The Tribune

By Fay Simmons

jsimmons@tribunemedia.net

Tribune Business Reporter

A Bahamian digital payments provider has unveiled plans to open a UK office in an announcement that coincided with the Prime Minister's visit to London for King Charles III's coronation.

Nicholas Rees, Kanoo's chairman, speaking at the annual reception for the Caribbean Council, said: "We are taking up the charge from the Caribbean Council. We will be establishing Kanoo in the UK and that I'm pleased to announce tonight.”

Promoting Kanoo's products and services, and their ties to the Sand Dollar, the Bahamian digital dollar that is backed by the Central Bank, he added: "We have a system in place today that processes revenue, it processes expenditure, it is customised and coded to the financial regulatory procedures of the country, and it is a sovereign wallet multi-signatory Central Bank Digital Currency payments system.

"The first of its kind. This system will enable governments and institutions and small businesses around the world to process real-time payments, revenue and expenditure, and tie those items directly to the heads of a budget to accomplish real time budget-based reporting.

"This is significant. This brings transparency, accountability, access and full inclusion of persons that need it. What we do is driven by the need of our people, our Family Islands. Our banks are pulling out. They cannot justify the expense of a physical branch [and] paying persons to be on these islands because it's not profitable for them. “

Philip Davis KC, also speaking at the Caribbean Council reception, slammed the "prejudices" that he asserted have resulted in The Bahamas being 'blacklisted' by the European Union (EU) for mere "administrative shortcomings" in the fight against tax evasion and avoidance.

He said “Despite the fact that we are still in our early years of national development, there are already a host of prevailing ideas about small island developing states, the Caribbean region generally, and The Bahamas in particular. Some of these ideas do not serve us well.

"Some are out of date. Some were never true. And perhaps the most widely-held ideas are formed from our success in tourism and financial services: That what we are, that all that we are, are sandy beaches, shimmering sunsets, and a haven for tax dodgers.”

Pointing to The Bahamas' achievement of a perfect '40 out of 40' score for compliance with the Financial Action Task Force's (FATF) anti-financial crime standards, Mr Davis questioned why larger countries are not punished for bank failures while smaller nations are blacklisted for technical deficiencies.

He said: “We find it odd that we are criticised for business failures when our regulatory regime is effective, and yet the same criticisms are not levied against those national jurisdictions who are currently experiencing a number of bank failures. Are the regulators to blame for the failures of Credit Suisse? First Republic? Silicon Valley Bank?

"We fear we have fallen victim to the same kind of prejudices which have led the European Union to put us on a blacklist for what are effectively administrative shortcomings when some of their members engage in exactly the same legal activities that we do.

"In this, as in climate change, here again a more evolved idea of The Bahamas takes shape. We think it important to speak up globally, to engage in international discussion and debate, in ways which previously was simply left to larger players. In doing so, we seek to join the rule-makers and not just remain a rule-taker.”

Mr Davis also defended The Bahamas' response to the FTX crypto currency exchange's collapse, adding that the Digital Assets and Registered Exchanges (DARE) Act enabled the Securities Commission to secure and protect $3.5bn of investor and client assets even though this valuation has since been much reduced.

He said: “The financial services sector is an area where we have already made strides in diversification and innovation. The Digital Assets and Registered Exchanges, or the DARE legislation we enacted, made us the first jurisdiction in the world which made a serious effort to regulate the nascent digital assets industries, notably relating to blockchain technology and crypto currencies.

"Contrary to some of the more intemperate commentary made at the time, the experience last year of the failure of FTX in our jurisdiction proved the effectiveness of our regulatory regime. It was the strength of the DARE Act that enabled The Bahamas to act first, and to act decisively on FTX.

"Our Securities Commission was able to quickly put The Bahamas-based entity into provisional liquidation, ahead of their filing for Chapter 11 bankruptcy. We were also able to secure FTX assets, which had a market or trading value around $3.5bn at the time they were secured," Mr Davis continued.

"The US debtors in the Chapter 11 themselves credited the Bahamian regulatory framework in the securing of assets. It is this robust regulation which was critical to The Bahamas achieving a perfect '40 out of 40' rating with the FATF recommendations, a milestone which only six countries in the world have achieved.”

Mr Davis said the country’s main industries, tourism and financial services, have returned to ‘good health’ after the pandemic. "Visitor numbers are historically high, and the revenue earned has helped to right our economy post-COVID. While the tourism industry was closed during the COVID-related lockdowns, the financial services industry, in large part, kept us going," he added.

"We remain a jurisdiction without income or corporate tax, although we are being invited to change our corporation tax arrangements in line with global initiatives. While tourism and financial services are fairly mature industries in Bahamian terms, both still have great capacity for opportunity and growth.

"In tourism, since coming into office in September 2021, we have signed a number of agreements for tourist-related developments. Some are already underway. As part of the evolved idea of The Bahamas we now promote, we insist that these and all developments spring from a sense of genuine partnership," he continued.

"We don’t want the benefit of these investments to be just low-skilled, marginal jobs for a handful of Bahamians. We also want the benefits to include opportunities for Bahamians to pursue meaningful careers, and, where possible, lead to some form of wealth creation.”