The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas "cannot hold back the tide" on a beneficial ownership registry, the deputy prime minister arguing: "We must set the standard for ourselves and others."

K P Turnquest, pictured, explained that while the Government was listening to financial services industry concerns, the Register of Beneficial Ownership Bill's tabling in Parliament and - subsequent release for consultation- represented an effort to finally get The Bahamas "ahead of the curve" on international regulatory initiatives that have repeatedly rocked this nation.

"We are obviously listening to the industry but, at the end of the day, we have to recognise that holding back the tide on this puts us in a much more difficult position as opposed to being proactive and establishing the standard for ourselves such that international bodies have to explain why our standard is not good enough," Mr Turnquest told Tribune Business.

"We are taking a proactive position to manage our industry. We are global players and thought-leaders in this space, and it's time for us to take our position as leaders and contributors to the industry."

Mr Turnquest's comments come in the face of growing financial services industry 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.

The deputy prime minister, though, argued: "We can't sit back and wait for someone else to take the first step. We sometimes have to create the scenario we want to work in, and make the case to our partners.

"It's a good standard, it's good for the country, and it's good for our international partners. It's a matter of when, and whether it [the beneficial ownership registry] will be public or not. Our technical people just came from a CARICOM meeting with the European Union (EU), and CARICOM supports the view that a private registry is the way to go. That is the way countries are going, and we support that stance."

The Minnis administration, since taking office, has argued that The Bahamas needs to move from a reactive to proactive stance when dealing with international regulatory initiatives impacting the financial services industry.

It has been seeking to "get ahead" of these developments, and begin to exert some influence on them, rather than allowing The Bahamas to be continually blindsided by other countries developing rules in which this nation has no say.

It appears that the Register of Beneficial Ownership Bill is the first attempt to make good on such a strategy, but not everyone is in agreement. 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.

He 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."

Mr Pinder, in a recent Bahamas Financial Services Board (BFSB) sponsored seminar, 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.

Calling for the Bahamas to instead focus on complying with the EU's demands for 'economic substance' and the elimination of 'ring fencing', Mr Pinder added that the Bahamian financial services industry could ill-afford further "shocks and challenges" until the revamping of its business model, and a clearly defined "value proposition" and growth strategy, were developed and implemented.

Carl Bethel QC, the Attorney General, told the same seminar that the Register of Beneficial Ownership Bill 2018 was "not set in stone", but reiterated that it was an attempt to stay ahead of global supervisory changes.

The proposed registry will contain beneficial ownership information on "all corporate and legal entities" incorporated in the Bahamas, but will be neither 'in the cloud' or linked to the Internet in a bid to prevent 'hacking' or data breaches.

Beneficial ownership information is currently required to be held and maintained by the local 'registered agent' for all Bahamas-domiciled entities, and this will now have to be 'inputed' into the registry once its creation is given legal authority by the Bill's passage.

The registry, though, is not an 'Open Sesame' and will not be open to members of the public to conduct ownership information searches on all and sundry. The Bill provides that it can only be accessed by so-called 'designated persons', who must either be assigned by the Attorney General's Office - which has direct responsibility for the registry - or selected by a 'registered agent'.

The latter can only designate a maximum of two persons, and searches of the registry's database can only be authorised by the Attorney General's Office or one of the financial services regulators in response to domestic and overseas supervisory authority requests.