The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamian financial services industry “will do all we can” to ensure this nation does not appear on a threatened European Union (EU) ‘blacklist’, Tribune Business was told yesterday.

Tanya McCartney, the Bahamas Financial Services Board’s (BFSB) chief executive, said this nation’s implementation of the Common Reporting Standard (CRS) for automatic tax information exchange was a critical defence to any EU moves against this nation.

Europe’s aversion to international financial centres (IFCs) was laid bare again yesterday, after EU legislators rejected a proposed money laundering ‘blacklist’ on the grounds that it included no IFCs.

The EU parliament rejected the 10-strong list presented to it, which included the likes of North Korea, Iran, Afghanistan, Iraq and Syria, because it was seen as “too limited” by not including IFCs.

An Associated Press report even singled out the Bahamas by name as one country that EU lawmakers wanted to include on the ‘blacklist’.

“In light of recent leaks revealing money laundering and tax crimes, it is ridiculous that Panama and other famous havens for dirty money are still not on the Commission’s blacklist,” a Green MEP, Sven Giegold, said.

The Bahamas and other IFCs have been in the EU’s cross-hairs for some time, with the continent’s governing body having previously announced plans to publish another ‘blacklist’ of so-called ‘tax havens’ by year-end 2017.

The EU, in rating 81 different jurisdictions for their co-operation on tax matters last September, ‘red flagged’ the Bahamas and nine other countries - mainly its fellow IFCs - for having either no, or a zero rate, corporate income tax.

The Brussels-based EU Commission also placed a ‘red flag’ against the Bahamas when it came to transparency and the exchange of tax information, although on the third and final criteria - the existence of a ring-fenced preferential tax regime - this nation received a clean bill of health.

Ms McCartney, though, yesterday said the Bahamas and its financial services industry were aiming “not to be on any EU list”, and were making preparations to achieve that goal.

“The potential blacklisting by the EU is something that we have been monitoring very closely over the past year,” she told Tribune Business.

“We know they have the intention of issuing some sort of listing by summer or fall, and hope to be in a position where we’re not on any listing.

“We are readying ourselves and looking to make policy recommendations to ensure we are not on the list,” the BFSB executive director added.

“We are implementing the CRS, which demonstrates our commitment to the highest standards of compliance. We’ll continue to do all we can to ensure we are not placed on that list.”

Ms McCartney conceded that the Bahamian financial services industry would continue to face international regulatory pressures for the foreseeable future, adding that the sector’s continued health depended on how this nation responds.

“This is the operating environment we’re in; it continues to change,” she told Tribune Business. “There’s going to continue to be pressures; they’re always there.

“It’s how we respond that matters to ensure we remain a viable, competitive jurisdiction.”

Ms McCartney said the Bahamas had already taken the “key” step towards implementing the CRS, the global standard for automatic tax information exchange, by passing the enabling legislation.

The Automatic Exchange of Financial Account Information Act 2016 took effect on New Year’s Day, and the BFSB chief said she anticipated that the accompanying regulations and guidance notes will be “released imminently”.

“We’re progressing very well,” Ms McCartney said. “The regulations are drafted and under review. They’re almost done. We have a pretty good draft that’s under review by the Attorney General’s Office, and expect that will be published shortly.

“The guidance notes are drafted and under review. We’ve been collaborating very diligently to get the framework in place in the shortest possible time. We expect the regulations and guidance notes to be released imminently.”

Ms McCartney said Bahamian financial institutions had “ample time” to register with the Competent Authority responsible for the automatic exchange of tax information, who will be the Ministry of Finance’s financial secretary, Simon Wilson.

The first automatic information exchange will begin in 2018, using information from 2017, with Ms McCartney adding that “the hard work has been done” in getting the legislation through Parliament.

She added that neither the regulations nor the guidance notes needed to go through Parliament, and “nothing” in their contents should be a surprise given the numerous meetings between industry and government agencies.

Ms McCartney said the fact that many Bahamas-based institutions were owned by foreign parents, many of whom had begun automatic information exchange this year, would “mitigate against some of the concerns people may have with respect to us being prepared”.

The keen eyes of the Organisation for Economic Co-Operation and Development (OECD), and its G-20 ‘master’, remain on the Bahamas, which last year came under intense pressure to exchange tax information on a ‘multilateral’ as opposed to ‘bilateral’ basis.

“Letters of Intent to negotiate have been issued to 45 countries,” Ms McCartney told Tribune Business in response to the OECD pressure.

“The process has commended in earnest, and we are demonstrating the steps taken to ensure we meet the 2018 commitment. We will be ready. The industry will be ready, and we are working with government to ensure we as a jurisdiction are ready.”