be liable by the SAC Act, if they fail to disclose the company. A further requirement is that a attached. The letter of request must contain:- the company’s status as an SAC. An SAC Statutory Declaration be drafted and signed 1. The name of the proposed company must maintain a register of account owners, by two directors of the company setting out which includes the expression “SAC” or which is not open to public inspection, the following:- “Segregated Accounts Company”; provided an account owner is entitled to 1. The assets and liabilities of the company 2. The nature of the business of the receive a copy of the information in the as at a date within three months prior to company; register pertaining to the account owner’s the date of the request; 3. The address of the registered office of interest in the SAC. It must file an annual 2. A description of any transaction/event the company in The Bahamas; and declaration stating that the company is which has happened before the request 4. The date of incorporation of the in compliance with the SAC Act and pay for registration or is expected to happen company. prescribed fees which are adjusted according between the date of the statement of to the number of segregated accounts. It assets and liabilities and the date of The Registrar of Companies: The Registrar of must also maintain records in accordance registration of the company; such that Companies is required to maintain a register with generally accepted accounting on the happening of the event there of SACs. Upon application and payment principles. Such records must be made would be a material change to the of fees prescribed by the Registrar of available at least once a year to each account assets and liabilities as disclosed; Companies, if the Registrar of Companies is owner, unless waived by the account owner. 3. The names of segregated accounts the satisfied that the company complies with the It is the duty of directors to keep the assets company intends to operate and the SAC Act and that consent from the requisite and liabilities of each segregated account and assets and liabilities which the company Primary Regulator has been obtained, it will the general account separate and separately proposes to assign to each one; register the company as an SAC and publish identifiable from assets and liabilities of each 4. A declaration that on registration: the in the Gazette notice of the registration of other segregated account and the general company and each segregated account the company. After registration, the Registrar account. will be solvent; that no known creditors will issue a certificate showing the date of will be prejudiced and that known registration and place a copy of the certificate Procedure to Register an SAC: A key creditors have been adequately notified on the public file. requirement of registering a company as an of liabilities to be transferred to the SAC is that it has a Governing Instrument. segregated account and have consented The Segregated Accounts Representative: Creating the Governing Instrument would in writing to the company proceeding to A Segregated Accounts Representative may likely entail structuring the Memorandum register; be required, where the Primary Regulator and Articles of Association to include the is especially prescribed by the Minister designation “SAC” or “Segregated Accounts If the company has not carried on business responsible for companies. The SAC must Company” as a part of the company’s name, prior to registration as an SAC, it does not keep particulars of the Segregated Accounts including a definition for SAC, creating require the consent of shareholders and Representative in the register of directors classes of shares linked to segregated creditors or a Statutory Declaration. The and officers of the company. The Segregated accounts and providing for various consent of the Primary Regulator must be Accounts Representative may be: a licensee indemnity and winding up provisions. If the received before registration of a company as under the Banks and Trust Companies company is an Investment Fund, its Offering an SAC. The list of Primary Regulators is as Regulations Act; a licensee under the Memorandum would be amended similarly follows:- Financial and Corporate Service Providers to the above and SAC risk information added 1. If the company business is investment Act; a licensee under the Securities Industry to meet the legal requirement of adequately funds, written consent must be obtained Act; a licensee under the Investment Funds informing investors. from the Securities Commission or the Act; a licensee under the Insurance Act or a Investment Fund Administrator; licensee under the External Insurance Act. The nature of an additional step in the 2. If the company business is issuing It is the duty of the Segregated Accounts registration of an SAC depends on whether securities, written consent must Representative to make a written report to the company has carried on business prior be obtained from the Securities the Primary Regulator within thirty days of to registering as an SAC. If the company has Commission; reaching the view that it is likely a segregated carried on prior business, it must receive 3. If the company business is insurance, account or the general account of an SAC will consent from 75% of its shareholders and written consent must be obtained from become insolvent, that the SAC has failed 75% of its creditors. A letter of consent the Registrar of Insurance; to comply with terms of the SAC Act or that should be executed by the shareholders and 4. If the company is a subsidiary of a Bank the SAC has become involved in criminal creditors. It is recognized that shareholders or Trust company not licensed by the proceedings. and creditors may, however, consider the Central Bank, written consent must be registration of the company as an SAC obtained from the Central Bank of The Conclusion: SACs offer a greater variety of detrimental to their interest in an action Bahamas; options to financial planners than traditional or claim in an insolvency by limiting their 5. If the company is any other business, companies. They allow for assets to be action or claim to assets of a particular written consent must be obtained from segregated and protected within segregated segregated account rather than having the Primary Regulator prescribed by the accounts. The Bahamas captive insurance access to all the assets of the company. Minister. industry and investment fund industry, On the other hand, securing the consent of especially, have benefited greatly from the shareholders and creditors could also prove Finally, a letter of request must be sent unique attributes of this recently established an insurmountable obstacle depending on to the Registrar of Companies requesting vehicle for use in international financial the number of shareholders and creditors registration of the company as an SAC centres. • associated with the relevant company. In with evidence of the consent of the

20 | BAHAMAS FINANCIAL SERVICES BOARD LEGISLATIVE DEVELOPMENTS The Bahamas Introduces Private Trust Companies Complementing private express by a PTC are not restricted to family responsiveness is a key focus of the members of the designated person or jurisdiction. trusts, purpose trusts and designated persons. foundations • Directors of the PTC are not required to The Bahamas has been very careful to be resident in The Bahamas. ensure that its legislative and administrative THE BAHAMAS HAS INTRODUCED a • The PTC, in selecting its Registered frameworks are continually refined in order comprehensive approach to Private Trust Representative in The Bahamas, may to retain its wealth management leadership Companies (PTC) that fully and appropriately also determine in discussion with the with its strong private banking and estate incorporates PTCs into the country’s robust Registered Representative whether it is planning industries serving as the backbone financial system. Private Trust Companies best that the Registered Representative for the sector. have become a preferred tool in the serves as Director, Secretary or Bahamas structuring of the estate and inheritance Agent to the PTC. This leadership has been reflected in a planning needs of the very high and ultra • There is no requirement for a Special number of developments over the past 10 high net worth families and can provide the Director where the Registered years. families with a greater level of involvement Representative is a Bahamian bank or over the investment of the trust assets. The trust company. Otherwise a director • Innovative Trustee Act 1998 which legislation clarifies and serves to introduce a of good reputation and who possesses provides, inter alia, the retention by the client friendly option for the use of this estate at least five years’ experience in a settlor of certain powers; planning tool. discipline relevant to the administration • The Bahamas’ model of an unrestricted of trusts is required. Relevant fund administrator, introduced in 1995, Under the legislation, a Bahamian PTC, disciplines include one or more of set the standard for the delegation like other structures such as the Bahamian law, finance, commerce, investment of authority to a regulated financial foundation, will not require regulatory management or accountancy. services provider. This permits the most approval or exemption from regulation. • While the growth of PTCs may spur the efficient mechanism for the licensing The PTC need only arrange its affairs with establishment of family offices in The and launch of investment funds; a regulated Bahamian service provider or Bahamas, there is no requirement for a • Segregated Accounts Companies (also Registered Representative. A Registered PTC to establish a physical presence in known as PCC) may be used in both the Representative, as defined in the legislation, the jurisdiction. institutional and private client spheres. is a bank or trust company or a licensed financial and corporate services provider From the family with operating companies More recently, in addition to the introduction approved by the Central Bank of the and charitable foundations, to the wealthy of purpose trusts, The Bahamas has Bahamas for the provision of these services. client from a civil law country, the PTC amended the perpetuity period enabling This feature distinguishes the Bahamian PTC may be the ideal solution on a number of families to plan for five generations by from those that are available in a number of different levels including control, influence, instituting a period of life or lives in being other jurisdictions and allows for exclusive privacy, continuity, flexibility, education plus 21 or 150 years. Improvements have interaction between the client and its and empowerment and cost efficiency. The also been made to the International Business Registered Representative without additional non-charitable purpose trust is the most Companies Act, as the jurisdiction seeks regulatory involvement. As a result, client frequent and often considered the best to maintain a legislative framework that is information need only be delivered to the option for holding the shares of a private comprehensive and relevant. offices of the client’s service provider. trust company. The Bahamian Purpose Further, the legislation clearly sets out the Trust Act confirms that a valid purpose of a At the end of 2004, The Bahamas also role and responsibility of the Registered Bahamian purpose trust is to hold the shares became the first premier Common Law Representative. of a company. In many ways, a foundation jurisdiction to introduce Foundations. This provides similar features to that of a purpose estate planning tool enjoys great familiarity In addition to its light regulatory touch and trust and for certain clients may be the ideal in civil law countries and may now be providing access to a broad range of service structure to hold the shares of the private established in The Bahamas for private, providers, the Bahamas’ PTC legislation has trust company. charitable or commercial purposes. a number of other distinguishing features: Alternatively, a company limited by The Bahamian foundation responds to the • There may be more than one designated guarantee could be the owner of a private needs of clients by providing, inter alia, a person; they are required to be related trust company, which addresses the issue vehicle that is domiciled in The Bahamas, by consanguinity or other family of ownership and offers cost savings. The is the legal and beneficial owner of its relationship to each other. Bahamas IBC legislation provides for such a own assets and has unlimited duration • The PTC may be established during or structure or vehicle. with particularly useful estate planning after the life of the designated person(s). features. These features include the choice • The PTC may act as trustee to Market Responsiveness of governing law, asset protection, the trusts settled by persons related reservation of certain powers to the founder by consanguinity or other family Providing specific legislation addressing the and the ability to appoint a protector. relationship to the designated person or manner in which private trust companies one of the designated persons. may be established and operated in The 2006 legislative developments have included • The PTC may act as trustee to existing Bahamas rounds out a series of steps reviews of the Purpose Trust Act 2004, trusts that meet the above mentioned undertaken in recent years to respond, as well as the Foundations Act, 2004. In criteria. in a comprehensive and competitive 2007, BFSB plans a comprehensive review • The beneficiaries of a trust administered manner, to the needs of the family. Market of all trust law. •

BAHAMAS FINANCIAL SERVICES REVIEW VOL. 7 | INCORPORATING 2006 ANNUAL REPORT | 21 LEGISLATIVE DEVELOPMENTS

Segregated Accounts Company Highlights

A SAC is a company which is registered under the instrument may also provide for management of prior to the application for registration a statutory Segregated Accounts Companies Act 2004. The the segregated account, appointments of one or declaration containing prescribed information SAC may create separate accounts with assets more managers, and the orderly winding up of must also be filed with the primary regulator and liabilities which are segregated from the the affairs and termination of the segregated along with evidence of the consent of 75% of assets and liabilities attributable to every other account. the intended account holders and 75% of the account and also from the company’s general • The governing instrument must be governed by would be creditors of the SAC. The Registrar will assets and liabilities. the laws of The Bahamas and the parties to it issue a certificate of registration on completion of must submit to the jurisdiction of the courts of registration. • A segregated account is not a legal person The Bahamas. distinct from the SAC. • The rights and obligations of counterparties Requirements: • A SAC must inform any person with whom it dealing with the SAC are evidenced in the form deals that it is a SAC. of contracts. • A SAC Representative who monitors and reports • A SAC must identify the segregated account on the activity of the SAC may be required which is connected to a particular transaction. Structures: where the primary regulator is • All assets linked by a SAC to a segregated especially prescribed by the Minister account shall be held by the company as a A company registered as a SAC must be governed responsible for companies. separate fund which will not be part of the by the Companies Act or the International • A SAC must maintain a private register of general account of the company but held Business Companies Act and that company (i) account owners. exclusively for the benefit of the account owners must be engaged in the business of either (a) • A SAC must file an annual declaration stating of the particular segregated account. Those investment funds (b) issuing securities or (c) that the company is in compliance with the assets will be available to meet the rights of the insurance, or (ii) is a subsidiary of a Bank or Segregated Accounts Companies Act. account holders and satisfy the liabilities Trust Company (and not licensed by the Central • A SAC must maintain records in accordance connected to the particular segregated account. Bank), or (iii) is engaged in a business where the with generally accepted accounting principles. • The SAC will record what assets are in its Minister responsible for Companies has prescribed Records must be made available at least once general account and such assets shall be the a primary regulator. No company licensed under a year to each account owner, unless waived only assets of a SAC available to meet the the Banks and Trust Companies Regulation Act by the account owner. general liabilities of the SAC. Assets in the may register as a SAC. • A SAC must pay prescribed fees based on the general account will not be available to satisfy number of accounts. liability which is linked to a segregated account. Registration: • The rights and obligations of account owners in a segregated account are contained in a A SAC must file a request with the Registrar to governing instrument. The governing instrument be registered as a SAC containing the prescribed may provide for conditions which must be information and accompanied by the consent of complied with in order for a person to become the primary regulator of the relevant business. a segregated account holder. The governing Where the company has conducted business Foundations Highlights

A Foundation is a distinct legal entity registered nominee founder may be used to preserve the Registration Formalities : under the Foundations Act of 2004. Once client’s confidentiality registered, a foundation is deemed to be resident • The procedures for appointing beneficiaries • Registration statement contains name of and domiciled in The Bahamas. Foundations may be included in the charter rather than the foundation, date of charter, purposes and may be established for private, commercial or names of the beneficiaries, thus preserving objects, date of articles (if any), details charitable purposes provided same are lawful their anonymity when the charter is filed in the of founder (could be nominee), secretary and and include the management of its assets. Registry foundation council or other governing body or Foundations are created by the will of the founder • Foundations may be established for a fixed or supervisory person, address of registered office, or by the founder executing a charter which indefinite period. Foundation may be formally period for which established and value of initial may, but need not, be filed in the Registry of liquidated or revoked assets. Foundations. • Charter may reserve powers to the founder, • Only additional filing required is statement including the power to amend or revoke same containing particulars of any amendments to Features: • Charter may appoint other officers in addition initial registration statement. to the secretary, whose duties will be mainly • Foundations must have initial assets of • Foundations may be used for estate planning, administrative $10,000.00 which must be maintained. tax planning, preserving family wealth, • Charter may include in terrorem provisions • Foundations must have a registered office and segregating assets, perpetuating corporate • Fiduciary and other responsibilities are usually secretary in The Bahamas. Secretary must governance philosophy, subordinating debts, vested in a foundation council or similar either be licensed under the Financial and separating voting and economic benefits, governing body and foundation may also have a Corporate Service Providers Act or be a trust investing in private companies with a poor protector or committee of protectors company duly licensed in The Bahamas. economic performance, owning private trust • Foundation council, where appointed, shall companies and establishing charities comprise one legal person or two or more Fees: • Foundations may be used for most purposes for natural persons or one legal person and one or which trusts and companies are presently used more natural persons • $500.00 if registered in first quarter of • Foundations may be used to avoid forced • Books and records must be kept, but audits are calendar year; heirship in other jurisdictions optional • $375.00 if registered in the second quarter of • Foundations have creditor protection provisions • Beneficiaries with vested interests entitled to the calendar year; • Foundations are exempt from Bahamian be notified of interests and to receive copy of • $250.00 if registered in the third quarter of the taxes and business licence fees, stamp duties charter and accounts calendar year; (excepting Bahamian real estate taxes) and • Founder, members of foundation council and • $125.00 if registered in the fourth quarter of exchange controls protectors also entitled to inspect accounts the calendar year. • Foundations may redomicile to or from The • Due diligence in respect of founder and • Subsequent annual fee is $500.00. Bahamas beneficiaries required • Articles are optional. If no Articles, Act applies • Instruments of disposition may include • Confidentiality with regard to foundation restrictions against alienation information must be maintained • Founder may be a natural or legal person and a

22 | BAHAMAS FINANCIAL SERVICES BOARD FOCUS ON BFSB ACTIVITIES

Those associations elected to serve on the Mission Statement:BFSB, established About The BFSB Board are: Jan Mezulanik, Association of in 1998, represents an innovative International Banks & Trust Companies commitment by the government & the BFSB, LAUNCHED IN APRIL 1998, (AIBT); Cherise Cox-Nottage, Bahamas financial service industry to promote the represents an innovative commitment by Association of Compliance Officers (BACO); development of the financial services the Government of The Bahamas and Ivylyn Cassar, Bahamas Association of industry. The effortsof BFSB are focused on the financial services industry to further Securities Dealers (BASD); Wayne Munroe, ensuring that the country’s regulatory and the development of The Bahamas as an Bahamas Bar Association (BBA); Peter business environment are suitable for both international financial centre. The Board Muscroft, Bahamas General Insurance clients and the international stature of The is a multidisciplinary body that, through Association (BGIA); Kendrick Christie, Bahamas as a member of the community of the active contribution of government, Bahamas Institute of Chartered Accountants nations. Its stated mission is two-fold: professional industry associations and (BICA); Suzanne Black, Bahamas Real individual member firms, has pursued Estate Association (BREA); David Slatter, •To act as a catalyst for the continued an active agenda for improvement in the CFA Society of The Bahamas (CFASB); development of the Bahamas as an jurisdiction and knowledge of the benefits of Paul Winder, Society of Trust and Estate international financial center and be The Bahamas for international finance. Practitioners (STEP). the principal communication arm of the industry. Member firms are drawn from the banks, Leslie Isaacs, Director of Financial broker dealers, trust and investment advisory Services, Ministry of Financial Services and Collaboration is seen as critical for the services, insurance and mutual fund Investments, and Wendy Warren, in her success of all BFSB projects. BFSB’s administration as well as legal, accounting, capacity as BFSB’s CEO & Executive Director strength increases with the participation of real estate and other professionals. serve as permanent representatives on the all of its members. Board. New Board of Directors and cross fertilisation of international & domestic markets and market participants. Arising from the above, specific projects were undertaken as part of Jurisdictional Development: • Strategic Planning • Branding Review • FSI Economic Study • Manpower Management • Benchmarking for Competitiveness • AML & Regulation • Business Development Initiatives, including policy, legislative and BFSB Board of Directors. Front Row, left to right: Peter Muscroft, Andreas Rentschler, Craig Gomez, administrative improvements in: Wendy Warren, Michael Allen, Earl Cash (Dr), William Whitaker; Second Row, left to right: Dennis Govan, Private Wealth Industry Michelle Neville-Clarke, Leslie Isaacs, Suzanne Black, Alan Davidson; Back Row, left to right: Michael Investment Funds & Securities Farrant, David Sussman, Alyson Yule, Jan Mezulanik. Not pictured: Ivylyn Cassar; Kendrick Christie; Insurance Christian Coquoz; Cherise Cox-Nottage; Anthony Ferguson; Miguel Gonzalez; Wayne Munroe; Andrew Corporate Services Raenden; David Slatter; Charlene Storr; Arthur Strommer; Michele Thompson; and Paul Winder. • Business Continuity Planning • Member Seminars The 2006 Annual General Meeting was held BFSB’s operational framework includes • Member Services on September 6, at which times members a number of key components related elected the Board of Directors for 2006- to its overall mandate, primary among In the area of Communication & Marketing, 2008. At the first meeting of the Board, which are Jurisdictional Development BFSB’s activities have focused on building Directors elected the Officers. including perspectives on policy setting & relationships, addressing the requirements implementation in the financial services of differing market segments, international Michael Allen is the new BFSB Chairman industry; Communications & Marketing; and financial centre positioning and its financial and Craig “Tony” Gomez is the new Deputy Coordination with Industry Stakeholders. centre focus outreach: Chairman. The BFSB Board is comprised of This has allowed a targeted approach to • Building Relationships two classes of directors. Those elected in programme and project development. The o Bahamas Briefing their individual capacity include: Michael Board in 2006 agreed on its key areas o Briefing Visits Allen, Earl Cash; Christian Coquoz; Alan of focus, including: institutional capacity o Conferences Davidson; Michael Farrant (Secretary); building; compliance & corporate governance • Product Emphasis Anthony Ferguson; Craig Gomez, Miguel (independent & external evaluations of o Bahamas Financial Services Review Gonzalez; Dennis Govan; Michelle Neville- financial systems; international cooperation o Foundations Guide Clarke; Andreas Rentschler; Andrew on non-tax matters; international cooperation o Legislation Fact Sheets Raenden; Charlene Storr; Arthur Strommer; on tax matters); branding to drive growth o Maritime Fact Sheet David Sussman; Michele Thompson (reputation management, building internal o Newsletters (Treasurer); William Whitaker; Paul Winder; brand, international recognition, marketing • International Financial Centre Positioning and Alyson Yule. The Board also consists & communication); market access and o Media Relations of individuals who are elected to represent development (trade protocols); infrastructure; o The Banker Award professional industry associations (“PIAs”). strategy/business model; manpower o Web Site Development BFSB has always respected and valued management (education & expertise) ; • Financial Centre Focus the role played by PIAs and welcome their competitiveness (legislation, regulatory o Careers Fest contribution as directors on the board. reform); sector specific development focus; Continued on page 24

BAHAMAS FINANCIAL SERVICES REVIEW VOL. 7 | INCORPORATING 2006 ANNUAL REPORT | 23 FOCUS ON BFSB ACTIVITIES Continued from page 23 Bahamas Strategy & Branding Survey o Domestic Media Outreach THE MINISTER OF FINANCIAL SERVICES in the top tier amongst the IFCs surveyed. o Industry Excellence Awards and Investments, the Hon. Vincent A. Peet, Other points of importance included: o Ministers Award M.P. appointed a joint public private sector committee to assess the results of The • The strong readiness of respondents to The Financial Centre Focus (FCF) initiative Bahamas Strategy and Branding Survey. The recommend The Bahamas in the area is co-ordinated in collaboration with the Committee has provided an Interim Report to of wealth management, particularly in Professional Industry Associations. Targeting Government, and is expected to release the the areas of trust, private banking, and those components considered essential for final Report at the 2007 Bahamas Financial corporate services. the continued success of The Bahamas Services Retreat in January. Undertaken by • The intentions of the majority of as an international financial services PricewaterhouseCoopers on behalf of the participating institutions to focus on centre, FCF is an ongoing public education Government, and in collaboration with BFSB, growing their Bahamian businesses over and awareness outreach that focuses on the survey was designed to evaluate: the next three years, with the remainder developments in the industry; the importance expected to maintain the present level of of high service standards; relationships • The Bahamas’ reputation as an IFC business. between the financial services industry and • Its ability to provide key services • The perception that The Bahamas is the community; and profiling industry role • Why customers use The Bahamas as dealing effectively with several threats models. Through these initiatives, BFSB well as why not facing IFCs in general. hopes to attract focused and qualified • Whether The Bahamas needs to expand • The belief by the majority of survey young Bahamians to the sector; promote its base of services respondents that The Bahamas will continued training of industry professionals; continue to play an important role in the and encourage all industry participants The survey reflected the Bahamas’ future of global financial services. to keep abreast of changes in the sector. commitment to excel in the delivery of Collaboration with the Government, financial services. While the government and The majority of survey respondents Regulators, Government Agencies & Related industry were pleased that the jurisdiction were from the private banking industry. Bodies, and with the Professional Industry was named the “Best International Centre Participants ranged from “giants” with Assets Associations has been an important in the Western Hemisphere” by a well under Management in excess of $100 billion component of BFSB’s engagement of all regarded industry publication, both parties to niche players in the industry with Assets industry stakeholders in ongoing initiatives recognise the value and importance of under Management less than $100 million. for the development of the sector. intelligent planning. BFSB looks forward to There was a balanced representation of continued partnership with Government in organizations between these levels of the BFSB Committees/Working Groups: the development of a new five year strategic spectrum. GT BFSB Ad Rev2.qxd 4/25/06• 10:58 AM Page 1 • Branding Working Group plan, based on the results • Business Continuity Planning Working of the survey. Group • Commercial Law Review Committee • Compliance / Corporate Governance More than 220 senior Committee representatives of the • Conferences & Briefing Visits Sub- financial services industry, Committee both internationally and • E-Business Working Group domestically, participated • Economic Impact Assessment Working in the Strategy & Group Branding Survey, and an • Financial Centre Focus Committee & Sub- executive summary of Committees the results was released Providing Comprehensive Legal Expertise • Fiscal Structure & Operations Review during the year. A key Committee finding was that the to Institutional and Private Clients Worldwide • Foundations Review Working Group financial services industry • Funds Sector Working Group for Over 50 Years. • Government Relations Committee in The Bahamas boasts • Immigration & Labour Committee a number of strengths • Insurance Working Group upon which the sector • Legislation & Benchmarking Committee can build a focused and w w w. g r a h a m t h o m p s o n . c o m • Manpower Assessment Programme (MAP) compelling brand position Working Group and develop a sound Nassau Of f i c e Fre e p o rt Of f i c e • Member Business Seminars Working business strategy. P.O. Box N-272 P.O. Box F-42451 Group Shirley St reet & Victoria Ave n u e First Commercial Centre • Member Development and Outreach Nassau, New Providence Freeport, Grand Bahama The core strengths of The Bahamas The Bahamas Committee trust and fiduciary, private • Mentorship, Orientation & Training banking and corporate Tel: (242) 322-4130 Tel: (242) 351-7474 Committee services ranked in the top Fax: (242) 328-1069 Fax: (242) 351-7752 • Professional Industry Association Working Group tier when compared with • Promotional Materials & Publications international financial Committee centres of similar size. • Purpose Trust Review Working Group Political stability was • Registry (RGD) Services Working Group perceived as one of the • Reputation Management, Media Relations jurisdiction’s important and Messaging Committee advantages, and its • regulatory regime ranked

24 | BAHAMAS FINANCIAL SERVICES BOARD FOCUS ON BFSB ACTIVITIES Bahamas Financial Services Retreat 2006 THE BAHAMAS FINANCIAL SERVICES participating countries, develop relevant RETREAT is one of several initiatives • Continue to fine tune BFSB’s ongoing research / benchmarking undertaken in recognition of the critical external communications plan. Analyse mechanisms. Promote / facilitate importance of engaging all industry anecdotal and empirical data as a participation in international dialogue at stakeholders on a regular basis for open first step in developing a facts-based public and private sector levels. discussions on financial services sector programme best suited to enhancing the issues. The annual event provides an international presence of the jurisdiction. • Monitor/analyse external developments ideal opportunity to share information on To maximise effectiveness, match to ensure readiness to provide input the strengths, weaknesses, threats and specific areas with specific product on steps necessary to maintain the competitive edge. Continue to provide a mechanism for private sector input to government - and vice versa – as plans develop for the consolidated regulatory landscape

More than 100 government, regulatory and industry representatives took part in the strategy and branding sessions during the 2006 Retreat, to help ensure the jurisdiction continues to direct its efforts in the most responsive and effective manner.

The involvement of senior government officials reflects the close public and private sector dialogue that exists in the country. Policy makers and regulators are committed to creating an environment designed to encourage the continued growth of the sector opportunities facing the industry. Arising out offerings. Utilise external resources through ongoing regulatory refinements, of the 2006 BFS Retreat, BFSB undertook to (existing and new Bahamas Missions, market sensitive legislation and efficient look at several specific areas as it developed e.g.) to promote the sector, and pursue service. its programme of work going forward and, enhanced relations with the Ministry of importantly, positioned itself to provide Tourism 2007 Retreat input for the next 5-year Strategic Plan for Financial Services. BFSB recognised that • Consider how best to ensure current The fourth annual Bahamas Financial concrete action must be taken by both the and comprehensive knowledge of Services Industry Retreat will take place at government and the private sector, and that international developments and threats the Emerald Bay Four Seasons Resort in there is a need to act in a timely fashion as impacting the fsi. Benchmark products Exuma on January 19 to 21, 2007. global developments will dictate a smaller and services number of international financial service As usual, participants will focus on the centres in the world, with the competition • Enhance existing initiatives to ensure strategic development of the sector. One more focussed. that the fsi is understood domestically, of the major highlights of the event will be with particular emphasis on its a presentation by renowned international Some short term and medium term areas of economic contribution, promoting a speaker, Mr. Bruce Zagaris, who will address engagement agreed on included: “buy in” by the local populace. Promote attendees of the plenary session on the topic: Bahamian ownership of the sector “The Potential for Small Island Jurisdictions • Work with MFSI to develop the second to Use International Agreements as a 5-Year Strategic Plan for Financial • Develop programmes to promote broad Financial Services Engine: Implications for Services, complete with a national understanding of the sector by relevant the Bahamas”. communications strategy on a mutually government ministries and departments, agreed image and messaging. This including information sharing through A roundtable panel discussion will follow should include product development Position Papers and use of parliamentary with a focus on trade protocols affecting based on perceived market needs seminar mechanisms. Maintain ongoing Financial Services. The Bahamas Strategy relations with all relevant government & Branding survey, released at the 2006 • Look at mechanisms to generate and agencies, providing a two-way street for Retreat will also be a major focus during the promote efficiency, expertise and quality dialogue and consultations. Apply the plenary sessions. service within the sector – i.e. the “PPP” approach broadly to facilitate development of a culture of excellence. collaboration and implementation of Other important matters that will be Take account of relevant initiatives ideas discussed during small breakout sessions within the educational system. Work include Jurisdiction Brand Development, with relevant stakeholders to determine • Recognising that tax treaties and Compliance & Corporate Governance, required skill sets and gaps and promote tax treaty networks do impact trade Manpower Assessment, Capital Markets and necessary training in financial services, even for non Private Wealth Management. •

BAHAMAS FINANCIAL SERVICES REVIEW VOL. 7 | INCORPORATING 2006 ANNUAL REPORT | 25 FOCUS ON BFSB ACTIVITIES Manpower International Intermediaries Meet in Nassau IN THE FALL, the Bahamas Financial of Financial Services and Investment; Assessment Services Board (BFSB) hosted twenty- Minister of Foreign Affairs; Attorney General one intermediaries from Europe and and Minister of Legal Affairs; Minister of FOLLOWING THE 2006 RETREAT, North & South America to a “Bahamas State for Finance; Governor of the Central BFSB recognized the need to conduct a Briefing”. Over three days, BFSF and co- Bank of the Bahamas; Inspector of Banks comprehensive assessment of financial host the Ministry of Financial Services and & Trust Companies, Central Bank of the Investments exposed the international guests Bahamas; Executive Director of the Securities services sector manpower needs, and to to the financial services industry of The Commission of the Bahamas; and Legal address development strategies that will Bahamas. Counsel to the Securities Commission. ensure the jurisdiction remains competitive in the provision of international financial services.

In exploring this project, BFSB’s PIAWG undertook discussions with the Bahamas Institute for Financial Services as well as with the College of the Bahamas, concentrating on skills sets needed for the sector. During the year, BFSB learned of The Skills Bill, an 18-month UK-wide programme of work designed by the Financial Services Skills Council (FSSC) to The Briefing also provided the opportunity The feedback received from the twenty- provide solutions to the skills issues which for the visitors to be exposed to the life styles one intermediaries confirmed BFSB’s belief affect the performance of financial services of the islands, as the programme included a that the Bahamas Briefing programme is an businesses in the United Kingdom. A key series of social activities. essential part of the organisation’s external component of this exercise is an employer communications and business development research project. The Working Sessions focused on the private outreach. Bahamas Briefings serve the wealth and funds sectors of The Bahamas, useful purpose of gaining first-hand feedback By setting out what skills employers want with corporate sponsors from both industries on industry development from practitioners in their people to have and planning how actively engaged in identifying the invited the marketplace. Additionally, intermediaries intermediaries and spearheading over generally not only report on tangible results the necessary education and training will 35 industry presentations. These ranged of their meetings with corporate sponsors of be funded and supplied, the FSSC aims on topics from Foundations and Private the programme, but also speak to the value to equip the industry with the skilled Trust Companies to Investment Funds of interacting and partnering with each other workforce it needs to build upon and and Segregated Accounts Companies. to promote the many advantages of The maintain its world leading status. The corporate sponsors were joined by Bahamas’ financial products and services. • Government Ministers and Financial Services Another important component of the Skills Industry Regulators who spoke to policy and Bill programme of work was a report regulatory issues impacting both sectors. These included the Prime Minister; Minister developed by Oxford Economics (OE) for the FSSC – “UK Financial Services: Five years Forward.” Oxford Economics has Supporting Agencies: direct experience in producing manpower assessments from the beginning stages Central Bank of the Bahamas all the way through to an action plan to Ministry of Tourism respond to shortages in the market. Corporate Sponsors: In order to facilitate a dialogue with Higgs & Johnson Abaco Club at Winding Bay members, OE has agreed to present, on Klonaris & Co. Ansbacher Bahamas Limited a gratis basis, to the 2007 Bahamas Lennox Paton Banca del Gottardo Financial Services Retreat. On request, the McKinney, Bancroft & Hughes Butterfield Bank (Bahamas) Limited Retreat report will be presented in modular Oceanic Bank & Trust Limited Butterfield Fund Services fashion, i.e. an outline of the objectives Pictet Bank & Trust Credit Agricole Suisse (Bahamas) Limited of the assessment, deliverables, and the Royal Bank of Canada Trust Company (Bah) Credit Suisse (Bahamas) Limited various steps involved. SG Hambros Bank & Trust (Bahamas) Ltd. • Ernst & Young Swiss Financial Services FirstCaribbean International Bank (Bah) SYZ & Co. Bank & Trust Graham, Thompson & Co. Templeton Global Advisors

26 | BAHAMAS FINANCIAL SERVICES BOARD FOCUS ON BFSB ACTIVITIES Financial Services Sector Economic Impact Analysis DURING THE LAST QUARTER of the year capacity building component, to ensure that of the Registrar of Insurance Companies.In the Bahamas Financial Services Board going forward the Department of Statistics addition to the quantitative analysis being contracted with Oxford Economics (OE) to will be able to update the data and build prepared, Oxford Economics also will provide assess the economic importance of financial information into their established research qualitative perspectives, by way of a narrative services and its associated activities in The mechanisms. “Effectively”, says Ms. Warren, on the role that FSI plays in supporting the Bahamas. The results will be delivered at “we do not visualise this as a one-time study, broader economy and certain sectors in the Bahamas Financial Services Retreat but as setting the groundwork for an essential particular. in January. BFSB is seeking to obtain a national initiative.” comprehensive picture of the financial Oxford Economics is one of the world’s services industry’s contribution to The The project arose from a BFSB Working leading providers of economic analysis, Bahamas; specifically, the direct, indirect and Group that had been engaged in reviewing forecasts and consulting advice. Founded imputed impacts. Wendy Warren, BFSB’s various options to best utilise existing data in 1981 as a joint venture with Oxford CEO & Executive Director says, “We believe and looked at the indirect contributions that University’s business college, Oxford the contribution of the financial services are not being tracked at the present time. Economics has an excellent reputation industry goes beyond economics. The Discussions initially began at the 2004 for high quality, quantitative analysis and positive and long-standing social impact of Bahamas Financial Services Retreat, at evidence-based advice. For this, its draws the industry must be identified.” which time the Prime Minister had raised the on its own staff of 30 highly-experienced question of how best BFSB could promote professional economists; a dedicated data Oxford Economics will also attempt to the importance of the sector, with continuing analysis team; global modeling tools, and a capture what The Bahamas might be without dialogue at the 2005 and 2006 Retreats. At range of partner institutions in Europe, the the presence of the international financial the end of the latter, it was agreed that this US and in the United Nations Project Link. services sector. The research project will should be a priority “action item” for 2006. Oxford Economics has offices in Philadelphia, provide BFSB with empirical data, enabling BFSB was able to contract OE only through London, and Oxford, and provides detailed it to engage in wide ranging communication the financial support of member firms and analysis and briefings on developments with all stakeholders regarding (i) the long other industry stakeholders. and prospects across 70 industrial and standing and significant socio-economic commercial sectors in over 70 countries. • contribution of the sector to the nation and Already, a fair amount of data is available, (ii) the need for continued development both through the Central Bank’s annual Working Group Members: Julian Brown, and growth of the industry. Further, the surveys and some concealed in the national Anthony Ferguson, Clarice Ferguson, Paolo growth and contribution of the sector will be accounts estimates produced by the Filippini, Tanya Holder, Dominique Lefevre, monitored through annual comprehensive Department of Statistics. Both agencies are John Rolle, Tenniel Rolle, David Thain, reporting. On this last point, the contract supporting this exercise, as are the Securities William Wallace, Leona Wilson, Peggy with Oxford Economics incorporates a Commission of the Bahamas, and the Office Winder.

Economic Impact Assessment Workling Group. Left to right: Paolo Filippini, Tenniel Rolle, Wendy Warren, Tanya Holder; and Julian Brown. Not pictured: Anthony Ferguson, Clarice Ferguson, Dominique Lefevre, John Rolle, David Thain, William Wallace, Leona Wilson, Peggy Winder

BAHAMAS FINANCIAL SERVICES REVIEW VOL. 7 | INCORPORATING 2006 ANNUAL REPORT | 27 FOCUS ON BFSB ACTIVITIES Business Continuity Planning THE BUSINESS CONTINUITY PLANNING Aspects of Planning Foot, Inspector of Banks & Trust Companies, Working Group (BCPWG) hosted a BCP • Regulating for Disaster Preparedness: Central Bank of the Bahamas; Trevor Seminar on September 27, as part of What is expected of Financial Services Bethel, Acting Manager-Market Surveillance, BFSB’s ongoing Business Seminar Series. Industry Licensees? Securities Commission of the Bahamas; Opening Remarks were presented by Mr. • National Planning Initiatives Roger Brown (Dr), Registrar, Office of the Michael Halkitis, Parliamentary Secretary • Infrastructure Readiness Registrar of Insurance Companies; Carl in the Ministry of Finance. He pointed out that operating disruptions can occur with or without warning and that because of the important role played by financial institutions in the economy of The Bahamas, it is important their business operations are resilient. The effects of disruptions in service must be minimized in order to maintain public trust and confidence in the jurisdiction’s financial system, he said.

BFSB’s CEO & Executive Director Wendy Warren also provided welcoming remarks, BCP Working Group. Left to Right: Sammy Gardiner, Ralph Forskin, Andre Knowles, Wendy pointing out that ensuring timely business Warren, Brian Moodie. Not pictured: Michael Fields, Larry Glinton, Laurenne McDonald, Charles recovery in times of disruption is an essential McKenzie, Adrian Medford, Caroline Moncur, Andrew Pike, Mario Smith component in the delivery of high quality financial services. In this regard, The Bahamas has an excellent record over the The event was cosponsored by Cable Smith, Under Secretary/Cabinet Office - almost 100 years of delivering financial Bahamas, Central Bank of the Bahamas, Director, National Emergency Management services. CIBC Trust Company (Bahamas) Ltd., the Agency (NEMA); l. Antonio Stubbs, Sr. Vice National Emergency Management Agency President, Chief Technology & Information Working sessions included: (NEMA), Pictet Bank & Trust Ltd., and Officer, Bahamas Telecommunications Providence Technology Group. Presenters Company; Preston A. Rahming, Engineer, • Lessons Learned / The Bahamas included: Water Supply Division, Water & Sewerage Response Corporation. - Cayman Experiences Robert Myers,Owner & Operator, Caribbean - A Prototype Bahamas Response: Group of Companies, Western District One of the key goals of BFSB’s BCPWG is the Western District Disaster Management Disaster Management Work Group; Andre greater integration of the business continuity Group Knowles, Regional Sales Director, Cable plans of individual financial services firms - National Recovery Centre – Bahamas; Richard Dolewski, Vice-President and that of the government of The Bahamas Possibilities For Technical and Contingency Services,Mid- and agencies providing key infrastructure. • • Disaster Preparedness: Technical Range Recovery Centre (Canada); Michael

Professional Industry Association Workling Group. Left to Right: Suzanne Black (BREA); Dianne Bingham (STEP); Kendrick Christie (BICA); Wendy Warren (BFSB); Nadine Frazer (IIB); Robin Hardy (BGIA); Anastacia Johnson (AIBT) and David Slatter (CFA Society).

28 | BAHAMAS FINANCIAL SERVICES BOARD COLLABORATION WITH INDUSTRY STAKEHOLDERS

Coordination with Industry Stakeholders

GOVERNMENT GOVERNMENT AGENCIES • Bahamas Bar Association • Office of the Attorney General & OTHER RELATED BODIES • Bahamas Insurance Brokers • Ministry of Finance • Financial Services Consultative Forum Association • Ministry of Financial Services • Grand Bahama Port Authority • Bahamas International Insurance & Investments Association • Ministry of Foreign Affairs • Domestic Investment Board • Ministry of Immigration, Labour • Coalition of Private Sector • Bahamas General Insurance & Training Organisations Association • Ministry of Tourism • Registrar General’s Department • Bahamas Institute of Chartered Accountants REGULATORS • Bahamas Institute of Financial • Central Bank of the Bahamas PROFESSIONAL INDUSTRY Services • Compliance Commission of the ASSOCIATIONS / TRAINING INSTITUTES • Bahamas Real Estate Association Bahamas • Association of International Banks & • CFA Society of the Bahamas • Financial Intelligence Unit Trust Companies • Inspectorate of Financial and Corporate • Insurance Institute of the Bahamas • Bahamas Association of Compliance Service Providers • Society of Trust and Estate Officers • Registrar of Insurance Companies Practitioners • Securities Commission of the Bahamas • Bahamas Association of Securities Dealers

Coordination with Government

KEY ACCOMPLISHMENTS IN 2005 & 2006

• Strategy & Branding Survey completed with results released • Private Trust Companies legislation passed in Parliament • RGD Internet Agent System enhanced, significantly reducing • Purpose Trust Amendments developed response time • GSM International Roaming Expanding • Funds Online Incorporation Process established • Blackberry service launched Sept 6, roaming agreements • Foundations Establishment Process completed pending • Training Program with Labour Department • Further infrastructure improvements pending • Immigration Policy enunciated for FSI • Point Persons for Financial Services appointed in Immigration & Labour Departments

Coordination With Regulators

Central Bank Registrar of Insurance Exchange Control & Policies re FCSP, AML Recognition & Operational Protocols, Review of application process Guidelines, Eligible Introducers, Geographic Updates Review of External Insurance Act Regulations

Securities Commission of The Bahamas FIU & All Regulators Recognition of Key Jurisdictions, Approach to Master/ Regular dialogue on developments & feedback received Feeder Funds, Investment Managers & physical presence requirements, operational best practice guidelines, SMART Fund Model 005 & SFMs Reporting Requirements, EUSD

BAHAMAS FINANCIAL SERVICES REVIEW VOL. 7 | INCORPORATING 2006 ANNUAL REPORT | 29 BANKS & TRUST COMPANIES Private Investment Bank Ltd. INVESTMENT FUND ADMINISTRATION Ansbacher (Bahamas) Limited Royal Bank Financial Group Butterfield Fund Services (Bahamas) Ltd. Arner Bank & Trust (Bahamas) Ltd. Santander Central Hispano Bank & Trust Citco Fund Services (Bahamas) Ltd. ATC Trustees (Bahamas) Limited Scotiabank (Bahamas) Limited DPM Mellon (Bahamas) Limited Banca del Gottardo Sentinel Bank & Trust Limited Genesis Fund Services Limited

MEMBERS Banca del Sempione (Overseas) Limited SG Hambros Bank and Trust Bahamas Ltd. Swiss Financial Services (Bahamas) Ltd. Banco Boavista Interatlantico, S.A. SYZ & Co. Bank & Trust PROFESSIONAL SERVICES & ATTORNEYS Banco Votorantim S.A. – Nassau Branch The Hongkong and Shanghai Banking Corp. Alexiou, Knowles & Co. Bank Leu Limited, Nassau Branch The Private Trust Corporation Limited Callenders & Co. BFSB Bank of Nova Scotia International Limited The St. James Bank & Trust Company Ltd. Chancellors Chambers Bank of Nova Scotia Trust Co. (Bah) Ltd. The Winterbotham Trust Company Limited Dupuch & Turnquest & Co. Bank of The Bahamas International Transamerica Bank & Trust Company Ltd. Fitzgerald & Fitzgerald BankBoston Trust Company Ltd. UBS (Bahamas) Limited Gibson & Company Bank Hofmann (Overseas) Ltd. Union Bancaire Privee Nassau Branch Gibson, Rigby & Co. Banque Privee Edmond De Rothschild Ltd. BROKER DEALERS / SECURITIES Graham, Thompson & Co. INVESTMENT ADVISORS Banque SCS Alliance (Nassau) Ltd. Halsbury Chambers Argus Advisors BGP Banca di Gestione Patrimoniale SA Higgs & Johnson Accuvest Limited BNP Paribas (Bahamas) Limited Higgs & Kelly Alliance Investment Management Ltd. BSI Overseas (Bahamas) Limited Holowesko & Company Bearbull International Limited Blubank Ltd. Jerome E. Pyfrom & Co. Colina Financial Advisors Butterfield Bank (Bahamas) Limited King & Co. FTC Asset Management (Bahamas) Ltd. Cayside Trust Company Limited Klonaris & Co. GEM Global Equities Management S.A. CIBC Trust Company (Bahamas) Limited Lennox Paton Geneva Private Portfolio Management Ltd. Cititrust (Bahamas) Limited McKinney, Bancroft & Hughes LOM Securities (Bahamas) Commonwealth Bank Limited Seymour & Co. Maritime Securities Limited Corner Bank (Overseas) Limited ACCOUNTANTS Nordica Group of Companies Credit Agricole Suisse (Bahamas) Limited BDO Mann Judd RMF Investment Products (Bahamas) Ltd. Credit Suisse (Bahamas) Limited Deloitte & Touche Templeton Global Advisors Limited Credit Suisse Investment Bank Ernst & Young Tillerman Securities Ltd. Credit Suisse Nassau Branch FT Consultants Ltd. 273 Capital Management Limited Credit Suisse Trust Limited Gomez Partners & Co. Van Daalen International Ltd. Credit Suisse Wealth Management Limited KPMG FINANCIAL & CORPORATE SERVICES PROVIDERS Cuscatlan International Bank & Trust Ltd. Pannell Kerr Forster Bahamas Co-operative League Ltd. Dartley Bank & Trust Limited PricewaterhouseCoopers Black & Associates Limited Deltec Bank & Trust Limited E-BUSINESS & INFORMATION TECHNOLOGY Bluewood Management Ltd. EFG Bank & Trust (Bahamas) Ltd. Cable Bahamas Limited Caledonia Corporate Management Group Elco Bank & Trust Co. Ltd. Emagine (Bahamas) Ltd. International Protector Group Experta Trust Company (Bahamas) Limited IBM Bahamas Limited Management & Service Company Limited Fidelity Merchant Bank & Trust Limited International Private Banking Systems Mercury Corporate Management Limited Finter Bank & Trust (Bahamas) Limited Providence Technology Group Montaque Securities International FirstCaribbean International Bank (Bahamas) Systems Resource Group Limited Mossack Fonseca & Co. (Bahamas) Limited FTC Trust Co. (Bahamas) Ltd. MEDIA, MARKETING, PR, PUBLISHING Offshore Managers Limited Gonet Bank & Trust Limited DBA Communications Inc. Registered Agent Services Ltd. Guaranty Trust Bank Limited Digital Isle Communications Group Sovereign (Bahamas) Limited Hang Seng Bank (Bahamas) Limited Etienne Dupuch, Jr. Publications The Bonnycord Group Limited Hottinger Bank & Trust Ltd. The Counsellors Limited Trident Corporate Services (Bahamas) Ltd. International Merchant Bank Ltd. The Nassau Guardian (1844) Ltd. Windermere Corporate Management Ltd. JPMorgan Trust Company Thyme Online Ltd. Worldwide Corporate Services Providers Julius Baer Bank & Trust Ltd. REAL ESTATE INSURANCE (Domestic / International) Lombard Odier Darier Hentsch Private Bank & Trust Ltd. Bahamas Realty Limited Bahamas First Holdings Ltd. Metropolitan Bank (Bahamas) Limited OTHER MEMBERS Britannia Consulting Group MMG Bahamas Ltd. Bahamas International Securities Exchange ColinaImperial Insurance Limited National Bank of Canada (International) Ltd. Colina Financial Group J.S. Johnson & Company Ltd. Oceanic Bank and Trust Limited Inventages WHealth Management Inc. RoyalStar Assurance Ltd. Pasche Bank & Trust StarCapital Securities Ltd. Summit Insurance Company Ltd. Pictet Bank & Trust Ltd.