The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The deputy prime minister has reiterated the government's desire to establish financial services "leadership" by setting the standard for beneficial ownership registries.

K Peter Turnquest, in a recent interview with Tribune Business, said he did "not necessarily subscribe" to Bahamian financial services sector requests to place the Register of Beneficial Ownership Bill on the backburner and instead prioritise compliance with the European Union's (EU) and Organisation for Economic Co-Operation and Development's (OECD) demands.

"That is a school of thought that," he said of the industry's call to deal with the bill in 2019, once global standards on beneficial ownership registries started to crystallise. "I don't necessarily subscribe to it because I don't believe we should be waiting for another one [global regulatory initiative] to drop.

"We should be proactive, understand what the environment looks like, and from my point of view be aggressive in establishing a position in that space. We'll have discussions over the summer and see where we end up.

"But government's position is that we want to take leadership in the industry and be proactive in our position, rather than someone telling us what it's going to be."

The Register of Beneficial Ownership Bill has already been tabled in Parliament, but has not moved on to the second reading and debate as the Government obtains financial services industry feedback and comment.

Yet there have already been calls for The Bahamas to delay moving on legislation to create a centralised beneficial ownership registry - albeit one that is private, and not accessible to ordinary members of the public.

Ryan Pinder, a former financial services minister, has already urged the Government to shelve the legislation "for now" amid fears it could "destabilise" the Bahamian financial services industry.

Addressing a Bahamas Financial Services Board (BFSB) sponsored seminar, he warned that a central Beneficial Ownership Registry represented "a major shock" for an industry and client base already reeling from the imposition of numerous international regulatory initiatives within just a few years.

He added that the legislation would likely prove especially alarming for the high net worth Latin American clients that the Bahamas is increasingly targeting, as they had legitimate reasons for confidentiality given the often-high level of crime and political instability in their home countries. Disclosure of their wealth - via hacking or data leak from a Bahamian ownership registry - could place their lives and their families in jeopardy.

Mr Pinder thus urged the Government to delay the Beneficial Ownership Registry until global standards on the issue further evolved, arguing that the Bahamas should see how UK legislation that forces public beneficial ownership registries on its overseas territories - Bermuda, Cayman Islands and the British Virgin Islands (BVI) - by 2020 plays out.

The former minister's position also received support from fellow attorney Michael Paton, with whom he co-heads the industry working group responding to the Government's legislative initiatives. Mr Paton, too, suggested passage of the Bill should be delayed to enable the Bahamas to focus on avoiding another EU 'blacklisting'.

"The Beneficial Ownership Register is not a 2018 criteria," he told Tribune Business. "I would say hold off on that. I would say prioritise 'ring fencing' and substantive economic presence. That's what we have to deal with right now."

The Bahamas must comply with the latter two demands by year-end 2018 or, once again, be exposed to EU 'sanctions' and blacklisting. And it also needs to meet the requirements set by the OECD's Base Erosion and Profit Shifting (BEPS) initiative.

All are designed to prevent tax avoidance by multinational corporations, and Mr Turnquest conceded to Tribune Business that the Government faces a "busy" summer that will involve drafting legislation to meet EU/OECD demands; consulting with the financial services industry; making sure the legislation "lines up" with international requirements and is "harmonised"; and talking to the EU/OECD to ensure the Bahamas "meets the standard".

"We are still on that track," the Deputy Prime Minister said. "It is critical we meet these commitments to demonstrate our obligations on tax information exchange and transparency.

"In the last couple of months we've been heavily engaged with these agencies [EU/OECD] in forming our administrative plans and getting guidance on potential legislation. This really has been a 'try as you go' kind of deal.

"We have been in constant dialogue with them, attending all the consulting conferences to ensure we have a good understanding of the conditions from their side; what makes a good piece of legislation and regulations. We believe, at the end of the day, we will end up with complete legislation."