The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Financial services industry jitters over the so-called ‘Panama Papers’ yesterday prompted the Central Bank to issue a notice asking its licensees to report any “material concerns” they may have in relation to clients connected to the leak.

The regulator also asked its estimated 240 bank and trust company licensees to confirm if they had a relationship with Mossack Fonseca, the Panamanian law firm from which 11.5 million documents were leaked.

“We refer to the recent release of information in the media concerning clients’ data relating to the law firm of Mossack Fonseca,” the notice said.

“The Central Bank is now seeking confirmation if your institution maintains a relationship with Mossack Fonseca, or any clients or parties connected to this firm.

“In addition, should there be existing relationship(s) in this regard that poses a material concern, kindly notify the Central Bank immediately.”

John Rolle, the Central Bank’s governor, told Tribune Business that it was in the process of revising the notice by “adding some context to it”.

Explaining why it was released, he said: “As is, it was e-mailed to all of our licensees, some of whom were making individual inquiries to the Central Bank.

“The request was for them to signal to us, if they had any material concerns about the publicised data.”

Several financial services industry sources, speaking on condition of anonymity, told Tribune Business that the Central Bank was likely being “proactive as a regulator”, or there were developments it wanted to “get ahead of”.

The Bahamas has, to-date, largely ‘kept its head down’ over the ‘Panama Papers’ saga, although Tribune Business understands that private, informal conversations have been held among financial services industry executives and public officials over how this jurisdiction should respond.

The leaked documents, which have been analysed by journalists around the world, show that the Bahamas was the third most-popular jurisdiction for Mossack Fonseca’s company incorporations, behind Panama and the British Virgin Islands.

The Panamanian law firm still has a financial and corporate services provider subsidiary in the Bahamas, so other financial institutions based here are bound to have either done business with it, or have clients who did.

The international fall-out from the ‘Panama Papers’ leak heightened yesterday, with the revelation that the US government, via its southern New York district attorney, is starting a criminal investigation into the evidence that has been disclosed.

It thus remains unclear whether the Bahamas is completely ‘out of the woods’ in relation to the global reaction to the ‘Panama Papers’, especially given the pressures on major industrialised nations from the media and voters to act.

Tax authorities in Europe and elsewhere have been meeting to co-ordinate their response, and the European Union (EU) has already threatened new ‘blacklists’ of international financial centres (IFCs). Further global regulatory initiatives targeting the Bahamas and others appear likely.

Much media coverage has played on the ‘class warfare’ angle, angering the majority of voters industrialised countries (the middle and lower income segments), who believe the wealthy and politically-connected are able to - unlike themselves - avoid paying their fair share of taxes with impunity.

The Bahamas will have to be conscious of such under-currents in developing its response, but its financial services industry received a major vote of confidence from Standard & Poor’s (S&P) this week,.

The international credit rating agency believes this country will not be ‘blacklisted’ or ‘greylisted’ as a result of the ‘Panama Papers’ leak, which at least partially influenced its decision to maintain the Bahamas current ‘investment grade’ status.

“Despite the recent leaks of offshore bank accounts in the Bahamas by Panamanian law firm, Mossack Fonseca, along with accounts in other offshore financial centres, our ratings affirmation is premised on our belief that these leaks won’t result in the country falling back on the Organisation for Economic Co-operation and Development’s ‘grey list’ for financial centres operating as tax havens,” S&P said.

“The country was removed from the ‘grey list’ in 2010. The affirmation also assumes that these leaks won’t affect the banking sector’s ability to roll over its debt.”

K P Turnquest, the Opposition’s deputy leader and finance spokesman, welcomed S&P’s assessment as “consistent” with his own when it came to determining the likely impact of the ‘Panama Papers’ saga on the Bahamas and international financial centres (IFCs).

“That’s good news, and is consistent with what we have so far,” he told Tribune Business of the rating agency’s analysis.

“It all appears to be circumstantial, and it appears we just happen to be a jurisdiction where some accounts were held. Certainly, there’s no indication of wrong doing or lack of compliance among Bahamian institutions at this point.”