The Opportunities Ahead

BAHAMAS FINANCIAL SERVICES REVIEW 2009, VOLUME 11 | A BFSB PUBLICATION | BFSB-BAHAMAS.COM/REVIEW

Th e Opportunities Ahead.

Business Development & Industry Sector Focus Jurisdiction & Industry Updates Regulatory & Legislative Developments BAHAMAS FINANCIAL SERVICES REVIEW

MESSAGE FROM THE CHAIRMAN

CRAIG (TONY) GOMEZ

2009 has been a very busy and productive time for BFSB. I take the opportunity to thank members for the continued support this organization continues to enjoy; we beneﬁ t tremendously from the expertise and willingness of a broad spectrum of professionals to actively participate in the work we set out to do.

Our open door policy with The insistence of the Bahamas An ongoing challenge for BFSB is respect to hearing the needs of Government on clarity and the task of ensuring that investors members - all members - has unequivocal language with and intermediaries outside The resulted in a prodigious amount respect to a level playing fi eld Bahamas know the jurisdiction, of communication with the was strongly supported by and know the fi nancial services membership. I believe that we are industry in 2002. Likewise, the products and services on offer. We a well run group - supported by industry this year supported the have to continue to let the world a proactive Board of Directors, decision of the government, in know who we are. Going forward, prolifi c roster of working groups conjunction with the governments we will continue to collaborate and committees, and an excellent of other major fi nancial centres, with the government on a Strategic offi ce team - that actively responds to endorse international standards Plan for the development of the to the needs of all participating on transparency and effective sector. We need the ongoing members; large and small, exchange of information through and increased support of all our international and domestic. defi ned and agreed protocols. stakeholders, who must join hands to create the kind of preferred We live in a challenging time for In addition to its ongoing industry that we would like to see. fi nancial services. The effects promotional initiatives BFSB of Wall Street’s turmoil and the also has had to address the The Bahamas Financial Services resulting probe of major U.S. various issues that faced our Review (BFSR) provides industry fi nancial institutions, coupled fi nancial services industry. updates written by industry with the continued changes in This has occasioned countless participants, and also serves regulation across many borders, meetings with the Government to communicate information have dovetailed into grey lists and and Regulators, and with industry about BFSB and its activities. blacklists. participants. Nevertheless, in these We extend our appreciation to times this organization’s mandate member fi rms and others who have The Bahamas has demonstrated has not changed. We must continue contributed to the production of that as a sovereign nation it is an to promote The Bahamas as a Vol. 11, through editorial input and active contributor to the discussion place to do business; and, we must advertising support. We invite you on a range of global matters and continue to line up our promotion to visit www.bfsb-bahamas.com that it is determined to act in a with the facts. for information on other BFSB responsible manner. publications. Contents TABLE OF CONTENTS

BAHAMAS FINANCIAL SERVICES REVIEW VOLUME 11 NOVEMBER 2009

BUSINESS DEVELOPMENT

Doing Business in The Bahamas 2 Insurance & Reinsurance in The Bahamas - FAQs 5

INDUSTRY SECTOR PROFILES

Arbitration in The Bahamas 13 Risk Management & Compliance 15

Bahamas External Insurance Act 2009 17

Private Placement Life Insurance 19

JURISDICTION & INDUSTRY UPDATES

The Qualified Intermediary Program - A Moving Target 22

The Communications Act 24

Lynden Pindling International Airport Redevelopment Project 26

REGULATORY UPDATES

Update on AML/CFT Legislative Developments In The Bahamas 29

Investment Funds and Securities Sector 31

LEGISLATIVE UPDATES

The Bahamas SMART Fund Programme 35

Real Property Tax 36 BUSINESS DEVELOPMENT - Doing Business

DOING BUSINESS IN THE BAHAMAS MICHAEL ALLEN

In a challenging global economy The Bahamas continues to be a jewel of opportunity. A dynamic public private partnership involving industry, government and key regulators continues to support a vibrant, attractive and potentially proﬁ table investment environment.

This coupled with an endowment of Services Board sponsored symposium, The offered in connection with the hotel and geographical advantages and retained Government of The Bahamas in partnership include golf courses, harbours, marinas, traditions, sustains The Bahamas in its leading with industry is poised to demonstrate its new roads and airfi elds; position for international investment and and continued commitment to providing a • Industries Encouragement Act under business opportunities. safe, stable and profi table environment within which exporters are exempted from which to manage and sustain wealth. Against import duties on equipment and raw Perennial fundamentals which make up the the backdrop of existing policies and a materials and from paying business Bahamian investment environment persist in statutory regime crafted to provide incentives licence fees; attracting investment to The Bahamas. These by way of concessions to attract international • The Tariff Act declaring that include its status as a sovereign nation, its investment, there is a fresh commitment manufacturers are exempted from import strategic geographical proximity to North to confronting contemporary challenges to tariffs on capital equipment and raw America, the accessibility of The Bahamas economic growth. materials needed for cottage industries, vis a vis the major economies in the Western food processing, garment manufacturing Hemisphere and Europe, a stable government, Historically, The Bahamas has benefi tted and handicraft/souvenir items; and a skilled work force and a responsible from granting tax and other concessions to • The Time Share and Vacation Plans judiciary administering a jurisprudence the international investor. These involve Act providing duty free concessions on based on internationally respected common investment incentives under certain Acts building materials for construction of law traditions. Not the least, however, is of Parliament, including exemptions from time share facilities. the welcoming disposition of the Bahamian the payment of customs duties on building people. This also continues to endear to The materials, equipment and approved raw In appropriate cases investors may also Bahamas both the international investor as materials and real property tax exemption secure, on concessionary terms, publicly well as the vacation traveler. for periods up to twenty years. A sampling of owned lands for conducting approved incentives includes the following: developments. It should be noted that there is What ensures the future health of The no requirement for Bahamian participation in Bahamas’ investment milieu, however, is an • The Export Manufacturing Industries foreign investment enterprises. International acute awareness by major stakeholders of Encouragement Act under which a investors are however encouraged to establish the current challenges and the readiness to manufacturer who exports at least 95% joint ventures with Bahamian partners. respond to the challenges which confront local of manufactured products receives duty- and regional economies impacted by global free import of raw materials, building As a matter of policy the following areas variables. These variables are often outside supplies and equipment and duty-free of investment are particularly noted by the control or infl uence of any one player. export of the product; Government as desirable for foreign They are however a primary concern of all • The Freeport, Grand Bahama Act investment: stakeholders and The Bahamas has indicated of 1993 which affords investors an its appreciation for the fact that success as a exemption from payment of real property • Touristic Resorts jurisdiction can only be assured to the extent taxes extended to August 2015; • Upscale Condominium, Time Share and that industry and private sector stakeholders • The Hotels Encouragement Act whereby Second Home Developments are jointly committed with The Government hotel developers are exempted from • International Business Centers of The Bahamas to a shared strategy for paying customs duties on equipment and • Marinas growth and development. As refl ected in a raw materials imported for the purpose • Information And Data Processing recent address by the Minister of State for of construction, and are granted certain Services Finance and Pubic Service the Honourable exemptions from real property taxes. Zhivargo Laing at a Bahamas Financial Exemptions apply to all amenities Continued on page 3

2 | BAHAMAS FINANCIAL SERVICES REVIEW international business. This includes i) a DOING BUSINESS IN THE BAHAMAS commitment to streamlining immigration About The Author: Mr. Michael F. L. Continued from page 2 procedures to afford preferred investors Allen’s areas of professional expertise advantageous immigration status; ii) providing include commercial, corporate, real estate & development, wealth management and • Ship Repair And Other Services an environment from which capital investment fi nancial services law. He is a partner • Light Manufacturing For Export may be made into the major economies of in the law fi rm of Higgs & Johnson. For • Agro Industries North, Central and South America, including more than 15 years he has advised • Food Processing attracting corporate headquarters for global international and Bahamian clientele on a • Banking and other Financial Services businesses with actual physical presence in variety of trust, corporate and commercial structures for general business and wealth • Captive Insurance The Bahamas; iii) expanding and upgrading the management purposes. His practice • Aircraft Services international airport facility; iv) maintaining involves providing legal support to major • Pharmaceutical manufacturing fi t for purpose infrastructure throughout Bahamian real estate acquisitions and • Off-shore Medical Centres the archipelago; v) the privatisation of resort development, the creation of • Sea/Air Business Centres telecommunication services thereby improving fi nancial products connected with wealth • Film and Television recording facilities competitiveness and quality of such services; management concerns, and issuing formal opinions on a wide range of multi- vi) implementing new legislation to support jurisdictional structures available for the The above list is not exhaustive and investors international insurance and aircraft related conduct of business in and through The with other interests may discuss those interests services; and vii) an ongoing review of Bahamas. Following the acquisition of a with their Bahamian legal advisor. fi nancial services and wealth management post graduate degree in counselling and New initiatives calculated to exploit the legislation which is currently recognized as administration from the State University strengths of the jurisdiction and broaden its already innovative and cutting edge. of New York at Buffalo, United States and a Bachelor of Laws degree from the utilization by the international investor have University of Buckingham in England, Mr. already begun to spark a renewed level of With 700 islands and 2,400 cays spanning Allen was admitted to the Bar of England increased optimism in The Bahamas’ economic 100,000 square miles extending southeast from and Wales in 1987 and the Bahamas future. With a growing number of High New Florida in the United States of America to Bar in 1988. He is also a member of the Worth and Ultra High Net Worth Individuals northern Hispaniola and given the commitment Honourable Society of The Middle Temple, choosing The Bahamas as the best fi t for of The Bahamas to the continual development England. He is a former Chairman of the Bahamas Financial Services Board and quality of lifestyle and for commanding their of its leadership role in offshore investment and has written on such topics as “A guide to global enterprises, it is a natural development fi nance, The Bahamas in many ways continues to doing business in The Bahamas”, “The for The Bahamas to provide an increasingly be virgin territory teeming with possibilities for Bahamian Foundation” “Investment Funds” unmatched facility for ease of conduct of the creative and forward thinking investor. and “International Business Companies”.

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2009 VOLUME 11 | 3

JURISDICTIONAL & SECTOR DEVELOPMENTS

BUSINESS DEVELOPMENT - Insurance FAQs

INSURANCE & REINSURANCE IN THE BAHAMAS LINDA BEIDLER-DʼAGUILAR FREQUENTLY ASKED QUESTIONS

A. REGULATION 12 members appointed by the Commission registration; and the company must appoint will advise the Superintendent with respect a person resident in the Bahamas to be its Question: Identify the regulatory agencies to general matters relating to the insurance principal representative in The Bahamas and responsible for regulating insurance and industry within or outside The Bahamas. inform the Commission in writing of the name reinsurance companies. (For the purposes of and address of that person. this question and others, the term ‘companies’ The Commission will also be the supervisory is intended broadly to include other entities authority for regulating external insurance The Commission may request the applicant such as Lloyd’s syndicates.) companies carrying on external insurance to furnish such additional information it may business from within The Bahamas under the consider relevant. Answer: There are two principal statutes Updated External Act. comprising the regulatory framework for If the insurer is a “public company” as The application package submitted to the the insurance and reinsurance business in defi ned in the Securities Industry Act, 1999, Commission will include: (i) details of the The Bahamas. The Insurance Act, 2005 its activities will also be overseen by the ownership structure; (ii) a detailed business (the “Domestic Act”) and its associated Securities Commission of The Bahamas. plan reviewed by both an independent Regulations (the “Domestic Regulations”) accountant and an independent actuary; deal with domestic insurers and the domestic Formation and licensing (iii) evidence of compliance with all capital market. The External Insurance Act of requirements and arrangements for reinsurance 1983, as amended, (the “External Act”) and Question: What are the requirements for as necessary; (iv) suffi cient information to its associated Regulations (the “External formation and licensing of new insurance and permit the Commission to determine that the Regulations”) regulate external (captive) reinsurance companies? benefi cial owners and the persons holding insurers; however, a wholly revised and executive positions of the company are fi t and updated External Insurance Act, 2009 (the Answer: The requirements for formation and proper persons to hold an insurance licence “Updated External Act”) has been approved licensing of new domestic insurance companies in The Bahamas; and (v) certifi ed copies of by Parliament and will become effective once are set out in the Domestic Act and Domestic all constitutive documents, including licenses the requisite updated external regulations are Regulations, and only corporate bodies that are issued by any external regulatory entity if prepared, adopted and implemented. registered as insurers thereunder may carry on licensed/regulated elsewhere. insurance business in The Bahamas The government agency responsible for The name of the company must be approved by The Commission can issue a restricted regulating insurance companies in The the Commission. It should refl ect the type of or unrestricted licence, and it may attach Bahamas is the Insurance Commission of The insurance business to be undertaken, and may conditions as it deems necessary to the issue Bahamas. The Commission is an operationally not confuse or deceive. and continuance of a licence. independent body corporate that derives its Continued on page 6 authority from the Domestic Act. Its functions A domestic insurance or reinsurance company include maintaining surveillance over the must be constituted in a manner which is insurance market, promoting and encouraging acceptable to the Commission. It cannot be About The Author: Linda Beidler- sound and prudent insurance management registered for both long-term and general D’Aguilar is a graduate of Georgetown and business practices and ensuring that the insurance business, and its constitutive University School of Foreign Service and provisions of the anti-money laundering documents must restrict its activities solely Georgetown University Law Center. After legislation of The Bahamas are complied to the carrying on of insurance business. leaving Kelley Drye & Warren’s Washington with. For these purposes, the Commission Upon application to and approval by the D.C. offi ce to move to the Bahamas in has powers of regulation, inspection and Commission, a domestic insurance company 1991, Linda worked at two major trust supervision over insurance companies. may be constituted as a Segregated Account companies in the Bahamas, then as in- Company under the Segregated Account house counsel for Bacardi & Company The Commission, which has fi ve to seven Companies Act, 2004. Limited from 1995 to 2003, following members appointed by the Governor-General, which she returned to private practice. is answerable to the Minister responsible for In the case of a foreign company seeking to She now heads up the fi nancial services practice at Graham, Thompson & Co.; her Insurance, to whom it has to report annually conduct business as an insurer in The Bahamas, practice includes structuring and advising on its operation and conduct. Members are it must be lawfully constituted in accordance investment funds, structured fi nancing, selected for their wide experience and capacity with the laws of the country in which it is mergers and acquisitions, advising on in insurance, fi nancial or commercial matters, incorporated and must have undertaken insurance and securities regulatory industry, law and administration. An Insurance insurance business in that country for at least matters as well as general corporate and Advisory Committee composed of at least 5 years before the date of application for commercial matters.

2009 VOLUME 11 | 5 directors of insurance and reinsurance minimum paid-up and unencumbered INSURANCE SECTOR FAQs companies? share capital of not less than $1,000,000; Continued from page 5 and Companies seeking registration under the Answer: A domestic insurance company in The • For any other insurance business: External Act are subject to largely equivalent Bahamas must have at least fi ve directors. A minimum paid-up share capital of such requirements. director must be at least 18 years of age and amount as the Commission determines. must be a natural person of sound mind; he or Other licences, authorisations and she may not The actual required capital levels can vary qualifi cations depending on the business plan submitted • Be bankrupt; with the application for registration. The Question: What licences, authorisations or • Be prohibited from exercising the voting requirements will be determined on the qualifi cations are required for insurance and rights attached to shares of the company; following criteria (projected or actual): reinsurance companies to conduct business? • Be an offi cer, director or full time employee of an entity that is prohibited • The size of the company as measured by Answer: An insurer licensed under the from exercising the voting rights attached its assets, capital and/or surplus, reserves, Domestic Act must obtain a business license to shares of the company; premium writings and insurance in force. under the Business License Act in order to • Be an agent or employee or minister of the • The kinds of business written, the conduct business in The Bahamas, which Government of The Bahamas; or company’s net exposure and the degree of will further necessitate registration with the • Be an insurance agent or broker of the diversifi cation of lines of insurance. National Insurance Board with respect to its company. • The past and anticipated trend in the size employees. of the company’s capital and consideration Residency requirements are imposed such that of premium growth, operating history, loss It should also be noted that the Commission’s at least one half of the directors of a company and expense ratios. prior approval is required in various post- that is a subsidiary of a foreign institution must licensing situations, including, inter alia, be resident in The Bahamas, and at least three Statutory fund any change to the company’s constitutive quarters of the directors of any other company documents, changes in its benefi cial ownership, must be resident in the Bahamas. The Domestic Act requires every insurance and the issue or use of a new form of policy or company registered in the Bahamas to establish application for policy. There are no special qualifi cation requirements and maintain a statutory fund in a fi nancial for offi cers and directors of external insurance institution approved by the Commission, and Offi cers and directors companies under the External Act. provide both initial and annual statements to the Commission evidencing particulars of the Question: What are the minimum Capital and surplus requirement liabilities of the company in respect of which qualifi cation requirements for offi cers and the fund is established; and particulars of the Question: What assets comprising the fund. are the capital and surplus Where the Commission fi nds that statement requirements unsatisfactory, incomplete, inaccurate, for insurance misleading and/or the value of the assets is and reinsurance insuffi cient or excessive, the Commission may companies? give directions to the company for an increase or decrease of the value of the assets. Domestic Companies Deposits

Paid-up share capital Every insurance company is also required to make speciﬁ c deposits, which are to be placed The minimum in a trust; the trust is to be created by trust deed paid-up share capital approved by the Commission. Universal Variable Life Insurance requirements for Policies and Deferred insurance companies The assets to be held in trust must be held by are the following: a trustee approved by the Commission. The Variable Annuities minimum assets required to be deposited by • For long-term a registered insurer from commencement of insurance business: operations are as follows: minimum paid-up and unencumbered • For life and/or health insurance business: share capital $2,000,000; of not less than • For property and casualty insurance Five Oceans Life Insurance Company SAC Ltd. $3,000,000; business: $1,000,000; • For general • For entities which propose not to write Charlotte House | Charlotte Street | PO Box N-341 insurance business: any new business: $500,000. Nassau | Bahamas minimum paid-up t: (242) 325 1437 | f: (242) 322 1254 and unencumbered The assets are to be valued at an amount which share capital does not exceed the total of their book values [email protected] | www.fiveoceanslife.bs of not less than less an investment valuation reserve in such $2,000,000; amount. • For industrial life insurance business: Continued on page 7

6 | BAHAMAS FINANCIAL SERVICES REVIEW exceeds $10,000,000). if the actuarial basis is approved by the INSURANCE SECTOR FAQs Commission, whichever is higher. Continued from page 6 The solvency ratio is established on the basis Admissible assets for deposits include cash, of risk assessment in each particular case. As In addition, every company carrying on general unencumbered securities of the Government, a general rule, the minimum solvency margin insurance business must provide reserves for other securities (at a value and on conditions ratio for domestic long-term and general meeting claims outstanding at the date of its accepted by the Commission) and letters of insurers is 5 to 1 net premium to capital/ annual statement of account and for meeting credit provided by a recognized bank. surplus, but a 3 to 1 margin is preferred. catastrophes as prescribed by the Commission. The Commission can exempt a company from The Commission may require a company Of the assets required for the minimum margin providing such additional reserves or prescribe to increase or decrease the above amounts of solvency, at least 25% (for insurer carrying that the reserves are to be held in trust as a if it considers it necessary. Moreover, the on long-term business) and at least 75% (for statutory fund. Commission may require a re-insurer that insurer carrying on general business) of such reinsures all or part of an insurer’s business to assets must be in approved form which, in There are no specifi c provisions in the Act with deposit balances owing to the insurer with the addition to admissible assets as previously respect to reserves for long-term insurance Commission. defi ned, include loans by way of mortgages business. An insurer registered under the on real estate; net investment income due and External Act may be required to maintain funds Note that reinsurance companies are not accrued; premiums receivable; reinsurance (in the form of cash, short-term securities or required to make the aforementioned deposits. balances receivable; accounts receivable net other easily realisable assets) equal to forty of provisions for bad and doubtful debts; percent of the last annual total net premiums Foreign companies registered under the land and buildings; and irrevocable letters of payable to such insurer; failure to maintain Domestic Act credit approved by a recognised bank, for such reserves as mandated may lead to cancellation amount and on such conditions approved by of the external insurance license. Foreign companies carrying on long-term the Commission. insurance business in the Bahamas are required Insurance products to vest in trust in The Bahamas assets equal to Surplus their liability and contingency reserves with Question: What are the regulatory respect to their policyholders in The Bahamas Further, a company may be required to have requirements with respect to insurance as established by the balance sheet of the additional funding as determined by the products offered for sale? Are some products company as at the end of its last fi nancial year. Commission in the form of contributed surplus regulated by multiple agencies? so that the start-up expenses will not impair the Foreign companies carrying on general initial capital. Answer: All domestic insurance companies insurance business in the Bahamas must place must sell or distribute their products through in trust in The Bahamas assets equal to their External Insurance Companies registered intermediaries (i.e. salespersons, liability and reserves less the amount deposited subagents, agents and brokers). on account of the business with respect to their Paid-up capital policyholders in The Bahamas as established The Domestic Act details information and by the revenue account of the company as at For companies engaging in external life terms which must be set out in policies for the end of its last fi nancial year. insurance business, the minimum paid up long-term insurance business, as well as capital is B$200,000, while companies mandating the particulars to be included Foreign companies must also deposit with engaging in external general insurance business in group life insurance policies. Other the Commission the same amounts as local will be expected to have a minimum net worth requirements are imposed with respect to companies. of B$100,000 based on premium income. benefi ciaries, paid-up policies, surrender values, the non-forfeiture of policies and Solvency requirements Registration under the External Act may be industrial life insurance business. cancelled for failure to fulfi l the requisite paid Additionally, an insurer must meet a minimum up capital requirements. There are no specifi c provisions with respect to solvency margin. The margin of solvency insurance products in the External Act. There is defi ned as the excess of the value of the Reserves are presently no products offered for sale in company’s admissible assets over the amount The Bahamas that are regulated by multiple of its liabilities. In each year after registration a Question: What are the requirements with agencies. company must have the following assets: respect to reserves maintained by insurance and reinsurance companies? Change of control 1. For long-term insurance business: an amount equal to total liabilities plus the Answer: The Domestic Regulations require Question: What are the regulatory minimum amount of capital required to domestic insurers to set aside certain reserve requirements on a change of control of satisfy the solvency requirement (i.e. amounts to meet all claims on the insurance insurance and reinsurance companies? Are 20% of the net premium income in its last issued. offi cers and directors of the acquirer subject fi nancial year or $500,000, whichever is to background investigations? the greater amount); The reserve requirements for companies doing 2. For general insurance business: amount general insurance business are as follows: Answer: The Domestic Act sets out the rules equal to total liabilities plus the minimum for transfer and sale or merger of an insurance amount of capital required to satisfy • 80% of the unearned net premiums company: a company that desires to have the the solvency requirement (i.e. 20% of computed pro rata per mensem, as at the whole or any part of its insurance business the company’s fi rst $10,000,000 of net date of the statement; transferred to or acquired by another company premium income in respect of general • 40% of the annual net premium for the must obtain the approval of the Commission in business and 18% of the amount by which year of accounting, as at the date of the writing. the company’s net premium income in statement; or • such amount as is calculated actuarially respect of general insurance business Continued on page 9

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Foreign private investment reinsurance and net risk must be provided. INSURANCE SECTOR FAQs The reinsurers must be identifi ed by name Continued from page 7 Question: What are the requirements and and address and evidence provided of their The acquirer (i.e. any person that proposes restrictions concerning the investment in an fi nancial solvency and consistent fi nancial to take control or increase his interest in a insurance or reinsurance company by foreign reliability, in order to ensure that where registered insurance company) must obtain the citizens or companies? reinsurances are used to reduce substantially prior approval of the Commission in writing. the potential liabilities outstanding, the policies The Commission may approve the acquisition Answer: In order to make an investment in a are to be taken out with only reputable, well of control with or without conditions. It company incorporated under the Companies reserved and fi nancially sound reinsurers. may refuse approval on the grounds that the Act or any other entity deemed ‘resident’ for acquirer is not a fi t and proper person to have exchange control purposes by the Central Generally speaking, reinsurance through control over the company and the interests Bank of The Bahamas, a prospective foreign affi liated or related entities is permitted only of consumers would be threatened by the investor, whether a citizen or a company, with the Commission’s prior approval where acquirer’s control. must obtain the prior written approval be of the affi liate or related party is not itself a the Bahamas Investment Authority and the registered insurer or is registered in another If a person acquires control of a registered Central Bank of The Bahamas. This will jurisdiction. The Commission has the power insurance company without any conscious largely apply solely in respect of a prospective to cancel an existing company’s registration action on his part, he must notify the foreign investment in a domestic insurance or if it believes that the company’s re-insurance Commission before the end of the period of 14 reinsurance company. arrangements are not satisfactory. There are days beginning with the day on which he fi rst no express regulatory requirements under becomes aware that he has acquired control. External (captive) insurance is an area that the the current External Act with respect to such Bahamian government has especially targeted agreements. The circumstances in which a change of as being of particular interest to foreign control is deemed to occur is set out in the investors. As a general rule, the insurance Ceded reinsurance and retention of risk Domestic Act. A detailed procedure as laid out or reinsurance companies regulated under in the Domestic Act (including provision for the External Act are not deemed ‘resident’ Question: What requirements and restrictions a public hearing) must be followed before the for exchange control purposes and as such a govern the amount of ceded reinsurance and Commission will determine whether or not to foreign investment in a non-resident company retention of risk by insurers? approve the transaction. The Commission must may take place without the approvals described also be notifi ed if 10% or more of a company’s in the preceding paragraph. Obviously, the Answer: The Commission has the power to ownership changes. Commission’s approval of the change in restrict, via regulation or directive, the extent benefi cial ownership of a domestic company to which a registered Bahamian or foreign The Commission may reject the change of will be required, as set forth in the response to insurer may cause itself to be reinsured against control in designated circumstances, including, question 8 above. risks. At present, the Domestic Regulations inter alia, where the Commission believes do not provide any specifi c requirements and that the proposed acquisition, amalgamation Foreign state investment restrictions with respect to the amount of ceded or transfer is detrimental to the policyholders, reinsurance and retention of risk by insurers; or the proposed acquisition, amalgamation or Question: What are the requirements and however, the nature and extent of existing or transfer is not in the public interest. Provision restrictions concerning the investment in an proposed reinsurance arrangements must be is made for appeal of the Commission’s insurance or reinsurance company by foreign included in the application for registration of decision, within a designated period. governments? every company and these are therefore subject to the Commission approval. A company in The Commission may undertake external Answer: There are no express requirements the application must in fact indicate clearly the background investigations on each of the or restrictions concerning an investment in amount of the applicant company’s retention present directors of a company; any directors insurance or reinsurance companies by foreign in each case and the names of the insurance it is proposed to appoint; any other persons in governments other than those set forth in the companies or associations of underwriters accordance with whose directions the directors response to question 10 above. which will reinsure each class of the of the company or any of them act or will act; company’s business and the amount which will and each person who either has an interest or Reinsurance agreements be reinsured by each. it is proposed will have an interest in shares of the company having a nominal value of 10% or Question: What are the regulatory There are no specifi c provisions on this point more of the company’s total share capital and requirements with respect to agreements for under the External Act as it presently stands or which carry voting rights. reinsurance ceded and assumed by insurance under the Updated External Act. and reinsurance companies domiciled in your No specifi c requirements are imposed by the jurisdiction? Collateral External Act. Answer: The Domestic Act expressly requires Question: What are the collateral Financing of an acquisition that in order to be registered in The Bahamas, requirements for reinsurers in a reinsurance an insurance company must make adequate transaction? Question: What are the requirements and arrangements for reinsurance, unless there is restrictions regarding fi nancing of the no justifi cation for making such arrangements. Answer: Neither the Domestic Act nor the acquisition of an insurance or reinsurance These arrangements must be contained in External Act expressly prescribe collateral company? the detailed business plan submitted to the requirements for reinsurers in a reinsurance Commission at the time the company applies to transaction. However, as previously Answer: Neither the Domestic nor the External be in licensed in The Bahamas. mentioned, details of reinsurance arrangements Act contain any requirements or restrictions on must be contained in the business plan the fi nancing of the acquisition of an insurance The business plan must contain an overall submitted to the Commission for approval. or reinsurance company. assessment of the risk factors and an analysis of the proposed reinsurances. Details of Continued on page 10

2009 VOLUME 11 | 9 properly licensed and registered insurance and such other staff as the body may employ, INSURANCE SECTOR FAQs intermediaries. they must be capable of carrying on business Continued from page 9 effi ciently as an insurance intermediary. Reinsurers must be identifi ed by name and Insurance intermediaries (being brokers, address and evidence must be provided of their agents, sub-agents, adjusters, risk managers, Limitations fi nancial solvency and consistent fi nancial consultants, salespersons or any other persons reliability. promoting or facilitating insurance products An insurer cannot be registered as a broker, or agreements) must be licensed. To obtain agent or other insurance intermediary. Insolvent and fi nancially troubled companies a license, the applicant must be “suffi ciently Similarly, adjustors, consultants or surveyors competent and knowledgeable to carry on cannot be registered as salespersons, agents, Question: What laws govern insolvent business as an insurance intermediary”. sub-agents or brokers. It should be noted that or fi nancially troubled insurance and Except as otherwise expressly prescribed in the an agent cannot be registered in respect of reinsurance companies? Domestic Act, insurance intermediaries other general insurance business for more than fi ve than salespersons and designated sub-agents insurance companies at a time, or for long- Answer: The Domestic Act deals with the must be corporate entities. term insurance business for more than three voluntary winding up of insurance companies Where the applicant is an individual, he must insurance companies at a time. A sub-agent and liquidation of insolvent insurance be a person of good character and a fi t and cannot be registered in respect of more than companies. The current External Act does proper person to be an insurance intermediary one general and one long term insurance agents not address this issue; however, the Updated and each of the persons, if any, with whom he at any given time. A salesperson cannot be External Act will dictate rules and procedures is associated, whether as a partner or otherwise registered for more than one agent or broker at with respect to the winding-up and liquidation in his business as an insurance intermediary, any given time. of external insurance companies and the must be a fi t and proper person. He/she must establishment and maintenance of solvency have passed any required exams, and be a Underwriters margins. member in good standing of a professional association approved by the Commission. No association of underwriters can carry on insurance business in The Bahamas unless Intermediaries If the applicant is a body of persons, each it is registered. A member of an association can, after the date of registration, carry on Question: What are the licensing of the persons managing or controlling the its Bahamian insurance business other than requirements for intermediaries (eg, body or, each of the partners, and or/ owners long-term insurance business. The persons who managing general agents, managing general as the case may be, must be a fi t and proper manage the applicant must be of good character underwriters, agents, brokers, third-party person. The underlying persons must also have and otherwise fi t and proper persons to manage administrators and professional qualifi cations and affi liations as the applicant; and the staff the applicant claims adjusters) representing insurance and prescribed by the Commission. employs must be suffi ciently competent and reinsurance companies? In either case, having regard to the knowledge knowledgeable to carry on that business in an effi cient manner. Answer: Domestic insurers may sell or and competence of the individual or the distribute their products only through persons managing the body or of the partners Continued on page 11

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10 | BAHAMAS FINANCIAL SERVICES REVIEW Answer: There is presently no statutory claim, an insurer may be entitled by the policy INSURANCE SECTOR FAQs guidance on this point; it will be governed by terms to bring an action for contribution from Continued from page 10 the contractual terms set out in the insurance the insurers that issued the other policies. If the applicant is constituted outside The policy. Bahamas, additional obligations are imposed C. REINSURANCE including the designation of one or more Incontestability period persons resident in The Bahamas who are (i) Reinsurance disputes authorized to accept service of process on Question: Is there an incontestability period the applicant in any legal proceedings. Under beyond which a life insurer cannot contest Question: Are formal reinsurance disputes the Updated External Act, a license will be coverage based on misrepresentation in the common (in your jurisdiction), or do insurers required for persons providing insurance application? almost always reach business solutions for management services, or acting as an external their disputes without formal proceedings? (Is insurance broker. Answer: There is presently no statutory arbitration or litigation in court the primary guidance on this point; it will be governed by means for formal resolution of disputes? Is NOTE: References in section A to insurance the contractual terms set out in the insurance there a body of law that serves as precedent include reinsurance unless otherwise indicated. policy. for substantive issues arising in the litigation Regulatory agencies or arbitration of reinsurance disputes? If so, Punitive damages please describe including, briefl y, statutes, B. INSURANCE CLAIMS AND rules, regulations and case law) COVERAGE Question: Are punitive damages insurable? Answer: There is presently no statutory Third-party actions Answer: There is presently no statutory guidance directly related to the settlement of guidance on this point, nor are there any reinsurance disputes. Formal disputes resulting Question: Can a third party bring a direct reported cases in The Bahamas regarding in local litigation are uncommon, and there is action against an insurer for coverage? the recovery of punitive damages. It should consequently little if any case law on point; at be noted that a court would award punitive the present time, most such contracts provide Answer: Generally not; however, provision damages only in the most exceptional for resolution outside the jurisdiction. is made in the Road Traffi c Act for insurers circumstances. to make payment directly to a third party in Common dispute issues respect of a liability which is covered by the Excess insurer obligations terms of insured’s motor vehicle policy, in the Question: What are the most common issues event a judgment in respect of the same has Question: What is the obligation of an excess that arise in reinsurance disputes? been obtained. insurer to ‘drop down and defend’, and pay a claim, if the primary insurer is insolvent or its Answer: The current hot topic is the Late notice of claim coverage is otherwise unavailable without full prospective wholesale amendment of the exhaustion of primary limits? Arbitration Act in The Bahamas, which will Question: Can an insurer deny coverage bring a updated and modernized statute on- based on late notice of claim without Answer: There is presently no statutory stream to facilitate the use of arbitration as a demonstrating prejudice? guidance on this point; it will be governed by dispute resolution mechanism in insurance and the contractual terms set out in the insurance reinsurance matters. Answer: There is presently no statutory policy. guidance on this point; it will be governed by Arbitration awards the contractual terms set out in the insurance Order of payment policy. Question: Do reinsurance arbitration awards Question: What is the order of priority for typically include the reasoning for the Wrongful denial of claim payment when there are multiple claims decision? under the same policy? Question: Is an insurer subject to extra- Answer: According to the present Arbitration contractual exposure for wrongful denial of Answer: There is presently no statutory Act, there is no express requirement that the a claim? (eg, acting in bad faith or refusal to guidance on this point; it will be governed by reasoning for a decision be stated. settle legitimate claims) the contractual terms set out in the insurance policy. However, guidance should be sought in Power of arbitrators Answer: No. respect of implications arising in the event that payments are made shortly before insolvency. Question: What powers (if any) do Defence of claim reinsurance arbitrators have over non-parties Allocation of payment to the arbitration agreement? Question: What triggers a liability insurer’s duty to defend a claim? Question: How are payments allocated among Answer: Under the current Arbitration Act, the multiple policies triggered by the same claim? arbitrators themselves do not have any power Answer: There is presently no statutory (eg, in the case of multi-year occurrences over non-parties to the arbitration agreement; guidance on this point; it will be governed by such as pollution)? however, a request may be made that a court the contractual terms set out in the insurance compel the attendance of a witness if such policy. Answer: There is presently no statutory witness is within The Bahamas. guidance on this point; it will be governed by Indemnity policies the terms set out in the insurance policy. It Appeal of arbitration awards should be noted that an insured can only seek Question: For indemnity policies, what triggers to be made whole and may not obtain payments Question: Can parties to reinsurance the insurer’s indemnity obligations? in excess of the full amount of the loss. In the event payment under one policy satisfi es the Continued on page 12

2009 VOLUME 11 | 11 will be governed by the terms set out in the Answer: The obligation will be governed by INSURANCE SECTOR FAQs reinsurance contract. the terms set forth in the reinsurance contract. Continued from page 11 arbitrations seek to vacate or confi rm Good faith Notice and information arbitration awards through the judicial system? What level of deference does the Question: Is a duty of utmost good faith Question: What type of notice and judiciary give to arbitral awards? implied in reinsurance agreements? If information must a cedent typically provide so, please (briefl y) describe that duty its reinsurer with respect to an underlying Answer: Yes, the parties may seek to vacate or in comparison to the duty of good faith claim? If the cedent fails to provide timely or confi rm arbitration awards through the judicial applicable to other commercial agreements. suffi cient notice, what remedies are available system, but there is little practical experience to a reinsurer? with the same. Under the Arbitration Act, an Answer: It is likely that a Bahamian court arbitral award may be set aside by the court would follow the English common law Answer: There is presently no statutory where an arbitrator has engaged in misconduct, principle pursuant to which a duty of utmost guidance on this point; it will be governed by or in the event the award has been improperly good faith would be so implied, although we the terms set out in the reinsurance contract. procured. are not aware that there are any reported cases on this point. Allocation of underlying claim payments or C. REINSURANCE settlements Facultative reinsurance and treaty (ii) Reinsurance principles and practices reinsurance Question: In the case of multi-year occurrences, such as pollution, how are Obligation to follow cedent Question: Is there a different set of laws underlying claim payments or settlements for facultative reinsurance and treaty allocated among policy years covered by Question: Does a reinsurer have an obligation reinsurance? multiple reinsurance agreements? to follow its cedent’s underwriting fortunes and claims payments or settlements in the Answer: No such separate laws exist, nor Answer: There is presently no statutory absence of an express contractual provision? are we aware of reported cases developing guidance on this point; it will be governed by Where such an obligation exists (whether or different principles in respect of facultative the terms set out in the reinsurance contracts. not expressly provided by contract), what is versus treaty reinsurance. the scope of the obligation, and what defences Review are available to a reinsurer? Coverage action Question: What type of review does the Answer: There is presently no statutory Question: Can a policyholder or non- governing law afford reinsurers with respect guidance nor reported cases on this point; it signatory to a reinsurance agreement bring a to a cedent’s claims handling, and settlement direct action against and allocation decisions? a reinsurer for coverage? Answer: There is presently no statutory guidance on this point; it will be governed by Answer: There the terms set out in the reinsurance contract. is presently no statutory guidance Reimbursing of commutation payments on this point. Although questions Question: What type of obligation does a as to coverage and reinsurer have to reimburse a cedent for rights of action commutation payments? Must a reinsurer are generally indemnify its cedent for ‘incurred but not governed by the reported’ claims? terms set forth in the reinsurance contract, Answer: There is presently no statutory there is likely to guidance on this point; it will be governed by be a question as the terms set out in the reinsurance contract. to whether in the absence of privity of Authors Note: It is anticipated that the fully contract any terms updated External Insurance Act, 2009 will purporting to permit come into effect as soon as the requisite such an action would External Insurance Regulations are prepared, be given effect by approved and issued. It is hoped that this the court. legislative initiatives will progress smoothly and quickly and that the new external Insolvent insurer legislation will become effective before the end of 2009. Reproduced with permission Question: What is from Law Business Research. This article was the obligation of a fi rst published in Getting the Deal Through - reinsurer (if any) to Insurance & Reinsurance 2009 (published in pay a policyholder’s June 2009; contributing editor Paul Kanefsky - claim where the Edwards Angell Palmer & Dodge LLP); author insurer is insolvent Linda Beidler-D’Aguilar, partner, Graham, and cannot pay? Thompson & Co.

12 | BAHAMAS FINANCIAL SERVICES REVIEW INDUSTRY SECTOR PROFILES - Arbitration

ARBITRATION IN THE BAHAMAS JOHN WILSON

There currently is a move afoot to position The Bahamas as a major international Arbitration Centre, and for the ﬁ rst time concrete steps are being taken towards this end.

This aspiration is by no means new or challenge. The ability to access court systems Arbitration can operate in two discrete revolutionary and debate on this topic has been and prosecute commercial disputes through to a contexts – in an international context and in in public discourse for quite some time. Over resolution in a timely and cost effi cient manner a local context. Internationally, this covers the years the goal of establishing The Bahamas has become increasingly elusive. With the disputes involving international commerce as a centre for arbitral dispute resolutions, explosion of world trade in the later half of the such as sale of goods, construction, foreign supported by a modernised legislative 19th century the search for effective alternative direct investment, international shipping, framework with a dedicated state of the art means of dispute resolution gained momentum international banking and fi nance, and facility has been met with varying degrees of and the result was a progressive move towards international licensing or intellectual property enthusiasm. the development of an enforceable system agreements. of voluntary arbitration. This move was For whatever reason, whether due to a lack of welcomed and encouraged by international All of the foregoing, to varying degrees, play political support or private industry initiative, commerce where it had been recognised for a part in the commercial life of The Bahamas. the past discussions have not hitherto resulted centuries that commercial men preferred to Of particular importance to us in The Bahamas in any tangible steps towards making this use arbitration rather than the courts to resolve is the very prominent role arbitration plays as aspiration a reality for The Bahamas. What is their business disputes. the dispute resolution mechanism of choice in not debatable however is that if The Bahamas international shipping. is to position itself as a fi rst rate centre for Arbitration continues to be the most frequently the conduct of international business, it is employed means of alternative dispute The Bahamas currently boasts the 3rd largest imperative that we make available to both resolution. ADR initially became commonly ship registry in the world with in excess of 50 international and local business persons alike used as an ‘alternative’ to litigation due to million Gross Register Tonnage (GRT) under the means of accessing a tried and true system litigation growing increasingly more costly, its fl ag. of Alternative Dispute Resolution (ADR). protracted and time consuming, and in some cases unsatisfactory or ineffective in resolving On the other end of the spectrum, local As one of the pillars of ADR this is essentially an ongoing dispute. Many legal practitioners arbitration can be a useful tool in assisting with what arbitration is designed to provide. It agree that “litigation is a costly, lengthy, public the resolution of personal disputes such is a private system of justice which exists exhibition of differences, leading to a great deal parallel with, but independent of the judicial of ill will between litigants. In contrast, ADR Continued on page 14 system which would have powers limited processes are usually faster, less expensive, only to the enforcement and recognition of less time consuming, and more conclusive than arbitration agreements and arbitral awards litigation.”1 and adjudicating appeals on points of law. About The Author: John F Wilson is a Arbitration is the consensual process by which For these reasons arbitration, (as one means litigation Partner with McKinney Bancroft commercial disputes are resolved, outside of of ADR) has been embraced by legal systems & Hughes and Co-Chair of the fi rms the court system, by an impartial tribunal in worldwide in an attempt to expeditiously Trust & Private Client and Admiralty & private. resolve confl icts where resorting to litigation is Shipping practice groups. He is a member of the committee for the establishment undesirable or avoidable, and also to endeavor of a Commerical Court for the Bahamas In modern times, not only in The Bahamas to preserve business or personal relationships appointed by the Chief Justice and Co- but in most western civilized countries, the between litigants where there may be acrimony Chairs the BFSB Arbitration Working traditional arrangement by which civil justice as a result of the proposed or ongoing legal Group. has been delivered has come under scrutiny and action.

2009 VOLUME 11 | 13 and ineffi cient procedure which, due to the trend towards utilizing arbitration to settle ARBITRATION IN THE BAHAMAS insistence of commercial men to have recourse commercial disputes is axiomatic. Continued from page 13 to it, encroached upon territory which was the sole domain of the judicial system and the With the active support of the Bahamas as divorce proceedings, family trust disputes, lawyers who practiced in it. However, since it Maritime Authority and the Bahamas Financial labour disputes, property, and defective transpired that commercial men continued to Services Board, new Arbitration legislation construction disputes, among many others. One insist on the right to arbitrate, it was accepted to replace our current laws is being proposed can easily envision the many different contexts that the system should be made to work as in the form of the Arbitration Bill 2009 and in which arbitration could be useful in settling effectively as possible. the Arbitration (Foreign Arbitral Awards) local disputes. Bill 2009. The Bills have been tabled in Ultimately, the United Nation Convention on the Bahamian Parliament already, and I am This is particularly so where individuals do International Trade (UNCITRAL) Convention optimistic that we will have new legislation in not have the fi nancial resources to enable them on the Recognition and Enforcement of place prior to year end. to commence and continue litigation before Foreign Arbitral Awards was signed in New the courts. Many Bahamian legal practitioners York in 1958 to enhance and harmonize the The Bills are primarily based on the would agree that an effective arbitration system rules and procedures relating to international UNCITRAL Model Law on International would be a welcome aid in alleviating the arbitration and facilitate the enforcement of Commercial Arbitration which is “designed pressure on the court system without adding arbitral awards throughout the world. To date, to assist States in reforming and modernizing to the current backlog of cases waiting for a 142 member nations of the United Nations their laws on arbitral procedure so as to take resolution. have ratifi ed the New York Convention, into account the particular features and needs including The Bahamas which acceded to it on of international commercial arbitration. Some basic ingredients, essential features and the 20th December 2006. advantages of arbitration are as follows: It covers all stages of the arbitral process from A legitimate question to ask is why have The the arbitration agreement, the composition • The arbitral process is consensual, based Bahamas and the wider Caribbean region not and jurisdiction of the arbitral tribunal and on an agreement between the parties. moved with alacrity to update and modernise the extent of court intervention through to the • The parties can chose who is to be their its arbitration laws? The region has lagged recognition and enforcement of the arbitral arbitrator and this means they can choose behind most of the developed world in fully award. It refl ects worldwide consensus on key an industry specifi c expert to resolve their embracing and promoting arbitration as aspects of international arbitration practice dispute. an effective means of alternative dispute having been accepted by States of all regions • The arbitral process is private and resolution. This perhaps could be partially and the different legal or economic systems of confi dential to the parties and the explained by the views expressed by University the world.”3 arbitrator. of West Indies Professor Albert Fiadjoe, where, • Arbitration may be conducted anywhere in commenting on some of the drawbacks to For The Bahamas, establishing itself as an that is convenient and at any suitable time. arbitration from the perspective of developing International Arbitration Centre would be a • The parties have procedural freedom. Its countries, he had this to say: welcomed adjunct to its current panoply of procedure can be tailored to a particular international business, chief amongst which dispute to make best use of time and it can “Arbitration is somewhat more worrisome is its international maritime and international be inquisitorial or adversarial. and its advantages over the court process not fi nance businesses. It will allow us to stand • Parties are free to use anyone they wish always obvious. In fact, for the developing shoulder to shoulder with other leading to argue their case and both counsel and countries of the region, its advantages are arbitration centres in the world and while the experts can make submissions on the somewhat dubious. This is so because most intent is not necessarily to compete with other parties’ behalf. donor countries and foreign enterprises centres, it should be a refreshing change to • An arbitral award is binding upon the refuse to invest in a country unless that grant international businesspersons and their advisors parties. stipulates a condition, which denies local courts if they are able to soak up some sun sand and • Unlike orders made in litigation jurisdiction to arbitrate.”2 sea while resolving their disputes. proceedings, an arbitral award can be enforced in almost every country in the Whatever the reason for this reluctance, I am world. delighted that The Bahamas is now taking Footnotes: steps to shirk this malaise and is actively taking Although arbitration exists parallel to the steps to update and modernise its Arbitration 1. Albert Fiadjoe. (2004) Alternative Dispute Resolution: judicial system it should be viewed as being regime. Our current collection of arbitration A Developing World Perspective. Pg. 1 complementary and not in opposition to it. laws, the Arbitration Act, the Arbitration 2. Fiadjoe, A, Commonwealth Caribbean Public Law (Foreign Awards) Act, and the Arbitration 2edn, 1999 Cavendish Publishing, p203 Historically, a healthy tension existed between Clauses (Protocol) Act, are antiquated pieces of 3. United Nations Commission on International Trade conventional litigation through the courts and legislation which date back to as early as1889. Law http://www.uncitral.org/uncitral/en/uncitral_ voluntary arbitration; this tension was due in That this covey of archaic legislation is ill texts/arbitration/1985Model_arbitration.html part to the view held by legal practitioners of equipped to meet the demands and challenges that period that arbitration was an ineffective of modern commerce and the increasing

14 | BAHAMAS FINANCIAL SERVICES REVIEW INDUSTRY SECTOR PROFILES - Compliance

RISK MANAGEMENT & COMPLIANCE EMMANUEL KOMOLAFE A NATURAL MARRIAGE

Compliance was the hottest topic in the wake of the adverse listing of countries and territories by the Financial Action Task Force (FATF) on its infamous Non Cooperative Countries and Territories (NCCT) list in 2000.

In the aftermath of the radical reforms and Kingdom’s Financial Services Authority. The of failing to clearly articulate and defi ne the legislative overhaul of Anti-Money Laundering truth we must all face is that the answer - RM - interaction between Compliance and RM. laws within The Bahamas as well as other had always dwelled in our backyards and stared RM involves the identifi cation, assessment, affected International Financial Centres (IFCs), us in the face all this time. Unfortunately, evaluation, mitigation and control of all risks Compliance Offi cers were a unique and sought- RM had been relegated to the dungeon of faced by an organisation. after breed of professionals. The importance irrelevance by some fi nancial institutions. of the Compliance Function was further validated by the issuance of Compliance and The Compliance Function and ipso facto Continued on page 16 the Compliance Function in Banks by the Basel the Compliance Offi cer is responsible for Committee on Banking Supervision (BCBS) in the management of compliance risk within About The Author: Mr. Komolafe holds April 2005. a fi nancial institution. The BCBS defi nes qualifi cations in Accountancy, Business compliance risk as “the risk of legal or Economics, Compliance and Anti- Money Laundering from the Lagos State Almost a decade after the FATF’s blacklisting regulatory sanctions, material fi nancial loss, or Polytechnic, University of Buckingham and in the midst of the worst fi nancial crisis loss to reputation a bank may suffer as a result and University of Manchester/ICA. He also since the Great Depression, the new hot phrase of its failure to comply with laws, regulations, holds a LLM - Master of Laws specializing “Risk Management” (RM), has emerged or rules, related self-regulatory organisation in banking law, securities regulation and international law from the University of rather re-emerged. The deliberate reference standards and codes of conduct applicable Buckingham, UK. to re-emergence is borne out of the reality to its banking activities”. The perception of that RM just like compliance is not a new Compliance as an absolutely separate and Mr. Komolafe is a member of the Institute phenomenon or concept. Rather, the fi nancial exclusive discipline without signifi cant links to of Risk Management, the Institute of Chartered Secretaries and Administrators crisis provided a high profi le illustration of RM based on the defi nition above could very (ICSA) and International Compliance how poor RM practices can severely damage well be one of the most expensive fallacies Association in the UK as well as the fi nancial institutions, industry sectors and a for any fi nancial institution. This fallacy Bahamas Association of Compliance fi nancial system in its entirety. The argument will almost always result in the adoption of Offi cers. He is a former Policy Offi cer at the Central Bank of The Bahamas where that extremely high risk appetites was the main a prescriptive approach to compliance in the he was assigned to special projects cause of the crisis we currently face is knocked context of anti-money laundering and customer involving the International Monetary down by the fact that the setting of reasonable due diligence efforts by a fi nancial institution. Fund, Caribbean Financial Action Task and prudent risk appetites is a key component This is because such an institution would have Force and the Offshore Group of Banking Supervisors. of an effective RM framework. implemented a compliance framework which is tunnel-visioned, as opposed to holistic and in Mr. Komolafe has attended courses on Indeed the global fi nancial crisis has left line with its overall RM framework. An ideal Risk Management, AML/Compliance and governments and fi nancial services industry formula, therefore, is one which successfully Basel II with the IMF, Caribbean Group of Banking Supervisors and the US regulators searching for answers as to what incorporates compliance into the fi nancial Department of the Treasury. He has also went wrong and how to prevent a recurrence. institution’s overall strategy for RM. sat on several panels within the fi nancial The proposals to prevent a repeat of the current services industry in The Bahamas. crisis have ranged from the introduction of Recent market failures have been linked to a Mr. Komolafe currently serves as the Chief a more stringent and enhanced regulatory lack of understanding of RM and the key role Risk and Compliance Offi cer for Colina regime in the United States to a shift from it plays in the achievement of organisational Holdings Bahamas Limited. “principles-based” regulation to an “outcomes- goals and objectives. Going further, the focused” approach to regulation by the United fi nancial crisis exposed the consequences

2009 VOLUME 11 | 15 breached by the fi nancial institutions involved. the likes of Merrill Lynch, Bear Stearns et al – RISK MANAGEMENT & COMPLIANCE a penny wise and pound foolish approach. Continued from page 15 The adoption of a holistic or enterprise approach to RM (which incorporates It seems fair to conclude that Compliance Compliance is a key element of the mitigation compliance) as opposed to the traditional is a RM function albeit RM is not solely a and control phases of RM. It is crystal clear isolated approach should have considered the compliance function. RM is much broader as from the defi nition of compliance risk above credit policies in line with established risk it addresses other issues such as stress testing, that Compliance Offi cers are prima facie risk tolerance/limits as well as systemic risks to organisational risk strategy, business continuity managers of legal, regulatory, fi nancial and global fi nancial markets. planning as well as the creation, monitoring reputational risks within a bank. and management of key risk indicators. There are fi ve main pillars of RM which The types of risks expressly omitted in the must all work together effectively for an defi nition – operational, credit, liquidity and organisation to successfully achieve its Compliance forces a fi nancial institution market risks are often covered under rules objectives – Governance, RM, Compliance, (either knowingly or unknowingly) to do and codes of conduct applicable to banking Internal Audit (IA) and Legal (GRCIL). The something about RM and could be described activities which is included in the defi nition of Governance pillar recognises the importance as an offspring of RM with both overlapping compliance risk by the BCBS. of good corporate governance and the ultimate in fulfi lling their mandates. There is no doubt responsibility of the Board for RM. that both RM and compliance are separate The role of Compliance Offi cers as defi ned fi elds and distinct functions; however, there are by the Financial Intelligence (Transactions The RM pillar represents the formal status effi ciency gains to be derived from merging Reporting) Regulations 2001 and the of a function dedicated to the day to day both functions under one umbrella within a typical functions performed by this group of management of strategic risks faced by the fi nancial institution. professionals are aimed at the management of organisation. Compliance is a subset of RM risks. with responsibility for daily monitoring and Certain fi nancial institutions in recognising management of specifi c risks within the the synergy created by merging both functions In ensuring that fi nancial institutions comply organisation. The IA and Legal pillars also play have adopted this approach in which RM and with relevant laws, regulations, guidelines, important roles in the RM framework albeit compliance fall under a Risk and Compliance prudential norms as well as its policies and they may be outsourced by smaller fi nancial Department and a Head of Risk and procedures, the Compliance Offi cer is at the institutions to transfer potential liability. Compliance. forefront of the RM process geared towards the safety and soundness of the entity. RM and Compliance professionals alike The marriage between RM and compliance are trained to ask the simple and sometimes is one borne out of necessity, logic and This is because, albeit this is not expressly perceived as “silly” questions which in most convenience. Divorcing RM from Compliance stated, the underlying objective of the aforesaid cases other individuals are too embarrassed is not an option for a fi nancial institution which rules and standards is to ensure that fi nancial to ask. In hindsight, it seems clear that these intends to have an effective RM framework. institutions are properly and effectively so-called simple questions were the ones managing their risk exposures. To illustrate this which were not asked nor properly answered RM and compliance should always remain further, the Capital Adequacy and Liquidity in ascertaining and understanding the actual married until death parts them. A forced Risk Guidelines are aimed at inter alia ensuring values of sophisticated mortgage and asset- separation by death in this instance will often that licensees have enough capital to support backed securities. be marked by the demise of the fi nancial their operations and maintain adequate liquidity institution which did not successfully marry to meet their obligations as well as sustain their Hence, it can be argued that had fi nancial both functions. operations. institutions answered the simple questions, the credit crunch and fi nancial crisis may The way forward requires the development The AML Guidelines on its part facilitates have been prevented or the effects of the same of a culture of compliance and sound risk licensees’ management of money laundering minimised. The culture pre-fi nancial meltdown management as well as improving the way risk and terrorist fi nancing risks and the resulting was one that rewarded individuals who took control staff interact with and infl uence the risk potential risks to their reputation. excessive risks with bonuses and benefi ts while takers within fi nancial institutions. This should RM and Compliance staffs were considered a ensure that, not only are potential threats A real life example of the direct result of necessary evil which added no real value, deal identifi ed and addressed, but opportunities fi nancial institutions’ failure to manage their breakers and enemies of creativity. for greater effi ciency and productivity are risk properly is the subprime mortgage crisis. uncovered and exploited. In this instance, the improperly managed risk Boards did not adequately hold senior was credit risk and the disregard for established management accountable for delegated RM prudential rules and limits - compliance responsibilities but were blinded by the issues – was obvious. It was also apparent potential earnings from highly risky products that there had been a deviation from industry and decisions which they did not understand. It best practices and compliance rules had been turned out to be a very expensive oversight for

16 | BAHAMAS FINANCIAL SERVICES REVIEW INDUSTRY SECTOR PROFILES - Insurance

BAHAMAS EXTERNAL INSURANCE ACT 2009 JOEL KARP

After several years of effort by The Bahamas, the Bahamas Financial Services Board and members of industry (with a little bit of help from their friends), the External Insurance Act, 2009 ﬁ nally has been enacted superseding prior legislation on the subject.

The general purpose of the new law is to provide those areas where there is no coverage crisis Another point is the possibility for private The Bahamas with state of the art legal and captive insurance is still popular because it can banking business with regard to the funds held administrative machinery with which to compete be used to reduce the overall insurance cost by in a Bahamas captive insurance company. in the lucrative market relating to international eliminating loading and acquisition charges and Also, captive insurance opportunities are insurance products. However, while it is by obtaining coverage at what is essentially a not only applicable to U.S. persons, but are believed that the goal of the new Act has been reinsurance (cheaper) rate. also applicable for European as well as Latin achieved, it must be remembered that legislation American enterprises. The question arises if such as this is always a work in progress. We Interestingly, the IRS, after years of opposition, the company is going to elect to be treated as understand the Bahamas Government will has come to sanction captive insurance within a U.S. corporation for tax purposes, why need always be open to improvements and changes certain guidelines. The result has been that in it be Bahamian? The answer is that by doing refl ecting the needs of new products constantly many countries of the world (not only the United so, the company legally avoids expensive and entering the market. States), corporate groups and entrepreneurs can burdensome insurance regulation in the United set up a captive insurance company in, let us say, States. The Bahamas also provides cost and Captive Insurance The Bahamas with pre-tax money which can be time effi ciencies and geographic advantages not accumulated with no or little tax for an indefi nite available in other jurisdictions. Since captive One of the major reforms accomplished by the period of time. When the funds accumulated in insurance is widely recognized as a legitimate new Act was to establish a clear, predictable and The Bahamas captive insurance company are activity, it should not be treated as operating in effi cient structure whereby a captive insurance repatriated, they can be repatriated at capital the “grey”. Also, the Bahamas Government has (or reinsurance) company covering risks outside gains tax rates which, although they will go up committed to being off of the OECD’s “grey of The Bahamas, may be established in The from the current 15%, are not slated to increase list” by the end of 2009, and it is well on its way Bahamas. Prior to the Act, the classes of captive beyond 20%. to achieving that goal. insurance that were specifi cally authorized were very narrow. Accordingly, most, if not all, of Thus, the structure is very interesting for International Brokerage the captive insurance companies which came individuals not only from an income tax point into existence required specifi c ministerial of view, but also from the point of view of estate Until the enactment of the External Insurance consent on a case by case basis. Such a process planning. For example, an individual owning a Act 2009, while there was provision for an was not conducive to the timing and economic manufacturing concern in the United States can underwriting management business providing constraints necessarily related to captive set up a Bahamas insurance company which can underwriting management services for an insurance as a business. be treated as U.S. for tax purposes. This election Continued on page 18 avoids penalty taxes, with no tax currently Why this is important to The Bahamas can be or in the future on underwriting profi ts (until illustrated by what a captive insurance does. repatriation) but with a tax on net investment About The Author: Joel J. Karp practices independently through Joel J. Karp, P.A. Basically, a captive insurance enterprise is income which can often be materially reduced and is also of counsel to Cantor & Webb formed by a group or professional or other or eliminated. P.A. His practice focuses on international association for the purpose of providing to tax and estate planning and international the corporate members of the corporate group The shares of this insurance company can be owned insurance law for high net worth international clients and their businesses. or the individual or other members of the by a trust for the benefi t of the entrepreneur’s Born in Brooklyn, New York, he received association with insurance (normally property children; thus, transferring profi ts from his business his B.A. degree from Columbia College and casualty insurance) (often in the case of to the next generation free of estate and gift tax. in 1961 and his LL.B from Columbia professionals, malpractice insurance) either There are, of course, limitations, qualifi cations, and University Law School in 1964. He is admitted to practice in New York and where such coverage is not otherwise available details relating to this type of structure which is not Florida and before the U.S. Tax Court. or is available only at a high cost. Even in appropriate to get into now.

2009 VOLUME 11 | 17 BAHAMAS EXTERNAL INSURANCE Continued from page 17 external insurance business on a limited basis, in the targeted separate accounts varies with such as the Segregated Accounts Companies there was no offi cial administrative procedure the market. There is, of course, no Bahamian Act. From a U.S. perspective, this seemingly for setting up an international brokerage rule which limits the investments in a separate innocuous provision is extremely important. company in The Bahamas. This, of course, account to marketable securities. Thus, This is because there is a tension between what has been rectifi ed by the new Act (which also interests in private companies, bonds, and U.S. tax law allows, from the point of view of expanded the scope of permissible underwriting even commodities are lawful investments of a creditor protection and the policyholder’s desire management services). The importance of separate account. In general, the same is true, for 100% absolute protection. The IRS takes the this relates to the fact that, for example, when for example, with regard to U.S. tax law which view that a certain amount of creditor protection a Canadian, U.S. or, indeed, any international authorizes investments sometimes beyond under State (or foreign) law is authorized. company wanted to sell insurance to persons what is possible domestically under U.S. State residing in countries where they were not insurance laws subject to so-called “investor However, if the segregation becomes too great, licensed, it was necessary to fi nd a place where control” and “diversifi cation” rules. This is yet the segregated account becomes a separate the sale and closing of an insurance transaction another reason why life insurance companies, entity and insurance ceases to exist because is lawful. This also puts the international insurer for example, are incorporated in The Bahamas of something called lack of diversifi cation of in a position to pay onshore brokers through – to take advantage of the U.S. tax liberality in risk. This provision allows a great amount of offshore affi liates, such that the payment of the investment without entanglement with the State fl exibility. An external insurer can issue a policy commissions is lawful and does not expose the insurance laws which may restrict that liberality. backed by a segregated account protected to the insurance companies themselves to penalties maximum degree possible under U.S. tax law, for selling insurance in a jurisdiction in which Asset Protection to a U.S. person who wishes a compliant policy they were not licensed. Prior to the new or have the policy separate account segregated legislation, while it was practically possible to Provisions relating to separate accounts made from the claims of creditors of the insurer and of establish an international brokerage company their appearance in Bahamas law in 1996. the policyholder under the Segregated Accounts in the Bahamas, once again, it was an ad hoc However, the new Act represents a signifi cant Companies Act, under which the external procedure requiring ministerial intervention. improvement over the fi rst effort. For one thing, insurer has also qualifi ed. Segregation under Thus, it was a long, involved, and expensive the new Act updates possible benefi ciaries of the Segregated Accounts Companies Act may process. Now on a predictable and effi cient creditor protection to refl ect new additions to be attractive to U.S. persons who are interested basis, international brokerage companies can Bahamas entities laws such as foundations. In only in asset protection and not necessarily in a be established in The Bahamas with business addition, the Act is now more closely correlated tax qualifi ed product. It may also be attractive transacted here. This brings people to the Islands with protections from claims of creditors to non U.S. policyholders for whom the for the purposes of lawfully closing on their afforded to residents under U.S. State laws such maximum degree of protection is mandatory and insurance policies. Thus, not only the fi nancial as the State of Florida. for whom a degree of that protection is not tax services but also the tourism industry is affected or otherwise sensitive under the laws that apply positively. The new Act retains the highly regarded to them. provision allowing an external insurance A collateral provision of the new Act authorizes company to suspend redemptions in a case Insurable Interest and clarifi es the admission of foreign companies where the policyholder is acting under duress. otherwise qualifying as external insurers to Thus, the new Act overrides a method whereby It should be noted that the exemption of the transact their external business from The creditors can by-pass a policy exemption by value of a life policy or annuity which is a Bahamas. The reason why a non-Bahamian requiring a debtor (including a judgment debtor) variable life policy or annuity, is absolute except company might want to be admitted in The to cancel the policy and bring the proceeds into in the case where the policy was opened with Bahamas would be to sell insurance to persons the jurisdiction for payment to creditors. The the intent to willfully defeat an obligation owed who may not fi nd it convenient to visit the new Act strengthens the external insurance by the policyholder to the creditor seeking country of the company’s corporate domicile. company’s hand by regarding as an offense to set aside the policy or in a proceeding in The interest of The Bahamas in this type of the insurer’s failure to suspend redemptions or bankruptcy, which has been commenced by or business is that it draws people to The Bahamas policy surrenders in case of policyholder duress. against the policyholder, at the date of purchase and calls the attention of the world to The There is also a new provision which strengthens of the policy or within three months of such Bahamas as an emerging insurance center. the policyholder’s protection against the claims date of purchase. No action or proceeding may of creditors of any insolvent external insurer by be commenced to set aside the policy unless Variable and Other Separate Account creating what is called a statutory cut-through commenced within two years of the date of the Insurance Products endorsement under which the proceeds of relevant transfer to the policy. reinsurance are paid directly to a policyholder Variable products, as we know, are generally in the case of insurer insolvency, bypassing the There are two provisions inconspicuously life insurance products and annuities, the insolvent estate and its creditors. squirreled away under Part VI of the Act which value of which is determined with reference are extremely important to external insurance to a separate account through which the There is another provision in the new Act which in The Bahamas. Section 50 of the Act sets premiums paid for the policies are invested indicates that the external insurer may issue out a detailed provision of what constitutes and reinvested. These separate accounts are policies backed by separate accounts which are an insurable interest under the law relating to targeted to the policies involved. The value of either segregated from creditor claims against external insurance. Prior to the enactment of death benefi t or annuity provided for under the it or from the policyholder’s creditors under the the External Insurance Act, since the Domestic policies varies as the value of the investments External Insurance Act or under any other act Insurance Act had no applicability to external Continued on page 20 18 | BAHAMAS FINANCIAL SERVICES REVIEW INDUSTRY SECTOR PROFILES - Insurance

RECAPTURING AMERICAN CLIENTS THROUGH USE OF A 953(D) PRIVATE PLACEMENT LIFE INSURANCE CARRIER IN THE BAHAMAS BENNO RAEBER SARAH FREI

Since the release of the U.S. Treasury’s 2009 Green Book, the crackdown on “offshore tax havens” and the investigations launched by the U.S. Internal Revenue Service (IRS) and Securities and Exchange Commission (SEC) against renowned banking institutions, numerous offshore banks have discontinued their relationships with American clients. Fear of legal persecution by the IRS due to violation of disclosure rules has led many ﬁ nancial intermediaries to abandon the largest market of high net-worth individuals in the world. However, by working together with a 953(d) private placement life insurance company in The Bahamas, it may be possible to substantially reduce many of the threats which now arise when taking on American clients as an offshore ﬁ nancial institution or investment manager. Life insurance and annuities are excellent wealth management instruments both for tax planning as well as asset protection. Due to the robust asset protection laws of The Bahamas and its geographic vicinity to the United States, The Bahamas is an ideal jurisdiction from which to operate a private placement life insurance company catering to U.S. clients.

The Green Book: W-8BEN Clients, W-9 a corporation organized elsewhere. Certain Each policy (not policyholder) has a segregated Clients, and the Financial Intermediary foreign insurance companies may elect to be account backing the policy into which the treated as a domestic corporation for U.S. tax policy premium is paid. An investment Since the proposed changes to IRS disclosure purposes under Internal Revenue Code (IRC) manager is selected by the policyholder. rules, in particular regarding W-8BEN, W-9 953(d). The election only applies to the Internal and FBAR forms as well as the aggressive Revenue Code and not to any other titles of The investment manager is responsible for strategy against offshore jurisdictions taken by the U.S. Code. Of course, with the election to the overall investment of the policy’s assets the U.S. Administration, numerous offshore be treated as a U.S. taxpayer comes the duty according to the strategy chosen by the fi nancial institutions have ceased to accept to pay U.S. taxes on the global income of policyholder. The investment manager is American clients. In basic terms, W-8BEN and the offshore insurance company, just as any therefore granted a limited power of attorney W-9 forms are used when U.S. source income domestic U.S. insurer would be required to by the insurance company over investment of fl ows to a recipient outside the United States do. However, the decision to be treated as a policy assets. so that the appropriate withholding tax on the U.S. taxpayer also offers many benefi ts, both outfl ow of funds is levied. A W-8BEN form to the insurance company as well as to the Aside from selection of the investment is used to demonstrate that the recipient is not policyholders. manager, there is no direct relationship between a U.S. Person - even if a U.S. Person has an the investment manager and the policyholder. interest in the company. The W-9 form is used U.S. Person for Tax Purposes: W-9 and There is also no direct relationship between the to show that the recipient is a U.S. Person. The FBAR Forms fi nancial intermediary and the policyholder. current viewpoint of many is that W-8BEN clients are “no go” clients whereas W-9 clients, As a 953(d) private placement life insurance Increased Investment Opportunity/SEC due to the increase in transparency, may under company is itself a U.S. taxpayor and since Compliance the correct conditions be acceptable. This the life insurance company is considered perception is to a certain extent incorrect, but owner of all policy assets, the “U.S. Person” Through a 953(d) insurance policy an it is reality in today’s offshore environment. in terms of any W-9 or FBAR forms is the So, how does one now operate in offshore 953(d) life insurance company and not the American client is provided with the jurisdictions such as The Bahamas when U.S. policyholder. As such, an offshore opportunity to invest in foreign non-registered relationships with W-9 clients alone are fi nancial intermediary would not be required funds. tolerated? How can the large market of tax to complete either FBAR or W-9 forms in the paying U.S. clients who simply wish to move name of the U.S. policyholder, but instead Continued on page 20 assets offshore for asset protection, investment in the name of the 953(d) life insurance opportunities, or due to loss of faith in the U.S. company. In other words, the direct client of About The Authors: Benno K. Raeber banking system be serviced? the fi nancial intermediary is the life insurance is Principal of Prime Advisory Group, a company and not the policyholder. This means company based in Switzerland, Ireland, and The Bahamas specializing in cross- Solution: Tax Status as a U.S. Corporation that, even after the proposed changes made border structuring and risk management. through a 953(d) Election by the U.S. Administration come into effect, Benno Raeber is also on the Board of through the use of a 953(d) private placement Directors of Five Oceans Life Insurance One possible solution is a 953(d) private life insurance carrier it should be possible for Company SAC Limited, an elected 953(d) placement life insurance company located an offshore fi nancial intermediary to cater private placement life insurance company in The Bahamas. In general, the U.S. to the U.S. market through a fully disclosed, located in the Bahamas. classifi es a corporation as either domestic or transparent, and tax compliant structure Email: [email protected] foreign, based on the jurisdiction in which without having to deal with the concerns which the corporation is organized. A domestic a direct client relationship will carry. The life Sarah Frei is an attorney and manager at Prime Advisory Group focusing on corporation is any corporation organized in insurance solution works by simply selling a compliance and tax structures. the United States; a foreign corporation is life insurance or annuity policy to each client. Email: [email protected].

2009 VOLUME 11 | 19 RECAPTURING AMERICAN CLIENTS Continued from page 19 Particularly in the current volatile market, it (i.) tax deferred build-up of assets during required when a U.S. person purchases an goes without saying that such a structure would the lifetime of the policy, providing for an offshore life insurance or annuity policy. In bolster the investment portfolio and economic advantageous compounding opportunity; and addition, The Bahamas fi nancial services sector return for many American clients. (ii.) reduction or mitigation of estate taxes. is specialized in private wealth management. The country is home to numerous skilled Furthermore, as the insurance carrier does Policies can be structured so that it is also professionals with profound expertise in not fall under the Securities Act of 1933, possible to make loans against the policy tax serving private clients. Furthermore, the Regulation S defi nition of a “U.S. Person” and free. jurisdiction responds quickly and effectively to is therefore not subject to SEC jurisdiction, the changes in international regulatory frameworks involved investment or fund manager should Why The Bahamas? and to the needs of the fi nance sector. In turn, not be subject to SEC rules or jurisdiction. In this ensures that a 953(d) insurance company other words, since the insurance company, as Considerable tax benefi ts can be obtained by located in The Bahamas may also respond client of the asset manager, is organized and purchasing a life insurance or annuity policy quickly to the constantly evolving international operated in The Bahamas and not the United anywhere, so what makes The Bahamas an regulatory environment. States, the investment manager’s client status exceptional jurisdiction? The Bahamas is home for SEC rules is that of a non-U.S. Person. to robust asset protection laws, providing an The jurisdiction offers rigorous, effective, excellent asset protection tool for high net- yet fl exible insurance regulation and is for Tax Benefi ts of a Life Insurance or Annuity worth individuals. an insurance company an ideal location from Policy which to service private clients. The geographical proximity of the country to Under current U.S. tax law, life insurance and the United States is also extremely convenient Overall Benefi ts of a Private Placement Life annuity policies offer two major advantages: for completing the mandatory offshore closings Insurance Policy through a 953(d) Carrier

• Fulﬁ lment of Disclosure and Compliance Rules through use of W-9 forms and the reporting requirements of 953(d) 953d Company companies U.S. Client U.S. Taxpayor Bahamas-Corporation • Tax-free build up of assets during the = SEC: Non-U.S. lifetime of the policy Person = W-9 • Death Beneﬁ t is tax-free, if properly structured No direct • Asset Protection: Florida, Texas, and The relationship with U.S. Bahamas client Bank • Reduction or elimination of withholding tax on investments • Opportunity for American clients to invest External Asset W-9 Account in foreign non-registered funds

BAHAMAS EXTERNAL INSURANCE Continued from page 18 insurers, there appeared to be no requirement for as providing a single integrated death benefi t Insurance Commission and the Superintendant an insurable interest under Bahamas law except, under the Act. The reason for this provision is of Insurance, and the Bahamas Financial perhaps, as required under English Common that there is case law in the United States and, Services Board are happy, as a courtesy to the Law. English Common Law is extremely perhaps elsewhere, under which if elements reader, to provide explanations with regard restrictive. Where a policyholder or benefi ciary of a policy are or may be treated as separable, to specifi c provisions of Bahamas external lacks an insurable interest in the life of the then they will be bifurcated for purposes of the insurance laws. insured (an insurable interest being an interest tax law. As you may know, one of the major in the longevity of the insured based upon advantages of life insurance in the United In general, it is believed that the Act has brought recognized economic or familial interest), that States is that there is no current income tax on the applicable law relating to external insurance contract is considered to be a wagering contract the inside buildup of investment income in the in The Bahamas to a state of the art level. in the United States and void as far as the U.S. separate account backing the policy. However, tax law is concerned. Accordingly, it was if the separate account could be separated However, we are confi dent that the Government absolutely essential that there be an insurable from the policy, then the inside buildup will of The Bahamas and the Bahamas Financial interest provision in the law and that insurable be taxable currently, and the policy itself will Services Board are open to suggestions that interest provision be retroactive to cover all be treated simply as a term insurance policy. might improve the Act even further or authorize existing policies. The Act has done that. Unfortunately, in order to insure that this does lawful, innovative insurance products designed not occur, Congressional interpretation of what for external insurers or others licensed under the Single Integrated Death Benefi t constitutes a single integrated death benefi t Act. holds that it must be such under the local law Section 51 must contain what for most people applicable to the policy. It is for this reason that As we have emphasized before, all interested is an extremely mysterious provision. It states Section 51 was included in the Act. parties are well aware that the Act will require that a policy of life insurance issued by an constant adjustment and updating as conditions external insurer shall be deemed to provide a Conclusion change in the industry and all are prepared to single integrated death benefi t, provided that work toward that end. the separate account backing the policy is not As you might imagine, the foregoing is not a separable from the policy. If so, all elements complete and total analysis. However, I think © 2009 Joel Karp. of and benefi ts under the policy shall be treated the major points are covered. Of course, the

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We stand by you JURISDICTION & INDUSTRY UPDATES

THE QUALIFIED INTERMEDIARY PROGRAM - A MOVING TARGET RYAN PINDER

In 2001, the IRS established a Qualiﬁ ed Intermediary Program (“QI Program”) to provide a mechanism that would encourage foreign persons to invest in United States securities and other liquid investments.

A qualifi ed intermediary (“QI”) is any foreign to Audit Guidance for External Auditors of The audit revisions are only the beginning of intermediary (or foreign branch of a U.S. Qualifi ed Intermediaries. Announcement proposals to reform the QI program. There intermediary) that has entered into a qualifi ed 2008-98 proposes to amend the QI agreement have been debates and discussions in the US intermediary withholding agreement with and the QI audit guidance in the following Congress, and particularly the US House of the IRS1. Foreign fi nancial institutions and ways: Representatives Ways and Means Committee. foreign branches of U.S. fi nancial institutions can enter into an agreement with the IRS to • A QI must notify the IRS whenever Hearing on Banking Secrecy Practices and be a QI. A QI is entitled to certain simplifi ed the QI becomes aware of a material Wealthy American Taxpayers withholding and reporting rules, and is not failure of internal controls relating required to forward documentation obtained to its performance under the QI On March 31, 2009 a Committee on Ways from foreign account holders to the U.S. agreement, any employee allegations and Means subcommittee of the US House of withholding agent from whom the QI receives of such failures, or any investigation by Representatives held a Hearing on Banking a payment of U.S. source income. The IRS regulatory authorities of such failures. Secrecy Practices and Wealthy American and Treasury Department achieve a greater • The QI audit guidance will be amended Taxpayers of which many topics were degree of assurance that proper withholding to add an audit procedure testing certain discussed, including proposed reforms to the is being made through the QI Program. accounts for characteristics that suggest QI Program. In addition, a QI agrees to undertake the that a U.S. person has authority over the following obligations regarding its customers: account. Mr. Peter H. Blessing2 provided testimony • The QI audit guidance will also be at the Hearing that addressed suggested • Follow specifi ed account-opening amended to add additional procedures reforms of the QI Program3. Mr. Blessing procedures based on “know your for fact gathering by the external auditor makes note of what I believe to be the driving customer” rules; and relating to the IRS’s evaluation of the force behind much of the QI Program reform • Have the procedures they follow be risk of a material failure of internal proposals, that “while the U.S. government subject periodically to an external audit controls. cannot force another country to cooperate, it pursuant to standards set by the IRS. • The QI audit guidance will be amended can force a fi nancial institution that handles to require the external auditor to U.S. source payments or otherwise is subject The QI maintains such documentation at its associate a U.S. auditor with the audit to its jurisdiction … to comply with its rules”4 location and provides the U.S. withholding and to require the U.S. auditor to accept Mr. Blessing makes note of suggested changes agent with information on a pooled, or joint responsibility for performance of ranging from the reporting of individual consolidated basis. This was a compromise to the procedures under the audit guidance taxpayer information by the fi nancial protect the individual confi dentiality concerns institutions to forcing the fi nancial institutions of the foreign fi nancial institutions. This The revisions of the audit requirements under to withhold payments without evidence of limited reporting by QIs, and the increased Announcement 2008-98 are to provide the residency in jurisdictions where there is not a pressure and enforcement by US taxing IRS with certain reassurance that the goals bilateral income tax treaty in effect. authorities, has led to discussion and a of the QI program are being accomplished, commitment to the reform of the QI program. however, there are concerns in the industry Among other comments and suggestions, the that the audit revisions will materially increase following specifi c recommendations were Audit Revisions to QI Program the compliance costs by the foreign fi nancial made at the Ways and Means Subcommittee intuitions, particularly the requirement for hearing: On October 16, 2008 the Internal Revenue an external auditor to associate with a US Service (“IRS”) released Announcement auditor. The proposed changes to the model 1. QIs should be required to report U.S. 2008-98, Proposed Amendments to Qualifi ed QI Agreement are proposed to apply to owners holding only foreign securities. Intermediary Withholding Agreement and calendar year 2010 and thereafter. 2. Require QIs to use information available Continued on page 23 22 | BAHAMAS FINANCIAL SERVICES REVIEW QUALIFIED INTERMEDIARY PROGRAM Continued from page 22 to them under money-laundering or decision to not participate in the QI Program reporting requirements of QIs would be other rules to identify cases in which the and not enter into QI Agreements. The extended beyond those of foreign bank and benefi cial owner(s) of a non-US entity fi nancial institutions may essentially make fi nancial accounts. QIs who form or acquires providing a W-8BEN appear to be a U.S. the decision that the costs of complying were a foreign entity on behalf of a U.S. person, person or persons. higher than the benefi ts of participating in the regardless if there is an associated bank or 3. Require QIs to provide the Forms QI Program. fi nancial account, would be required to fi le an W-8BEN to the IRS. information return with the IRS regarding the The Green Book proposals address this foreign entity. One concern that exists about strengthening concern. Subject to enumerated exceptions, the QI Program and requiring increased any withholding agent making a payment of Anticipated Response of Industry reporting and monitoring responsibility on fi xed or determinable annual or periodical the fi nancial institutions is that fi nancial gains, profi ts, or income (“FDAP income”) to As discussed above, it will be diffi cult for institutions might elect to not participate a nonqualifi ed intermediary would be required international fi nancial institutions to not in the QI Program. This concern has been to treat the payment as made to an unknown participate in the QI Program. What we addressed in the proposals by the Obama foreign person (and therefore to withhold tax have seen recently, especially from fi nancial executive team. at a rate of 30 percent). Foreign persons that institutions in Switzerland and the United are subject to over-withholding as a result of Kingdom, is that although the fi nancial General Explanations of the this proposal would be permitted to apply for institutions will participate in the QI Program, Administration’s Fiscal Year 2010 Revenue a refund of any excess tax withheld7. those institutions will not accept United States Proposals (President Obama Green Book) taxpayer clients. This strategy will result in Furthermore, a withholding agent would not having to have the enhanced reporting In May, 2009 the Department of the be required to withhold tax at a rate of 20 requirements required by the reformed QI Treasury issued what is known in the percent on gross proceeds from the sale of Program. industry as The Green Book, or the General any security of a type that would be reported Explanations of the Administration’s Fiscal to a U.S. non-exempt payee, when paid This business strategy, however, will result Year 2010 Revenue Proposals. As part of by the withholding agent to a nonqualifi ed in a market of clients for offshore fi nancial the explanations in the Green Book are the intermediary that is located in a jurisdiction institutions to grow, the United States client. reforms by the Obama administration to the with which the United States does not have a As the offshore fi nancial institutions that are QI Program. In describing the policy behind comprehensive income tax treaty that includes available to service these clients shrink the the reform of the QI program, the Green Book a satisfactory exchange of information opportunities for other offshore fi nancial provides “[s]trengthening the withholding program8. Continued on page 39 and reporting rules under which QIs operate with respect to U.S. and foreign persons while These forced withholding mechanisms will creating incentives for more foreign fi nancial make it impractical for international fi nancial institutions to become QIs will help to ensure institutions not to be participants in the QI About The Author: Ryan Pinder, a that U.S. persons are properly paying tax in Program. Any foreign fi nancial institution Partner in the fi rm Becker & Poliakoff, P.A., is a shareholder and Board Certifi ed connection with foreign income and accounts that conducts transactions within the United Tax attorney in the fi rm’s Tax Law Group, and that proper withholding tax applies with States and is not a QI would be penalized. assists high net worth individuals as well respect to foreign persons”5. This forced withholding mechanism in not in as domestic and foreign corporations, the QI Program addresses the concern raised partnerships, limited liability companies Overview of Proposed Reforms to QI by Mr. Blessing above during his testimony at and corporations in minimizing their Program the Ways and Means Subcommittee hearing. tax burden. Mr. Pinder advises local, regional, national and international clients in both taxable and tax-free mergers and The reforms in the Green Book would require Proposed Reporting Obligations of QI acquisitions, business combinations, all QIs to identify all of its account holders Program restructurings, private equity transactions, that are U.S. persons. Furthermore, a QI corporate joint ventures and other would be required to report all reportable In addition to the above, the proposed reforms strategic alliances relating to domestic and payments (for this purpose, treating the QI as also provide routine reporting requirements on international taxation, business valuation a U.S. payor) received on behalf of all U.S. the transfer of funds. A QI that (a) transfers and business entity law. He counsels high net worth individuals and closely held account holders. Thus, a QI would fi le Form money or property with a value of more than businesses in forming their investment 1099s with respect to payments to those U.S. $10,000 to a foreign bank, brokerage, or other structures, succession planning and account holders as though the QI were a U.S. fi nancial account, or (b) receives a transfer of estate planning. In addition to providing fi nancial institution. In order to ensure that a money or property with a value of more than comprehensive tax consultation and fi nancial institution cannot only designate one $10,000 from a foreign bank, brokerage, or planning to domestic and international affi liate as a participant in the QI program, other fi nancial account, on behalf of a U.S. clients, Mr. Pinder is experienced the proposed reforms would require that a person9 will be required to fi le an information in representing large multi-national corporations in corporate governance fi nancial institution may be a QI only if all return regarding such transfer. In addition, a and compliance issues. He is a member commonly-controlled fi nancial institutions are QI would be required to fi le an information of the Bahamas Bar, the Florida Bar, Tax also QIs6. return with the IRS when the QI opens a Section and International Section; and the foreign bank, brokerage, or other fi nancial American Bar Association, Tax Section. Proposed Withholding Reforms to QI Program account on behalf of a U.S. person. There He obtained his Masters of Laws (LL.M) are specifi c exceptions to these reporting in Taxation and J.D. from the University of With the numerous reforms proposed to requirements, including transfers of funds Miami, where he also obtained his B.B.A and a Masters in Business Administration the QI Program, there is a genuine risk that by publicly traded entities, and transfers (Finance). fi nancial institutions would make the business that are made between QIs. In addition, the

2009 VOLUME 11 | 23 JURISDICTION & INDUSTRY UPDATES

THE COMMUNICATIONS ACT

DAVID ALLEN

Telecommunications in The Bahamas were, in theory, liberalized in 2000 with the passage of the Telecommunications Act, 1999. However, for many reasons, including the desire of The Bahamas Government to privatise the national telecommunications company, BTC, liberalization was not fully realized; BTC retained its monopoly over cellular services, and only one other player, Systems Resource Group, was licensed as a telecommunications carrier.

The doors are being reopened with • to enhance effi ciency; • plans for effi cient use of state assets and the introduction and passage of the • to promote investment/innovation; aspects of social policy such as scope Communications Act (“ComsAct”). ComsAct • to encourage sustainable competition; of universal service and public service represents a complete revision of the • to promote optimal use of state assets; broadcasting. Telecommunications Act, 1999, the majority • to provide persons in The Bahamas of which will be repealed on its coming into affordable access; The sector policy comes into force on the date force. The most radical changes include: the • to maintain public safety and security; of its publication in the Gazette. A month from specifi cation of Government policy objectives • to contribute to privacy; ComsAct coming into force, the fi rst sector and guidelines; the introduction of a more • to limit public nuisance; policy will be published by the Minister. The robust, fl exible and powerful regulator under • to protect the environment; and sector policy must be revised after 3 years the Utilities Regulation and Competition • to provide content services. and a new sector policy published within 3 Authority (“URCA”); the convergence of months. telecommunications and broadcasting under The guidelines for the regulation and one roof; provisions for consumer protection; Government measures are: URCA the inclusion of a Utilities Appeal Tribunal; and, for the fi rst time in Bahamas legislation, • market forces are to be relied upon Under ComsAct, URCA is the regulator provisions for the regulation of competition. to achieve communications policy of electronic communications; it replaces ComsAct is joined by two other pieces of objectives; the Public Utilities Commission under the legislation, the URCA Act and the Tribunal • regulatory and other measures will be Telecommunications Act. It has been said that, Act, to assist with liberalization. introduced when market forces won’t this time around, the regulator has been given achieve results within a reasonable time teeth. STATUS frame and having regard to costs; • regulatory and other measures must ComsAct specifi es the functions of URCA as: ComsAct will come into force on the date be introduced in a manner that is specifi ed by a notice published in the Gazette transparent, fair and non-discriminatory; • to regulate; which is to be the earlier of the date when and • competition law; the Government no longer holds the majority • regulations that amend government • represent the Government in the region; of shares in BTC; or as soon as practicable policy must specify the electronic • charge licence fees; thereafter or such other earlier date as the communications policy objective • act on behalf of government for billing Minister may appoint. ComsAct binds the advanced and demonstrate compliance and fees; and Crown. with the said guidelines. • perform functions under ComsAct.

POLICY AND REGULATORY The Minister, which is defi ned by ComsAct ComsAct designates powers to URCA to: GUIDELINES as the Minister charged with the responsibility for the electronic communications sector other • make determinations; Unlike the Telecommunications Act, which than the Minister for URCA and the Minister • make adjudications; referred to but did not specify Government for the Corporation, will publish sector policy • impose conditions and penalties; policy objectives and guidelines, ComsAct is in the Gazette setting out aims of Government • issue regulations; more clear. The objectives of the electronic to meet the policy objectives including: • issue directions, decisions, statements, communications policy are: instructions and notifi cations; • priority of liberalizing the sector; • publish and maintain registers or lists; • to benefi t consumers by way of • the manner in which Government sees its • issue technical rules and standards; competition; role in sector; and • institute prosecutions to enforce Continued on page 25

24 | BAHAMAS FINANCIAL SERVICES REVIEW THE COMMUNICATIONS ACT Continued from page 24 ComsAct; exempt person and an exemption applies. The based on objective criteria, including: • issue, suspend, vary or revoke licences, exempt persons are: permits and exemptions; • applicant’s fi nancial bids; • conduct inquiries, investigations and oral • Royal Bahamas Police Force; • relevant experience; hearings; • Royal Bahamas Defence Force; • commitments of applicants with respect • require licensee to furnish information; • Providers of fi re brigade, ambulance, to the type, quality and geographical and coast guard; and coverage of the relevant services; or • conduct market investigations and • Military services duly authorized to • any combination of the foregoing. market reviews. operate in The Bahamas. Individual licences must be for a term of not ComsAct allows URCA to transition from a Individual Licence: Individual licences must less than 5 years. URCA will, on application licensing regime to a general authorization be issued to the named licensee and will come of a licensee renew an individual operating regime. In a general authorization regime, into force pursuant to an application process. licence unless the licensee has repeatedly communication service providers do not An individual licence may be granted by contravened, or failed to cure a material need a licence but can operate and deliver URCA with conditions which must comprise contravention of ComsAct or any other electronic communications networks or substantially the same for all licensees. regulatory measure, including the conditions services further to compliance with general Licensees are required to notify URCA of any of the individual operating licence. URCA and specifi c conditions of entitlement. subsidiary undertaking. may amend the terms of an individual licence that is to be renewed in order to conform General conditions of entitlement include: Application Process: Persons wishing to to determinations, adjudications, orders or apply for an individual licence must submit an regulations then in force. • conditions to protect consumers; application in the form and manner and with • conditions to secure service the information specifi ed by URCA. A fee URCA may by determination, on its own interoperability; may be payable on application. URCA must motion or on written application of the • conditions for securing functioning treat persons seeking an individual licence relevant licensee, modify, vary, restrict the networks; to provide a network or carriage service conditions of or revoke any licence granted to • conditions to give effect to and the right to use radio spectrum for such a licensee if: determinations; network or carriage service under a single • conditions in event of disaster; application process in order to minimize the • it is necessary to comply with • conditions to protect public health; and administrative burdens and uncertainties international treaties; • conditions requiring compliance with for such persons of dual application or • it is necessary to further the international standards. registration processes. Persons wishing to communications policy objectives and apply for an individual licence must: there is justifi cation; However, URCA may not introduce general • the licensee has repeatedly contravened conditions of entitlement to set conditions • be legal entities incorporated in The ComsAct; applicable to the identity of the provider Bahamas; • the licensee made a material of the network or carriage service; or to • conduct the administration and misrepresentation in its licence set conditions that differ according to the management of the business from application; identity of the provider of the network premises in The Bahamas; • the licensee has entered into receivership or carriage service. Special conditions of • be a fi t and proper person to establish, or liquidation; entitlement will relate to the provision of maintain and operate a network or • the licensee is not providing the network universal services and the provision of carriage service or use radio spectrum; or carriage service authorized by and information demonstrating compliance with • demonstrate suffi cient intention, fi nancial specifi ed in its licence and URCA is a universal service obligation and conditions strength and resources to meet their satisfi ed the licensee does not have the on SMP licensees. URCA also has powers of obligations under ComsAct; and intention or fi nancial strength; investigation. URCA may accompany a peace • meet any other requirements including • it is in accordance with the procedure of offi cer and inspect premises. To promote a provision of information and data that URCA’s power to make orders; and stable regulatory environment that is attractive URCA may require. • it is in accordance with the terms of the to local and international investors, it is licence. important that URCA acts fairly and is seen to URCA will review all applications for act fairly. individual licences and within 30 days of The licence will be affected 30 days after the receipt: date of written notice, and the licensee before There is a wide obligation on URCA to the date specifi ed in the licence may appeal to publish signifi cant documents and consult • approve the application and grant a the Tribunal. with the public. URCA is required to licence(s); Continued on page 32 implement standard ADR procedures for • reject the application specifying the disputes between licensees and between reasons for the rejection; or licensees, service providers and consumers. • request further information necessary About The Author: David Allen is a to evaluate the application. In this case, Partner of Bahamas Law Chambers. He LICENSING OF ELECTRONIC URCA will have 1 month from the date holds a BA from Emory University .He COMMUNICATIONS AND RADIO of receiving information to evaluate the received a Bachelor of Laws Degree from SPECTRUM licence application. the University of Kent at Canterbury in the United Kingdom and completed the Bar Under ComsAct, URCA has 2 types of If the Minister or URCA intend to restrict the Vocational Course at BPP Law School. In 2003 he was admitted to the English Bar licences at its disposal: number of individual licences to be granted as a member of the Honourable Society for the right to use the same or similar radio of Lincoln’s Inn and subsequently in that 1. an individual operating licence; and spectrum, then the Minister or URCA will year also called to the Bahamas Bar. 2. a class operating licence. select such licensees for those individual He received a Master of Laws Degree in licences pursuant to a competitive selection International Comparative Business Law It is a criminal offence to provide a network process. A competitive selection process will from London Metropolitan University in the or service without a licence, unless one is an provide for selection by the Minister or URCA United Kingdom.

2009 VOLUME 11 | 25 JURISDICTION & INDUSTRY UPDATES

LYNDEN PINDLING INTERNATIONAL AIRPORT – REDEVELOPMENT PROJECT

The Nassau Airport Development Company • Stage 1: Construction of a new US The Nassau Airport Development Limited (NAD), a Bahamian company owned Terminal & Pier: 247,000 sq. ft. Company Limited (NAD) by the Government of The Bahamas, in • Stage 2: Selective demolition and April 2007 signed a 30-year lease to manage construction of new International Our Mission daily operations at the Lynden Pindling Arrivals Terminal and International Our mission is multi-faceted: to International Airport (LPIA). The company Departures Pier: 226,000 sq. ft. continue to run a safe, friendly and is also overseeing a $409.5 million airport • Stage 3: Construction of a new effi cient airport while we plan and redevelopment project. Domestic/International Departures and design new, sophisticated terminals Domestic Arrivals Terminal: 112,000 for the future. Our goal is to build a NAD is responsible for most of the physical sq. ft. world-class airport based on sound business principles. We are also infrastructure of the airport including parking committed to building business lots, terminals, runways and taxiways. Once completed, the airport will increase opportunities for Bahamians in all All revenue generating and commercial in size by 21% and will be capable of aspects of the airport – in retail, development projects are under NAD accommodating 50% more passengers. service contracts, maintenance, management. As a private company, NAD capital works and fi nancing. receives no government guarantees or grants The offi cial groundbreaking ceremony for Our People and is a self-sustaining commercial entity the Expansion Project was held on July based on international best practices. 9. The groundbreaking marked the offi cial The competitiveness of our company start of construction on stage one – the U.S. is determined largely by the In October, 2006, the Vancouver Airport Departures Terminal and Pier. knowledge, skills and attitudes of the people on our team. At NAD, we are Services (YVRAS) company signed a committed to providing educational, 10-year agreement to provide NAD with NAD President and CEO Craig Richmond training and coaching opportunities a management team to oversee the entire at that time noted that while this was an for staff. We provide a minimum of operation and to complete the redevelopment important occasion, it was just another step 40 hours of training per year for each project. YVRAS also signed a 5-year project in what had been a tremendous amount of employee. In the fi rst quarter of 2009, our People Department offered more management agreement in April, 2007. preparatory work over the past three years. than 1,300 training hours to NAD employees. Staff members have LPIA REDEVELOPMENT To date, more than $11 million has been spent taken advantage of a combination on capital improvements at the airport. of elective and mandatory training The redevelopment of LPIA is occurring over opportunities including offsite training at other YVRAS airports. two Phases. Phase 1, an $11.7 million capital The fi rst terminal building is scheduled for improvements phase, is nearing completion. completion in early 2011. There will be Vancouver Airport Services (YVRAS) This phase has included improvements to the approximately 15,000 sq. ft. of retail space is one of the world’s premier airport physical and sanitary conditions in the present in the new terminal, including a sit down operators. The 18 airports in the terminals, a new $2 million baggage system restaurant and bar, three newsstands, four company’s portfolio generate revenues of $440 million, with in the US departure terminal, a new baggage Bahamian specialty retail stores, and two passenger traffi c numbers exceeding carousel in International arrivals, 17 new or retail kiosks. Stage 2 is scheduled for the Fall 25 million. Together with the team refurbished restrooms, upgrades to the public 2012, with Stage 3 following in the Fall 2013. at NAD, YVRAS is committed to address system and changes in the parking In 2008, 3.2 million passengers traveled transforming LPIA into a world-class facilities. through LPIA. By 2020, with the new airport, operated in the most effi cient commercial and cost competitive expanded facilities, the airport is expected to manner. Phase II of the redevelopment is comprised of accommodate 5.2 million passengers. three stages.

26 | BAHAMAS FINANCIAL SERVICES REVIEW LPIA REDEVELOPMENT PROJECT

Garden Terrace - US Departures Food Court - U.S. Departures

International Baggage Claim / Customs Check-in Hall / U.S. Departures

U.S. Departures Holdroom International Departures Pier B

Pier B at the end of International Departures LPIA model

2009 VOLUME 11 | 27

REGULATORY UPDATES

UPDATE ON AML/CFT LEGISLATIVE DEVELOPMENTS ROCHELLE DELEVEAUX IN THE BAHAMAS The continuous review of the AML/CFT laws, policies and practices of The Bahamas forms the cornerstone of the jurisdiction’s commitment to uphold international standards and to protect the ﬁ ne reputation of the country’s ﬁ nancial services sector.

The Bahamas is a member of the Caribbean to ensure, subject to any exemptions or terminate or restrict its business Financial Action Task Force (“CFATF”) a permitted by the wire transfers relationship with the originating fi nancial FATF-style regional body comprised of thirty regulations, that the following information institution. member states from the Caribbean Basin. The accompanies all wire transfers of $1,000 • Intermediary fi nancial institutions must CFATF conducts peer reviews of its members’ or more: the name of the payer, the also ensure that information which AML/CFT laws, policies and procedures and account number of the payer, the address, they receive on a payer remains with assesses the extent to which countries comply or date and place of birth of the payer or the wire transfer. Where technical with the Financial Action Task Force’s 40 + their national identity number, or customer limitations of a payment system prevent 9 Recommendations for preventing money identifi cation number. information remaining with a wire laundering and countering the fi nancing of • Individual funds transfers of $1,000 or transfer, an intermediary must retain the terrorism. The CFATF carried out a mutual more from a single payer that are batched information received with the transfer evaluation of The Bahamas in 2006 and together to be sent to a fi nancial institution for fi ve years. An intermediary may only published a report of its fi ndings in December outside of The Bahamas, need not contain use a payment system with technical 2007. The jurisdiction’s efforts to continually the due diligence information of the payer, limitations if it informs the benefi ciary assess and strengthen its AML/CFT framework provided the batch fi le itself contains the fi nancial institution that it does not have are on-going. requisite information. complete information on the payer as • Domestic wire transfers may be required and that it intends to use such a Overview of revisions to the AML/CFT accompanied by the payer’s account system. Where an intermediary fi nancial legislation of The Bahamas number, unique identifi er or a transactions institution uses a payment system with number which permits the transaction to technical limitations, the intermediary The Bahamas has enhanced its AML/CFT be traced back to the payer. However, fi nancial institution shall, at the request of legislative framework relative to customer a benefi ciary fi nancial institution may a benefi ciary fi nancial institution, provide due diligence, record keeping requirements, request complete information on the the benefi ciary fi nancial institution of reliance on the due diligence of third parties payer from the originating fi nancial the customer to whom the funds have and requirements for wire transfers through institution and this information must be been sent, with all the information it has amendments to existing, and the introduction provided within three business days of received on the payer, whether complete of new, legislation as discussed below. the request. Information on the payer and or not, within three business days of the the wire transfer should be retained by the request. A. Wire transfers: The Financial Transactions originating fi nancial institution for fi ve (Wire Transfers) Regulations, 2009 (wire years, in all cases. Continued on page 30 transfers regulations) came into effect on 14th • Financial institutions are required to adopt January 2009. a risk based approach which enables them to identify wire transfers that lack • These regulations require fi nancial complete originator information on the About The Author: Rochelle A. institutions to know the identities of payer and to assess whether such transfers Deleveaux is a Counsel and Attorney-at- persons who initiate wire transfers or related transactions should result in Law who has practiced law in both the public and private sectors and currently (payers) and to ensure that due diligence a suspicious transaction report to the serves as the Legal Counsel and Board information obtained in relation to the Financial Intelligence Unit (FIU). Secretary of the Central Bank of The payer accompanies the wire transfer. • Where a benefi ciary fi nancial institution Bahamas. She was called to the Bar of Where due diligence has already been fi nds that information on a payer is England and Wales and The Bahamas carried out on an existing customer of a missing or incomplete, it may reject the Bar in 1990. She advises the Central fi nancial institution, there is no need for transfer or ask for relevant information. Bank on inter alia AML/CFT issues, the fi nancial institution to repeat its due A benefi ciary fi nancial institution may and has represented the Central Bank diligence procedures for that customer. where, on a consistent basis, information and The Bahamas at local, regional and international forums on the prevention of However, under the new regulations, an is not forthcoming from an originating money laundering and terrorist fi nancing. originating fi nancial institution is required fi nancial institution, reject future transfers

2009 VOLUME 11 | 29 AML/CFT LEGISLATIVE DEVELOPMENTS The Financial Transactions Reporting D. Record Keeping Requirements: Under Continued from page 29 Regulations, 2000 as amended by the the FTRA fi nancial institutions are required Financial Transactions Reporting (Amendment) to retain transaction and identity records of • Transactions which are exempt from Regulations, 2009 introduces additional due their customers for fi ve years from the date of the requirements of the wire transfers diligence requirements for corporate entities, the transaction or from the date the customer regulations include: partnerships and unincorporated associations relationship is terminated. Liquidators are now • transfers of funds where the payer and trusts. Financial institutions are now required to continue to retain these records withdraws cash from his or her own mandated to obtain the following information until the relevant statutory period has elapsed, account; and documents: even where a company has been liquidated or • transfers to public authorities for the fi nally dissolved. payment of fi nes, penalties, duties or For Corporate entities: other taxes within The Bahamas; Effect of AML/CFT Guidelines and Codes of • direct debits from accounts 1. certifi ed copy of the certifi cate of Practice authorized between two parties so incorporation; long as a unique identifi er allowing 2. authorizing resolution of the Board of Failure to comply with AML/CFT guidelines the payment to be traced back to the Directors for the operation of the account; and codes of practice is now subject to criminal payer accompanies all transfers; 3. documentary evidence on the signatory/ sanctions. • transfers where both the payer and operator of the company account. the payee are fi nancial institutions • The Financial Transactions Reporting acting on their own behalf. For Partnerships and Unincorporated (Amendment) Act, 2008 provides that it Associations: is an offence for a fi nancial institution Failure to comply with the wire transfers to violate or fail to comply with any regulations is an offence punishable by a 1. verifi cation of the identity of all partners provision of any code of practice issued fi ne not exceeding $2,000. As an alternative or benefi cial owners; by the Compliance Commission. to prosecution, a fi nancial institution’s 2. copy of the partnership or other agreement • The Financial Intelligence Unit Supervisory Authority may impose a fi ne establishing the unincorporated business; (Amendment) Act, 2008 amended the of $2,000 on the fi nancial institution that 3. authorization from partners or benefi cial Financial Intelligence Unit Act, 2000 and contravenes or fails to comply with any owners for the operation of the account; empowers the Minister responsible for provision of the wire transfers regulations. 4. documentary evidence on the signatory/ administering the Act to make regulations operator of the account. to, among other things, impose criminal B. Customer Due Diligence Issues: The sanctions for failure to comply with Bahamas has introduced legislation to For Trusts: regulations or guidelines issued under strengthen customer due diligence requirements the Financial Intelligence Unit Act, or for fi nancial institutions and which facilitates Financial institutions must, when required to with guidelines, codes of practice or more effi cient conduct of fi nancial services in verify a person’s identity in relation to a trust, other instructions issued by a Supervisory this jurisdiction. A summary of the relevant take reasonable steps to identify the settlor and Authority. legislation follows: the person exercising effective control over the • The Financial Intelligence (Transactions trust. A person who exercises effective control Reporting) Regulations, 2000 as amended The Financial Transactions Reporting over a trust includes a person (whether alone or by the Financial Intelligence (Transactions (Amendment) Act, 2008 amended the Financial jointly with another person or with the consent Reporting) (Amendment) Regulations, Transactions Reporting Act, 2000 (FTRA) and: of another person) who has the power to: 2009 provides that it is an offence to fail to comply with guidelines issued • Broadend the defi nition of “fi nancial 1. dispose of, advance, lend, invest pay or by the Financial Intelligence Unit under institution” to include licensed fi nancial apply trust property; the Financial Intelligence Unit Act or and corporate service providers. 2. vary the trust; guidelines, codes of practice or other • Distinguishes between services offered 3. add or remove a person as a benefi ciary or instructions issued by a Supervisory by lawyers or accountants pursuant to a to or from a class of benefi ciaries; Authority. On summary conviction, a fi nancial and corporate service providers 4. appoint or remove trustees; fi nancial institution is liable to a maximum licence and services offered (a) in the 5. direct, withhold consent to or veto the fi ne of $10,000 and on conviction on case of lawyers, when they receive funds exercise of a power such as is mentioned information to a maximum fi ne of $50,000 in the course of their business (i) for the above. and to some $100,000 for a second or purposes of deposit or investment; (ii) subsequent offence. It is a defence for a for the purpose of settling real estate C. Eligible Introducers: Prior to the amendment fi nancial institution to prove that it took transactions; or (iii) to be held in a client of sections 3, 7(2), 8(6), 9(6) and 11(3) all reasonable steps and exercised due account; and (b) in the case of accountants and (4) of the FTRA, where a fi nancial diligence to comply with the requirements when they receive funds in the course of institution wished to rely on the customer of the regulations, guidelines, codes of their business for the purposes of deposit due diligence of another fi nancial institution practice or instructions. or investment. Where they conduct the or “eligible introducer”, the categories of • The Securities Industry Act, 1999 was type of business described in (a) or (b) of eligible introducers that could be relied amended by the Securities Industry this paragraph, lawyers and accountants upon were restricted to a limited number of (Amendment) Act, 2008 to remove the continue to be regarded as fi nancial the fi nancial institutions listed in section 3. restriction in section 94 of the Act which institutions for the purposes of the FTRA. These restrictions have been removed by the provided that guidelines issued by the • Requires fi nancial institutions to verify amendments to the FTRA so that any of the Securities Commission do not have the customer identity where there is a fi nancial institutions listed in section 3 of force of law. suspicion of money laundering or terrorist the FTRA or their foreign counterparts may fi nancing, notwithstanding that these potentially act as eligible introducers, subject to This article was produced originally for customers may be subject to reduced due guidance and directions issued by the relevant Complinet, June 2009. diligence under the law. domestic Supervisory Authority.

30 | BAHAMAS FINANCIAL SERVICES REVIEW REGULATORY UPDATES

INVESTMENT FUNDS AND SECURITIES SECTOR HILLARY DEAVEAUX

In May 2009 the Securities Commission of The Bahamas applied to be a signatory to the Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and Exchange of Information (MMoU) established by the International Organisation of Securities Commissions (IOSCO) and was approved as a Signatory ‘B’ on 9th June, 2009.

The MMoU was adopted in October 2002 by are identifi ed in order to facilitate seeking any As a Signatory ‘A’, the Commission will IOSCO, the principal international standard necessary legislative changes. be able to access information from other setting body for the regulation of the securities MMoU signatories necessary to better ensure markets, as the benchmark for cooperation The Commission was approved as a Signatory compliance with and enforcement of securities and information sharing among its Members. ‘B’ to the MMoU because the current laws and regulations. The Signatory ‘A’ status The MMoU is a practical tool that describes information sharing provisions of Bahamian also serves as evidence of good citizenship the types of information to be shared between securities laws do not comply with some of the with respect to global fi nancial governance. securities regulators when investigating requirements of the MMoU. By agreeing to There are currently 194 Members of IOSCO, possible securities violations, thus enhancing become a Signatory ‘B’ the Commission has of which 121 are eligible to be signatories. At the ability of regulators to detect and deter undertaken to make the necessary legislative September 30, 2009, there were 55 Signatory cross-border fi nancial crime. The substantive changes to enable it to meet all of the terms ‘A’ Members and 27 Signatory ‘B’ Members. parts of the MMoU include sections on the of the MMoU. At present, the draft Securities At the April 2005 Annual Conference of scope of assistance to be provided, required Industry Act (the draft securities legislation), IOSCO a timetable was agreed for all Member content of requests for assistance, execution which recently underwent a public consultation regulators, not already signatories to the of requests for assistance, permissible uses process, refl ects the provisions necessary to MMoU, to apply to be signatories by January of information, confi dentiality, consultation enable the Commission to become a Signatory 1, 2010. regarding mutual assistance and the exchange ‘A’. As such, it is anticipated that once the of information, and unsolicited assistance. draft securities legislation is brought into force, the Commission’s change in status to a About The Author: Hillary Deveaux The commitment to provide assistance is Signatory ‘A’ would be imminent. received his education at the Government based on the legal ability, the willingness High School, Iowa State University; the London School of Economics and Political and the capacity of Signatories to: collect Currently the Commission is able, under Science; and Cambridge University. Mr. key information for use in investigating and Bahamian legislative provisions, to engage Deveaux was appointed Secretary to prosecuting enforcement matters; provide that in cooperation and exchange of information the Securities Board (the predecessor information to foreign counterparts for uses with external regulators (i) if the laws of to the Securities Commission) on June outlined above, and protect the confi dentiality confi dentiality in the requesting state are 1, 1997. Prior to joining the Securities of that information. similar to those existing in The Bahamas; or (ii) Commission, he served as General if the external regulator expressly undertakes Manager of the Bahamas Agricultural and An IOSCO Member applicant who meets all to keep the information provided confi dential Industrial Corporation. Other appointments include Project Offi cer, Caribbean the requirements of the MMoU is approved as and to seek the consent of the Commission Development Bank in Barbados; a Signatory ‘A’. Members that do not have the prior to sharing the information with ANY third Manager of the Eurodollar Division, Bank legal authority in their local laws, regulations party. In addition to these required standards, of New Providence in Nassau; Money and administrative practices to meet the the Commission must also be satisfi ed that Market Manager, Chemical International information sharing standards as established the information is required for the regulatory Finance Ltd. (a wholly owned subsidiary by the MMoU provisions, may be approved functions of the external regulator. In of Chemical Bank,) in New York; and as Signatory ‘B’ provided they voluntarily determining whether to provide assistance the Assistant Director, Research Department, express commitment to seeking the legal Commission may also, if it thinks it relevant, Central Bank of the Bahamas. He is a member of The Bahamas Trade authority required to comply. This expressed consider whether there is a parallel offence Commission and the Group of Financial commitment is demonstrated by completing within the laws of The Bahamas and how Services Regulators (GFSR), and the application process through which the serious the matter is in relation to which the previously served as the Chairman of the precise legislative limitations that preclude information is sought. FTAA Negotiating Group in Services. Members from meeting the MMoU standards

2009 VOLUME 11 | 31 THE COMMUNICATIONS ACT is responsible for deciding the method of has been assigned to a person and assign such Continued from page 25 allocating frequencies in the premium spectrum spectrum to a different person on the following band of the spectrum plan. The Minister will grounds: URCA must take into account continuity of set spectrum fees or the method for setting • the relevant radio spectrum is not in service to users. URCA is required to maintain those fees. URCA is required to publish signifi cant use and there is demonstrable a register in electronic paper form of all the spectrum plan. The spectrum plan must demand from other persons for making individual licensees. be consistent with applicable international effi cient use of all or part of such radio treaties, commitments or standards including spectrum; Class Licence: URCA may establish class the International Telecommunications Union. • such variation is necessary to comply with licences not requiring registration. Any person It must specify those frequency bands that are international treaties; meeting the specifi ed qualifi cation criteria premium spectrum bands. Within 3 years of • the person agrees to vacate it; can provide the service in accordance with each publication of a spectrum plan, URCA • the person has contravened a the published conditions in the class licence. must formulate and submit a revised spectrum determination, adjudication or order If URCA establishes class licences requiring plan to the Minister. relating to management or operation of registration, it must publish a standard The Minister may approve or amend the radio spectrum; registration form for class licences. proposed spectrum plan within 45 days of • the person previously assigned the submission by URCA. relevant radio spectrum made a statement URCA will publish guidelines for registration or omitted to make a statement relating and deregistration of class licensees. Any Objectives Of Radio Spectrum Management: to the management or operation of radio person meeting the specifi ed qualifi cation The Minister and URCA must ensure that radio spectrum; criteria published by URCA for a class licence spectrum is managed and used in a manner • the person previously assigned the radio requiring registration may register and remain that: spectrum made a statement resulting registered for that class licence by fi ling with in a material misrepresentation in the URCA the appropriate registration form • is open, objective, transparent and non- assignment of it; or and paying application or other fees. If the discriminatory; • the person previously assigned the radio registration is non-effective, URCA must • is economically effi cient; spectrum has entered into receivership or provide written notice of this. Registration • meets the needs of government liquidation. takes effect 45 days after fi ling. URCA may not departments and agencies. restrict the number of persons that may register URCA may by determination made on under a class licence. URCA must take enforcement action promptly application or on its own motion, require a to ensure protection of licensed radio spectrum person to vacate radio spectrum previously Radio Spectrum Management: URCA has bands from interference. assigned to it, and assign the radio spectrum to the exclusive right to manage, allocate and a different person on other grounds if: assign all frequencies in the radio spectrum URCA may by determination establish 1 or in The Bahamas. However, the Minister more of the following: • necessary or expedient to further the electronic communications policy • exemptions from objectives; or a requirement to be • there is justifi cation for causing hardship Providing Quality Financial licenced; that may result to the licensee. • class licences; & Corporate Services and A determination made of the above may be Locally & Internationally • requirements conditional on payment by the new persons for radio spectrum assigned the relevant radio spectrum of individual licences. compensation to the person required to vacate Company Incorporation the radio spectrum. URCA’s determination URCA can establish: made to vacate the radio spectrum will take Registered Agents/Registered effect on date specifi ed by URCA not less Offices Services • requirements for than 30 days after the date of written notice Nominee & Shareholder authorization of use given by URCA to a licensee affected by that of radio equipment, determination. Services including technical Directorships & Company requirements and The licensee may appeal to the Tribunal standards in relation against the determination. URCA must provide Management to radio interference; written notice to a person previously assigned Mailbox Services and radio spectrum that it intends to vacate the Structural & Commercial • procedures, relevant radio spectrum and the person may conditions and within 30 days appeal to the Tribunal for: Transactions restrictions Mutual Fund Structures & applicable to the use • the determination of his interest/right; of radio spectrum • the legality of the vacation of the Licensing and radio equipment. spectrum; Company Liquidations • the reasonableness of the time given to Work Permits Vacation of vacate the spectrum; Radio Spectrum: • the amount of any compensation; and Accounting & Financial URCA may by • the period of time in which it is paid. Statement Preparation determination made on application A Licensee is not permitted to assign the use Ocean Centre, Montagu Foreshore Tel 242 502 5200 or on its own of radio spectrum to a third party; however, East Bay Street, P.O. Box SS - 19084 Fax 242 502 5225 motion, without URCA may publish further rules on this. Nassau, Bahamas compensation, [email protected] / www.hjcorporate.com declare vacant any radio spectrum that Continued on page 33

32 | BAHAMAS FINANCIAL SERVICES REVIEW THE COMMUNICATIONS ACT available; and BROADCASTING AND PUBLIC Continued from page 32 • prices available in comparable markets. SERVICES

COMPETITION PROVISIONS SMP licensees are required: ComsAct has been called “state of the art” because it converges traditional ComsAct is the fi rst time Bahamas legislation • not to unduly discriminate against telecommunications with broadcasting has made explicit competition, also called particular persons in terms of electronic services. In the digital age, high speed internet antitrust, provisions. These are provisions that communications offered by them; has lead to a unifying of these mediums, and prevent one carrier from becoming overly • provide technical specifi cations about ComsAct embodies this unifi cation. Thus, the dominant such that a monopoly is formed. any interconnection on a reasonable sector is called the electronic communications ComsAct states that, so far as is possible, and timely basis when information is sector because it encompasses the provision matters of competition are to be dealt with in a required by another licensee to provide its of all electronic communications, including manner which is consistent with international licensable services; and broadcasting. After ComsAct comes into force, best practice. • not adopt technical specifi cations for a URCA is required to review the Broadcasting network that prevents interconnection Act and publish recommendations to the SMP: URCA is, at any time, enabled by or interoperability with a network of a Minister about: ComsAct to designate a licensee an SMP competitor. licensee, if the licensee enjoys a position of • necessary amendments to the economic strength which hinders the If an SMP licensee is subject to an obligation Broadcasting Act; regarding the cost orientation of its prices, the • the role of public service broadcasting in maintenance of effective competition on the burden of proof that charges are derived from The Bahamas; relevant market; this happens if it behaves costs lies with the SMP licensee concerned. • the remit and corporate governance rules to an appreciable extent independently of of the Corporation; and its competitors, consumers and subscribers. ComsAct provides that there will be a • the preferred method of funding any URCA may publish criteria relating to presumption of SMP for the following: public service broadcasting obligations. the defi nition of markets in the electronic communications sector; and against which • BTC in the provision of fi xed voice; Based on recommendations presented by market power may be assessed, in order to • Cable Bahamas in the provision of high URCA, the Minister must specify in the sector enable it to determine whether a Licensee is an speed data services and connectivity; policy or by notice published in the Gazette SMP. URCA’s criteria is: • BTC in the provision of mobile voice and the public service broadcasting obligations mobile data services; and within 3 months of submission by URCA of • market share; • Cable Bahamas in the provision of pay TV the recommendations. URCA may designate • ability to infl uence market conditions; services; a public service broadcaster. A public service • access to fi nancial resources; and broadcaster is entitled to apply for funding • experience in providing products to the Anticompetitive Agreements: ComsAct from the public service broadcasting fund; market. prohibits agreements, decisions and practices and other benefi ts determined by URCA. implemented in The Bahamas which prevent, ComsAct establishes the public service ComsAct sets out a non-exclusive list of the restrict or distort competition relating to broadcasting fund into which are to be paid any obligations imposed on licensees deemed to communications. money appropriated by Parliament, including have SMP. URCA can oblige the licensee that the imposition of a levy; and any grant, has SMP to offer access or interconnection to These agreements are ones which: contribution or loans from any international other service providers at rates approved by organization or donors. URCA and published in a reference offer, and/ • fi x purchase prices; or the licensee to submit its retail tariffs to • limit markets, technical development or Content Regulation: URCA may issue URCA for approval. investment; regulatory and other measures to regulate • share markets; content services intended for subscribers. URCA may impose specifi c conditions on • apply dissimilar conditions to equivalent URCA is required to issue codes of practice licensees determined to have SMP in the transactions; and that are to be observed by licensees providing relevant market, including: • make the conclusion of contracts audiovisual media services in The Bahamas. subject to acceptance of supplementary These may include: • price controls; obligations. • equivalence of access/interconnection; • methods of ensuring protection of children • submission of fi nancial statements; Abuse Of Dominant Position: Any conduct by from exposure to programme material • retail price regulations; a licensee which relates to communications and which may be harmful; • sharing of facilities; is an abuse of the licensee’s dominant position • promoting accuracy and fairness in news; • access to systems used to provide content; in a market is prohibited. Conduct may be • preventing broadcasting of programmes • offering services on non-discriminatory abuse if it: that mislead or alarm audiences; basis; • time, standards required, and kinds of • provision of standard terms of business; • imposes unfair purchase prices; sponsorship for advertising; • provision of service level guarantees; and • limits market development; • captioning for hearing impaired; • such other obligations as URCA deems • applies dissimilar conditions to equivalent • teletext; necessary to meet policy objective. transactions; • political broadcasts; • requires supplementary obligations; and • sports and national events; Prior to imposing obligations on SMPs, URCA • limits access to a network. • regulations and national emergency and is required to: disaster conditions. Merger Control: No change in control of • ensure mandated pricing methodology is a licensee can be implemented without In developing codes of practice the following sustainable and benefi ts consumers; obtaining the prior written approval of URCA. taken into account: • take into account investment made by The acquirer or licensee must notify URCA licensee and allow a reasonable rate of within 7 days of concluding an agreement or return; announcing a public bid that would result in a • cost accounting system made publicly change of control of a licensee. Continued on page 34

2009 VOLUME 11 | 33 THE COMMUNICATIONS ACT TECHNICAL MATTERS AND FEES referred to the Tribunal. The Tribunal hears Continued from page 33 disputes over land access. Whenever the URCA is enabled by determination or Tribunal’s jurisdiction does not extend to the • physical and psychological violence; regulation to establish technical rules and review of regulatory or other measure URCA • sexual conduct and nudity; standards which are to be applicable to or any public authority, normal principles of • use of drugs including alcohol and communications equipment manufactured judicial review apply. tobacco; and within The Bahamas. • matters that are likely to perpetuate TRANSITIONAL PROVISIONS racism. Land Access: ComsAct provides for licensees to gain access to land and facilities for The Minister will publish the fi rst sector policy A person who fails to comply with any the purposes of providing and developing under ComsAct in the Gazette within 1 month regulatory or other measures is liable to pay a electronic communications networks and of ComsAct coming into force or as soon as fi ne. services. practicable thereafter. Any licence, permit or franchise granted under either the Broadcasting Universal Service: ComsAct contains universal National Interest Matters: The Minister has Act or Telecommunications Act in respect of a service provisions. It provides for the Minister certain powers in matters of national interest. network or carriage service or radio spectrum to determine services which the Government It ensures ComsAct is compatible with which is in force prior to ComsAct coming insists a designated licensee give to persons in requirements of the Listening Devices Act. into force will be an “existing licence” and will The Bahamas or in other specifi c locations in Governor General enabled to take possession have effect as an individual licence granted The Bahamas. of any electronic communications network in by URCA for the expired term of the existing cases of national emergency. licence. Under ComsAct, BTC is required to provide: Fees and Payments: ComsAct sets out fees Every holder of an existing licence is required • Basic dial-up internet services to payable by licensees including Licence within 3 months of ComsAct coming into force populated areas; Fee, URCA Fee and Minister Fees. The to supply URCA with full details of its existing • Basic internet services to specifi ed communications licence fee will be equal to licence. Any licence for which full details are institutions; 2% of licensee’s relevant turnover. not supplied to URCA will expire on the date • Basic telephony services to all populated being 3 months after ComsAct comes into areas; and ENFORCEMENT force. An existing licensee within 1 month after • Public access to pay apparatus. the date it supplies URCA details of an existing This time around, the regulator has been given licence must apply to be granted individual and Cable Bahamas is required to provide for teeth. Its actions can take any of the forms licences; or give notice of its objection to basic television services in specifi ed locations. listed below. URCA requesting its existing licence continue in force for the remainder of its unexpired term Consumer Protection: URCA has a duty to Orders: Orders relate to the sanctions URCA or until a later date specifi ed in the notice of monitor and enforce the consumer protection may impose on licensees and content providers objection. If an application to be granted an conditions in the licences. URCA may issue for a breach of legislation. Orders may include individual licence is made, URCA may grant general regulations relating to protection of fi nes not exceeding 10% of the licensee’s or refuse to grant an individual licence on the consumers, which might include: relevant turnover, specifi c performance, grounds that a company of which the applicant injunctions or variation suspension or is a subsidiary undertaking is an existing • standard of service, quality, safety; revocation of licences. licensee or is a company that requires or has • handling of consumer complaints; applied for an individual operating licence. • any other matter to secure effective Determinations: This relates to the regulatory protection of consumers. function of URCA. URCA may investigate an ComsAct governs licences granted under alleged infringement either as a result of a third legislation repealed by ComsAct or the URCA Following a request by URCA, licensees must party complaint or on its own initiative. Act. The process for migrating licensees publish performance against any key performance under the Telecommunications Act and the indicators and provide details of their performance Adjudications: Adjudications relate to Broadcasting Act to licences under the new against key performance indicators. the competition functions of URCA. Communications regime. Under current sector These are used when a licensee has acted policy, BTC has a monopoly for the provision URCA may prohibit use of network or carriage anticompetitively or is subject to a change of of cellular services. It is envisaged that BTC service to provide unsolicited communications to control. will continue to have a monopoly for the reduce annoyance, inconvenience or anxiety. provision of cellular services until the special Offences: If a person is not licenced and rights in the sector policy expires or the sector Licensees must keep consumer data confi dential breaches any provision of the Act, URCA’s policy is no longer in effect. ComsAct lists and only disclose a subscriber’s name, address recourse is through criminal courts. URCA has the Acts partially repealed and replaced by and listed telephone in a directory. A licensee power to bring prosecutions. ComsAct and the URCA Act. These include is allowed access to a subscriber’s property to Telecommunications Act, Broadcasting Act, operate, maintain in good working order and Fines And Remedies: The general fi ne that Bahamas Telecommunications Corporation repair all facilities belonging to it. can be imposed for contravention is a fi ne not Act, and the Business Licence Act. exceeding 10% of the relevant turnover. It is Numbering and Naming Systems: With regard required to be paid in one lump sum or over a CONCLUSION to Numbering and Naming Systems, ComsAct period of time in smaller sums. obliges URCA to publish a numbering plan for ComsAct consists of twenty parts, unlike the carriage services and allows URCA to make Utilities Appeal Tribunal: ComsAct provides meager twelve parts of its predecessor, the rules pursuant to that plan for the allocation a means of appealing the actions of URCA by Telecommunications Act. ComsAct is farther of numbers to licensees and the use and way of the Utilities Appeal Tribunal. reaching than the aforesaid and will provide assignment of those numbers to licensees. for a more robust and expansive regulatory ComsAct affi rmatively confers upon the system. With the passing of ComsAct, it is COB is given the power to manage .bs domain Tribunal jurisdiction to hear and judicially clear the Bahamas Government is determined names in The Bahamas. review appeals from URCA, disputes between to liberalise telecommunications in licensees and any other matter or disputes The Bahamas.

34 | BAHAMAS FINANCIAL SERVICES REVIEW LEGISLATIVE UPDATES

THE BAHAMAS SMART FUND PROGRAMME DAVID THAIN NEW SFM006 INTRODUCED IN 2009

In 2003, industry was invited to challenge the status quo and develop new and innovative uses for Investment Funds. The catalyst for this challenge was The Bahamas SMART Fund programme, a modern and dynamic yet balanced platform for the development of cutting edge solutions for clients.

In this article we will examine the SMART therefore a mechanism for promoters to purpose a Fast Track Programme has been fund programme, analyse by means of approach the regulator for approval of a developed which guarantees complete and examples some of the available models and specifi c style of fund and for that fund, correct application approval within 72 hours. suggest opportunities for further development if approved, to be allocated a risk based of this important product area within The licensing and supervisory regime tailored Some may view as controversial the ability to Bahamas and beyond. for it sole use. waive the annual audit; however we will see when we examine the SMART fund structures The Investment Fund Act of 2003 defi ned Once each new SMART Fund is approved, the approved to date that either the limited nature four classes of Fund; Standard, Professional, template, which constitutes the requirements of the equity interests or the specifi c nature Recognised Foreign and SMART. Whilst the for licensing, is published and becomes of the investment purpose renders an audit fi rst three were largely facsimiles of existing available for use by anybody. To date six redundant. There is, of course, nothing in the structures and similar to equivalent funds Templates have been approved, each quite SMART Fund programme which prevents an in other jurisdictions, the SMART fund was different and designed for distinct investment audit which may be organised at any time; totally new. Technically known as the Specifi c purposes. Currently each enjoys the following there is merely a provision that it may be Mandate Alternative Regulatory Test Fund, three advantages over traditional funds: waived if considered by the investors to be the SMART fund marked a departure from unnecessary. established protocols and introduced a product 1. The SMART funds does not require a designed specifi cally for the Private Wealth lengthy traditional Offering Document; SMART Fund 001: Management industry; regulated, innovative rather there is a simple Term Sheet, the Discretionary Managed SMART Fund and unencumbered by comparison with required contents of which are defi ned by anything that had come before. each template. A fund limited to the discretionary managed clients of a named fi nancial institution. The 2003 Act and Regulations established 2. If all of the equity investors agree in a high quality, rigorous regulatory regime advance the SMART fund may waive the Rationale: Once clients delegate management for Bahamas Funds but recognised that not requirement for an annual audit. of their assets by means of a discretionary all funds required the same degree of direct management agreement, investor protection supervision and that some requirements, 3. Unrestricted Fund Administrators have the language and other standard risk awareness appropriate for traditional funds, may be power to issue the SMART fund licence wording typically included in retail offering superfl uous for structures which amounted under a delegated authority granted by the documentation becomes superfl uous. to private investment schemes. The SMART local regulator. fund programme introduced two radical new In these cases the fi nancial institution providing concepts: Clearly, being able to avoid the time and cost the managed service may set up a SMART associated with drafting an extensive offering fund and allocate shares to the portfolios of an 1. Whilst the requirements for qualifi cation document has appeal. Similarly, removing any unlimited number of its clients. for a standard of professional fund are uncertainty associated with the timing of the clearly defi ned within the law, the specifi c launch by repositioning regulatory fi lings to Continued on page 40 requirements for a SMART fund license a date soon after licensing rather than before are defi ned on a case by case basis by allows the promoter generous time to market About The Author: Mr. Thain holds the means of approved templates, each of control. position of General Manager of Arner Bank which creates a new SMART fund model. & Trust (Bahamas) Ltd and currently serves It is also the case that application for licensing as Deputy Chairman of the Association of 2. The number and type of SMART funds can be made directly through the Securities International Banks & Trust Companies in remains an open group. There exists Commission of The Bahamas, and for this The Bahamas.

2009 VOLUME 11 | 35 LEGISLATIVE UPDATES

REAL PROPERTY TAX - 2009 AMENDMENTS MIKE KLONARIS

The Real Property Tax (Amendment) Act, 2009 (“the Amendment Act”) and the Real Property Tax (Amendment) (No. 2) Act, 2009 were assented to on the 13th July, 2009 and the 5th August, 2009, respectively, bringing into effect several positive changes for owners of Bahamian property, including relief to owners of high-end residential properties.

By way of historical background, in revival of surcharge, (4) Treasurer’s power specifi ed in the principal Act; namely owner- December, 2002, the Government amended of sale, and (5) conveyance to purchaser and occupied property, developed property the principal Act by establishing a maximum application of proceeds of sale. other than owner-occupied property and real property tax of $35,000.00 in respect of unimproved property, each of which attract “owner-occupied” property. The effect of Changes to Defi nitions a different property tax rate – and has now this was to attract investment in The Bahamas added a fourth category of Crown Leased Cay. by non-Bahamians in particular during times The Amendment has introduced new The Amendment Act has amended the rates when Bahamian real estate values experienced defi nitions for “owner-occupied property”, applicable to owner occupied property and appreciation and world economies enjoyed “unimproved property” and “improvements”. unimproved property and established rates for growth. Crown Leased Cays. “Owner-occupied property” now means In June, 2008, the Government again “property occupied by a person who being “Owner-Occupied” real property tax rates amended the principal Act by removing the the owner in fee simple or a mortgagor in have been amended by the Amendment Act “owner-occupied cap” perhaps without due possession occupies and resides in such and the current rate structure is as follows: consideration to the adverse impact it would property exclusively as a dwelling house on a have on various parties, including existing permanent or seasonal basis”. Previously an • The fi rst $250,000 of market value is high-end property owners who suffered a owner-occupier was required to be physically exempt from real property tax; dramatic increase in real property taxes, in residence for a minimum of nine months • The following $250,000 is taxed at a rate and property developers whose potential or per year. of 0.75% of the market value; committed investors were not prepared to • The following $4.5 million is taxed at a pay signifi cantly more taxes than originally “Unimproved property” now means property rate 1%; and anticipated. The removal of the “cap” on which no improvements in excess of • The amount of market value thereafter is together with the current global economic $50,000 in total value have been effected. taxed at a rate of 0.25% crisis certainly have adversely affected recent Consequently, “improvements” now means investments in Bahamian real estate. “any physical additions or alterations to, or Previously, owners of real property valued in any works for the benefi t of, the land (not excess of $5,000,000 were liable to pay tax at Recent lobbying by various interested parties being additions, alterations or works by way the rate of 0.75% on that part of the value that including property developers, realtors, of agriculture or horticulture) made or done exceeded $5,000,000. attorneys and owners of high-end properties by the owner or any of his Predecessors in in particular was instrumental in the passing title which has the effect of increasing the The Real Property Tax (Amendment) (No. of the Amendment Acts and the Bahamian value of such land (assessed without reference 2) Act was passed for the sole purpose of Government should be commended for its to any such additions, alterations or works as amending the provisions relating to property timely and sensible response in reaching a aforesaid) by a total of fi fty thousand dollars owned by a company whose benefi cial owner reasonable compromise for all parties affected or more”, as opposed to fi ve thousand dollars seeks to benefi t from the “owner-occupied” in reducing the rate of tax for “owner- as previously provided in the principal Act. property tax rate. In such circumstances, occupied” property. This is only one aspect, such benefi cial owner must now submit to albeit an important one, brought about by the Variation of Annual Real Property Tax the Chief Valuation Offi cer a declaration Amendment Acts. Rates in the prescribed from stating that such property is occupied by him as benefi cial In summary, the principal changes of the Although there was initial discussion owner exclusively as a dwelling house on a Amendment Acts relate to: (1) changes to simplify the tax rate structure to two permanent or seasonal basis. to defi nitions (2) variation of annual real categories, the Government has determined property tax rates (3) surcharge, waiver and to retain the three categories of landholding

Continued on page 37 36 | BAHAMAS FINANCIAL SERVICES REVIEW JURISDICTIONAL & SECTOR DEVELOPMENTS REAL PROPERTY TAX Continued from page 36 the tax is due and payable, for the recovery existing restrictive covenants and conditions, Unimproved property rates have been amended of such real property tax”. Owner-occupied easements, exceptions and reservations, service by the Amendment Act and the current rate property and “other property” are not subject charges and uses as may then exist and also structure is as follows: to the said power of sale. It should be noted subject to any charges in respect of debts due that the said power of sale is not exercisable to the Crown other than real property taxes • The fi rst $7,000 of market value is taxed unless the real property tax has been in arrears and stamp duty payable on the conveyance. at a rate of $100; and and unpaid for more than six months after the The purchase money from such sale shall be • The amount of the market value thereafter expiration of thirty days from the tax becoming fi rst applied to pay for costs incidental to the is taxed at a rate of 1.5%. due. Thereafter, the Treasurer may by warrant sale and next in payment of any tax due to of sale in the prescribed form order the sale the Treasurer at the date of the conveyance. Previously, rates were $30 on the fi rst $3,000 of such land by public auction. Notifi cation Any surplus remaining shall be paid to the of the market value, 1% on the value exceeding of such sale shall be given to the owner as persons entitled thereto or paid into Court $3,000 and up to $100,000 of the market value registered with the Chief Valuation Offi cer by at the discretion of the Treasurer. A Third and 1.5% thereafter. Unimproved property the Treasurer at least thirty days before the day Schedule to the principal Act has been inserted owned by Bahamians, as is property owned appointed for the sale, by advertisement in the by way of the Amendment Act, and includes by Bahamians situated in the Family Islands, daily newspaper in The Bahamas or by such prescribed forms of the Warrant of Sale, List whether improved or not, is still exempt from other manner prescribed by the Minister. Attached to Warrant of Sale, Warrant of Sale taxation. Crown Leased Cays are now taxable after Postponement, Request for Registrar of as follows: A mortgagee of any unimproved property Supreme Court (regarding surplus monies), and advertised for sale may pay the outstanding Conveyance. • On the fi rst Ten million dollars of the tax at any time before the day appointed for market value of improvements at a rate of sale and such payment shall stand as a further Generally speaking, the 2009 amendments to 0.5%; charge on the unimproved property in favour the principal Act appear to refl ect a fair and • On the market value of any improvements of the mortgagee. Unimproved property sold responsive decision on the part of Government thereafter at a rate of 0.25%. pursuant to power of sale shall be sold “free in balancing its interest in maintaining an from any mortgage and encumbrance” and important tax revenue stream and those Surcharge, Waiver and Revival of Surcharge the Treasurer may impose a minimum reserve interests of owners of Bahamian property, in price not less than the amount of tax due, plus particular of non-Bahamian investors who The Amendment Act has replaced the old penalties and interest thereon, and the cost would otherwise be considering alternate and provision relating to Surcharge with a new one of advertising and conducting the sale. The less taxed jurisdictions to purchase residential imposing a surcharge of fi ve percent of such Treasurer may at any time before the sale of property. It is also important to note that tax per annum if any taxes remain unpaid after land advertised for sale, postpone generally the Government is prepared to take more 31st December, 2009. New provisions relating or to some specifi c day, the sale of all or any signifi cant steps by way of the use of a power to waiver of surcharge have been introduced, part of the land provided the requisite notice is of sale, in relation to owners of unimproved providing that: provided to the owner. The person conducting land who default on payment of real property the sale under power of sale shall report to the taxes, to assist it in properly collecting its • surcharges on owner-occupied property Treasurer the amount of the highest bid and the revenue for the betterment of The Bahamas. valued up to $250,000 shall be waived; name and address of the highest bidder and the The said amendments have been well received • surcharges on owner-occupied property Treasurer may declare the highest bidder as the by most market participants and promise to play which exceeds $250,000 shall be waived purchaser of the land and convey the land to a positive role in stabilizing and stimulating the if the outstanding property tax is paid by the purchaser accordingly. Bahamian real estate market. 31st December, 2009; and • surcharges on other property shall be If the Treasurer, upon considering the said waived by fi fty percent if the outstanding report, is satisfi ed that (a) there has been some About The Author: Mike Klonaris real property tax is paid by 31st fraud or improper conduct with reference to attended Vanderbilt University in Nashville, December, 2009. the sale; (b) that there is some material error Tennessee obtaining a Bachelors Degree in English and Business. He also in the description of the land; (c) that the tax received a Bachelor of Laws Degree If after 31st December, 2009 any real property for non-payment of which the land was offered from the University of Buckingham, tax remains outstanding in respect of “owner- for sale had been paid at the time when the bid England and studied for the English Bar at the University of Westminster, London, occupied property” or “other property”, then for the land was made, or (d) that the reserve England. As a member of The Bahamas the owner thereof shall now be liable to pay price, if any, had not been reached, then he may Bar and Bar of England and Wales a new surcharge of fi ve percent per annum. declare the sale to be void. Where a sale of land (Lincoln’s Inn) since 1993, his career commenced in 1993 when he joined Previously, if tax was overdue for more than 90 is declared void as aforesaid, the Treasurer may Callenders & Co., a Law Firm. In 1996 days then a surcharge of 10% would accrue. issue a fresh warrant for the sale thereof. he moved to the Law Firm of Alexiou, Knowles & Co. as an associate. In 2001 he established the practice of Klonaris & Treasurer’s Power of Sale Conveyance to Purchaser and Application of Co. His present areas of practice are Real Proceeds of Sale Estate, Trusts and Estates, Immigration, In addition to the previously existing power to Corporate, Commercial, Banking and commence proceedings to recover outstanding By virtue of Section 25B, where land is sold Foreign Investment. Mr. Klonaris speaks Greek, Spanish and French on an real property taxes pursuant to Section 23 under Section 25, the Treasurer shall have the intermediate level, and is a member of the of the Principal Act, the Amendment Act power to execute a deed in the prescribed form Board of Directors of Julius Baer Bank & introduces a new Section 25A which empowers conveying the land in the name of the owner. Trust (Bahamas) Limited, Julius Baer Trust Company (Bahamas) Limited and Julius the Treasurer to more effi ciently enforce The purchaser shall not be concerned to inquire Bar Life (Bahamas) Limited, the Society collection of outstanding taxes. Section 25A as to the compliance with the provisions of the of Trust and Estate Practitioners (STEP), specifi cally provides that “where any property Act relating to sale, nor as to the validity of the the Hellenic Ball Committee and the Music Society and has served on the Board of tax relative to unimproved property is in sale, and the land shall become vested in the the Greek Orthodox Church and the Lyford arrears and unpaid the Treasurer may sell purchaser freed and discharged from all estates, Cay Property Owners Association. Mr. the unimproved property in respect of which charge and encumbrances subject to any Klonaris is also the Honorary Consul of Finland.

2009 VOLUME 11 | 37

and procedures to ensure compliance with the Footnotes: QUALIFIED INTERMEDIARY PROGRAM Continued from page 23 enhanced reporting requirements. Some institutions will deem this practices 1. The model QI agreement is contained in Revenue and procedures to be too costly and no longer Procedure 2000-12, 2000-1 C.B. 387, as amended institutions that are willing to comply with the accept U.S. clients, while others may view 2. Mr. Peter H. Blessing is a lawyer in private practice reporting requirements and other obligations it as an opportunity and put in place the with the law fi rm Shearman & Sterling LLP. Mr. under the QI Program will grow. necessary procedures to take advantage of Blessing teaches International Taxation as an U.S. clients. In either event, the operations of adjunct professor in the J.D. program of Columbia This demonstrates that as the international foreign fi nancial institutions with respect to Law School. fi nancial landscape changes, those fi nancial the United States is evolving before our eyes. 3. See Testimony of Peter H. Blessing before the institutions with the fl exibility to adapt can Subcommittee Select Revenue Measures of the take advantage of opportunities that develop. Committee on Ways and Means, U.S. House of IRS Circular 230 disclosure: Representatives, March 31, 2009 Conclusion To ensure compliance with requirements 4. Id. page 9 imposed by the IRS, we inform you that any 5. See General Explanations of the Administration’s Many of the proposed revisions to the QI U.S. federal tax advice contained in this Fiscal Year 2010 Revenue Proposals page 41 Program have the goal of strengthening the communication (including any attachments) 6. Id. Page 42 oversight of the institutions and imposing is not intended or written to be used, and 7. Id. Page 43 routine reporting requirements on the offshore cannot be used, for the purpose of (i) avoiding 8. d. Page 44 fi nancial institutions that in the past was solely penalties under the Internal Revenue Code or 9. U.S. person includes any entity of which a U.S. the responsibility of the U.S. taxpayer. The (ii) promoting, marketing or recommending person owns, actually or constructively, more than QIs will be required to not only strengthen to another party any transaction or matter 50 percent of the ownership interest. the audit function, but implement controls addressed herein.

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2009 VOLUME 11 | 39 JURISDICTIONAL & SECTOR DEVELOPMENTS

SMART FUND PROGRAMME A similar structure is available as a SMART SMART Fund 003 was a transition model Continued from page 35 Fund 005 which whilst limiting the number of introduced in the 2003 legislation and designed investors to fi ve, does allow the administrator GOVERNMENTto provide a licensing route for funds classed - SMART Fund 001 - to be based outside of The Bahamas as Exempt under the previous legislation. This model is no longer available for new SMART Fund 004: Private Client SMART Fund BAHAMAS FINANCIAL INSTITUTION applicants. (Administrator & Manager) A private investment vehicle limited to a maximum number of fi ve investors. SMART Fund 006 is perhaps the best example yet of the advantages inherent within the Rationale: The client requires a simple licensing approach adopted by the Securities Voting Shares 100% credible vehicle with which to open a Bank or Commission of The Bahamas. Funds in all Brokerage account. Rather than use an IBC or jurisdictions have experienced problems in Trust, a SMART Fund offers a higher degree recent months owing to the global fi nancial of credibility and acceptance in the eyes of crisis, and the use of Gates, Side Pockets, etc BAHAMAS ‘SMART’ FUND the client (and many counterparties) without has become commonplace. limiting fl exibility.

In The Bahamas; however, the SMART fund Equity Interests - SMART Fund 004 - programme has allowed industry to design a CLIENT product tailored to meet speciﬁ c current needs in a pro-active timely fashion.

Voting Shares 100% As a wealth management tool SMART Funds Administrator (Bahamas licensee) have proven useful within Family Ofﬁ ce Unlimited number of Discretionary Managed Clients BAHAMAS Investment Manager of the Financial Institution ‘SMART’ FUND (Client or other counterparty) structures as a simple asset distribution (Bahamas IBC)

Asset Management Account mechanism to allow family members to raise (Typically no Custodian) Investor Shares liquidity without removing specifi c assets SMART Fund 002: Incubator SMART Fund from the family ‘pot’. Similarly, the addition of sub funds (perhaps by means of a Bahamas A private investment structure limited to Maximum 5 Professional Investors Segregated Account Company), allows assets a maximum number of ten sophisticated to be legally separated and independently investors. managed. Rationale: Promoter wishes to set up a Hedge Fund but is not ready to solicit funds from the SMART funds also have application as specifi c General Public and does not therefore want to purpose vehicles within the venture capital, real incur the expense associated with setting up a estate and commercial restructuring fi elds. The Professional Fund. If we limit the number of SMART Fund 006: Side Pocket SMART Fund addition of a Trust as the legal owner of voting investors to ten, who qualify as ‘Professional’ shares adds a further dimension, increasing and a majority of whom have the power to A special purpose vehicle designed to hold viable uses yet further. remove the Operators, the Incubator fund illiquid assets outside of an existing Parent allows a fast track, inexpensive licensing fund. process. Indeed it is not an exaggeration to say that the SMART Fund programme has established Rationale: An existing Bahamas fund holds a tool whose uses are limited solely by the - SMART Fund 002 - assets which have become illiquid or diffi cult imagination of industry practitioners and the INVESTMENT to value. Rather than allow these assets to MANAGEMENT agreement of the local regulator, who to date COMPANY Ownership 100% PROMOTER prevent the normal administration of the fund (Bahamas IBC) (or perhaps a timely liquidation) they may be has shown commendable support. placed into a new SMART Fund, the shares of

Administrator which are issued to the same equity investors Recent ofﬁ cial data which shows SMART (Bahamas licensee) as the original Parent fund. Funds as the fastest growing segment of the BAHAMAS ‘SMART’ FUND local Investment Fund sector demonstrates (Bahamas IBC) Custodian - SMART Fund 006 - or Prime Broker that The Bahamas has been able to develop an Participating Redeemable Preference Shares (With power to remove the Directors of the Fund) BAHAMAS FINANCIAL important niche as the location of choice for INSTITUTION (Administrator) the establishment of non traditional funds.

Maximum 10 Professional Investors Voting Shares 100% This type of innovative approach to product

BAHAMAS Administrator development, coupled with the jurisdictions’ ‘SMART’ FUND (Bahamas licensee) established private wealth management Equity Interests expertise, will likely allow The Bahamas to remain at the cutting edge of modern, client- focused ﬁ nancial services. Unlimited number of existing investors in Bahamas ‘Parent’ Fund.

40 | BAHAMAS FINANCIAL SERVICES REVIEW MARK YOUR CALENDAR

JANUARYY 29TH - 31STST, 20201010

BFSB is pleased to announce the Bahamas Financial Services Retreat will become the International Business and Finance Summit (IBFS).

The Summit will provide participants with insights and tools required for business development in the wake of global financial challenges. Global leaders in international business and finance will lead our discussions. Invite your head office colleagues along with professional associates and build relationships with international and local advisors.

Most important, register today for this executive summit scheduled for January 29th to 31st at the Bimini Bay Resort & Casino. For more information contact info@bfsb-bahamas. com or BFSB at 242 316 7001. bahamassummit.com

PRESENTED BY:

SUMMIT VENUE: