The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas has been urged to “embrace a new era in financial services” by launching an Investor Citizen programme, a leading accountant describing this as essential if the country is to remain a “player” in the industry.

Raymond Winder, Deloitte & Touche (Bahamas) managing partner, told Tribune Business in a recent interview that this nation “cannot sit idly” and fail to respond to the rapidly-changing demands of institutional and high net worth clients.

Explaining that tighter ‘home country’ regulatory environments were forcing the Bahamas’ financial services clients to seek out new advantages to being ‘offshore’, Mr Winder said one such benefit was citizenship.

Many wanted to become citizens of countries where their assets were based, and Mr Winder said this requirement meant some kind of ‘Investor Citizenship’ programme would be a vital tool in the Bahamas’ financial services marketing arsenal.

“In order to safeguard the viability of this industry, we need to change with the times, and the times require us to offer clients not only residency but a pathway to citizenship,” Mr Winder told Tribune Business.

“We are in a new era in the financial services industry. We cannot sit idly and not embrace this reality if we want to be a player in the industry going forward.”

The idea of a Bahamian Investor Citizenship programme was publicly-floated in mid-May by Sean McWeeney QC, a key adviser to Prime Minister Perry Christie, to “join the bandwagon” and implement such an initiative.

While arguing that it would have “the most transformative effect” on the economy, Mr McWeeney emphasised that such an initiative would not be ‘mass marketed’ or see the Bahamas merely selling citizenship to whomever.

He said a Bahamian Investor Citizenship initiative would target the world’s leading high net worth individuals and their families, enticing them to follow their assets to the Bahamas and have this nation as their primary domicile.

The ultimate goal would be to see these individuals follow the Izmirlian family and Joe Lewis, and become major investors in the domestic economy, creating hundreds of jobs for Bahamians.

Tribune Business understands that the Investor Citizenship proposal has gained widespread traction and support within the financial services industry, and in some government circles.

However, the Christie administration is proceeding cautiously in turning it into legislative and policy reality, fearing a potential political and nationalist backlash if it is perceived to be giving Bahamian citizenship away for a price.

Mr Winder, though, told Tribune Business that the Bahamas could not afford to ignore its clients’ needs if it wanted to secure its financial services industry’s future.

“We have to look at how we can embrace the change in the industry where clients, because of their concerns as citizens of certain countries, would like to change their citizenship to countries where they actually have their assets,” he said.

“No longer are clients just interested in placing funds and investments in certain jurisdictions, because these things no longer qualify as the kind of benefits they received 20 years ago.

“To take advantage of the new benefits, these institutions and organisations must seek out new locations for corporate offices, and high net worth individuals must seek out new countries where they can become resident citizens and have a real physical presence.”

The latter could be especially important to Americans desperate to escape the worldwide tax net cast by Washington. Indeed, Tribune Business understands that in some quarters the Investor Citizenship proposal is being viewed as a counterweight to the US Foreign Account Tax Compliance Act (FATCA) and global automatic exchange of information plans, as it removes clients’ home country tax authorities from the equation.

Mr Winder, meanwhile, expressed confidence that the Bahamas could design and regulate a more stringent Investor Citizenship programme than the likes of St Kitts and Nevis, where US regulators had branded such an initiative as “open to abuse”.

Mr McWeeney, though, had stated that the Bahamas would have to set a much higher qualifying investment threshold (likely in the millions) than Sit Kitts and Nevis’s $300,000.

And Mr Winder said the Bahamas’ Know Your Customer (KYC) regime, implemented in response to the 2000 ‘blacklisting’, coupled with its long history in financial services, left it better placed than most to scrutinise Investor Citizenship applications.

“I agree that we should not be giving citizenship to anyone and everyone,” Mr Winder told Tribune Business.

“But, clearly, the knowledge we have gathered over the past 40 years puts us in a position to be one of those countries to have real due diligence around the issue.

“We are well-equipped to take advantage of the situation. We have the land mass, we have the professional bodies, and we have the know-how to vet these individuals.”

Mr Winder added: “it think it’s very important for the future of financial services industry, because high net worth individuals are being challenged by moving their investments around the world, and are being taxed based on where they are citizens.

“We have been able to attract investors and assets over the years, and to not lose that position we have to be in the game to attract these investors as citizens.”