The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Minister of Financial Services yesterday urged Bahamian financial and corporate services providers (FCSPs) “not to panic” over proposed guidelines on the maintenance of accounting records, adding that their implementation would not make this nation uncompetitive.

Pointing out that all other financial centres were having to implement the same standards, Ryan Pinder called on the industry to be “proactive” and provide feedback on its concerns to the Securities Commission over its draft guidelines.

And, while the Bahamas was a sovereign nation able to develop policies that put its people and financial services industry first, the Minister acknowledged that it “has to be compliant with international best practices or we will have no industry to support”.

Tribune Business revealed yesterday how the Bahamas Financial Services Board (BFSB), at the behest of FCSPs, was set to write to the Securities Commission setting out the industry’s concerns over draft guidelines it believes will impose too onerous a burden.

In response, Mr Pinder told Tribune Business: “I do not believe it will make us uncompetitive. It’s not like the Bahamas is the only jurisdiction putting in these amendments to comply with international best practices.

“I would caution the industry about panicking over proposed guidelines released for consultation. There’s no need for panic. It’s a very defined area of international best practices.”

The Minister said Bahamian FCSPs needed to place the guidelines in context, noting that those which served as directors of Bahamian-domiciled corporate entities had access to the relevant information during the course of their fiduciary duties.

The other context, he added, was that the Bahamas needed to be seen as a jurisdiction that was fully compliant with international best practices - such as the need for all corporate entities to maintain accounting records for a minimum five years, as stipulated by the Organisation for Economic Co-Operation Development’s (OECD) peer review process.

“I would encourage the industry to be proactive in providing its concerns to the Securities Commission on this matter, as it’s a consultation,” Mr Pinder told Tribune Business.

“Don’t instill panic, instill co-operation with the regulator. I emphasised early on that financial services is an ever-changing environment and ever-changing industry.

“What sets us apart is our ability to be nimble, find business and take advantage of opportunities in the industry.

“We are a sovereign country, and have the ability to formulate policy in the best interests of our people and financial industry, but we have to be compliant with international best practices or we will have no industry to support. It’s been that way for 20 years.”

Mr Pinder said he had met with Bahamian FCSPs on the accounting records issue earlier this year, and pledged that he was “very engaged and very open on this issue”.

The Securities Commission’s draft guidelines for the ‘Management of Accounting Records’, issued for consultation last month, require “reliable records” for International Business Companies (IBCs) to be available through their Bahamas-based registered office/agent.

“Where the financial and corporate services provider is the registered office/agent of an IBC, the financial and corporate services provider must have access to reliable accounting records for an IBC, [and] must ensure that such records are available through its offices,” the draft guidelines state.

Tribune Business sources identified this section as the one causing most concern in the financial services industry. While the guidelines are designed to combat the biggest “deficiency” uncovered during the Phase One peer review of the Bahamas by the OECD’s Global Forum, financial and corporate services providers fear it imposes an unrealistic bureaucratic/administrative burden.

“It’s caused a huge amount of concern,” one provider, speaking on condition of anonymity, said of the draft guidelines. “It’s totally impractical.

“They [the Securities Commission] want evidence that confirms that records are available to produce accounts if necessary. The main concern is the work involved, and perhaps the impossibility of getting people to provide accounts. If they don’t, we’ll have to consider what to do.”

In short, Bahamian corporate and financial services providers fear the time and cost involved In complying with the existing guidelines could make them, and the sector as a whole, uncompetitive.

The Securities Commission’s proposed guidelines are designed to bring Bahamian financial and corporate services providers, and the entities they act for, into compliance with demands by the G-20 and the Organisation for Economic Co-Operation and Development (OECD).

The main issue identified by the OECD’s phase one peer review of the Bahamas was the absence of legislation requiring all corporate entities domiciled in this nation to maintain accounting records for a minimum of five years.

As a result, the Government amended a whole raft of companies-related legislation – the IBCs Act, Foundations Act, Segregated Accounts Companies Act, Exempted Limited Partnership Act etc – to bring the Bahamas into compliance with the Peer Review findings. The Securities Commission’s guidelines are thus an effort to develop the regulations that will accompany, and implement, these legal changes.