More than five hundred years ago, explorers from Europe ventured into Latin America in search of the treasures and wealth of that continent. This encounter changed the course of history. Today the people of Latin America, supported by innovative government policy, have sought to responsibly and sustainably utilise their vast natural resources and human capital for their long term growth and development. Latin America is now generally viewed as an important centre of economic growth and ingenuity within the global economy. The continent has experienced rising income levels and has witnessed greater economic mobility and the creation of a substantial middle class. The economic boom in Latin America has also resulted in the creation of a considerable and growing class of wealthy Latin Americans who are looking for robust and credible wealth management solutions. The Bahamas has positioned itself to provide these solutions to this growing segment of Latin America.
Telling The Bahamian Story: What Makes The Bahamas Special
The Bahamas is a mature, well regulated financial centre, offering: strategic location, political stability, sovereignty and innovative services and solutions which meet the needs of clients in both traditional and emerging markets. With over 80 years in the financial services business, the story of The Bahamas is the story of the transformation of an economy characterised by “booms and busts” in the early years of our history to one which is the premier, full service financial center in the Caribbean. The Bahamas’ first trust company was established in the 1930s and the financial services industry experienced exponential growth from the 1960s with the creation of the Eurodollar market. In 1998, now Central Bank Governor Wendy Craig and others wrote:
“The Bahamas presented itself as an attractive centre: it had …[the] absence of exchange controls on transactions between non-residents; developed infrastructure facilities; skilled professional support; convenient direct [transport] links and strategic location in the same time zone as New York.”[i]
Those traditional comparative advantages, together with the legislative and political stability, an attractive tax and cost structure and an investor friendly business climate catapulted The Bahamas to a household name in terms of “private banking” and “wealth management”.
As a sovereign country, The Bahamas has the capacity to be nimble and responsive to the changing demands of the global economy and the needs of the clients which use our products and institutions. The Ministry of Financial Services oversees the policy development of the sector and ensures that there is cabinet level oversight of The Bahamas’ second largest industry. The Bahamas government is able to make policy decisions in real-time and decisively craft and implement policies and legislation in the best interest of the financial services industry and for the overall benefit of The Bahamas. The needs of the sector constantly evolve and The Bahamas is able to adjust to such shifting circumstances in such a way that will ensure that the jurisdiction remains a much sought after financial centre in which to do business.
The Latin American Strategy: Ready, Set, Gone
Latin America is well known to The Bahamas as Bahamian financial institutions have served clientele from throughout Latin America. As such, The Bahamas is familiar with the various aspects of the continent’s client needs, languages and cultures.
The Ministry of Financial Services, is now seeking to ensure that the reverse is also true - that is that The Bahamas becomes a household name – synonymous with quality, innovation and confidence – in Latin America. The Government of The Bahamas has increased its marketing efforts in Latin America. Our approach has been to bring the personal touch that our jurisdiction offers directly to Latin America’s financial sector leaders. Together with our private sector partners, The Bahamas Financial Services Board (BFSB) and the Association of International Banks and Trust Companies (AIBT), the Ministry of Financial Services has participated in significant landfall events throughout Latin America. The Ministry has also nurtured partnerships and relationships with leading Latin Americans who are friends of The Bahamas to serve as Brand Ambassadors within their homelands. Early next year, the Ministry plans to redouble its efforts to ensure that key law firms, fund managers and wealth planners in Latin America are active in utilising The Bahamas as the jurisdiction of choice for their clients’ wealth planning needs.
Products Tailored to the Latin Market
The Government of The Bahamas, together with our industry partners, is continually evaluating new product offerings for our Latin American clients. As an example, in order to expand into the Brazilian market in a broad and sustainable fashion, the Government of the Bahamas created the Bahamas Specific Mandate Alternative Regulatory Test (SMART) Fund Template 007 specifically for the Brazilian market. SMART funds provide the promoter with a high degree of flexibility in terms of the licensing requirement for the fund. Rather than prescriptive requirements, the Securities Commission of The Bahamas designs a tailor made investment fund licence based on discussions with the fund’s promoters.
The creativity of Bahamian investment funds is but one example of the ability of The Bahamas financial services industry to develop specialty products specifically suited for Latin American clients. As a rule, the philosophy of the government ensures seamless collaboration with the Regulators and the private sector to ensure that Bahamian products meet every need found in the financial services industry.
The Bahamas and Latin America: A Bright Future Together
The Government of The Bahamas believes that the future advancement of our financial centre rests in our ability to generate linkages between current and new industries and to create long lasting and mutually beneficial synergies between the financial services industry and tourism services, real estate and construction services, shipping, legal, accounting and arbitrations services. The maturation of The Bahamas as a full service business centre will result in the future deepening of the jurisdiction’s relationship with Latin America through broad and sustained trading arrangements.
The Bahamas government is also committed to reducing all impediments to the conduct of business with Latin America. Initiatives of the Ministry of Financial Services aim to continue the development and attraction of the highest caliber of talent, with the necessary Spanish and Portuguese language skills and cultural sensitisation, as precursors for industry growth into Latin America. The Bahamas has also pursued a modern, “development-focused” and progressive immigration policy which ensures opportunities and mobility for Bahamians, as a priority, while facilitating international business. Finally, the Government, together with industry, has begun to review all aspects of business with a view to bolstering competitiveness and making it easier and more efficient to do business in The Bahamas.
Commitment to Regulatory Excellence and Efficiency: An Important Driver for Latin American Business
The Government of the Bahamas is fully aware that in order to remain a premier financial jurisdiction, a commitment to regulatory prudence and the maintenance of a responsive regulatory regime is necessary. The Bahamas is committed to ensuring that a flexible regulatory regime exists which is robust enough to secure the industry, but at the same time does not stifle innovation.
The Bahamas is a country of integrity and credibility – important values that our Latin American clients hold in high regard. One of the core policy initiatives of the Government is to advance the adoption of international best practices promulgated by agencies such as the Basel Committee for Banking Supervision and the International Organisation of Securities Commissions.
The Bahamas, to date, is the sole sovereign and independent country in the Caribbean Region who has achieved IOSCO A status. This IOSCO designation allows for a significant increase the ability of financial sector professionals to conduct business between Latin American countries such as Brazil and Bahamas. This is a tremendous achievement and demonstrates the level of integrity and credibility of the regulatory structure of the Bahamas financial industry.
The Bahamas believes that as a responsible, preeminent financial centre, we must be a full and active partner with the various international bodies to ensure high standards in financial services regulation and in the fight against financial crime, inclusive of money laundering and terrorism financing. The Bahamas has undergone rigorous assessments by the international standard setters in order to certify its compliance with international best practices. Wherever possible, The Bahamas contributes prominently to the discussions which help to shape the international financial architecture. We are an active member of the Global Forum and its Peer Review Group, the Caribbean Financial Action Task Force (CFATF) and a member of The Government sits on the United Nations Committee for Tax Experts. The Bahamas is committed to a reasoned approach to financial sector transparency which considers the realities of life in the region, butis sensitive to the continued need for the maintenance of financial confidentiality and privacy.
Conclusion: A Stable and Progressive Democracy, Devoted to Wealth Preservation
The parallel success stories of Latin America and The Bahamas are examples of the dynamism of a new world economy. The Bahamas, as the pre-eminent full service business and financial centre in the region, has already invested heavily to better align its financial services strategies with the needs of the emerging economies within Latin America. We have invested in good governance and democratic principles and practices. We have already invested in top class, sensible regulation and technology. Most importantly, we have invested in our people. We have a strong relationship with Latin America and in the coming years, we view a definite and decisive deepening of that relationship. The Bahamas is ready.
[i]Craig W. (1998), “Financial Evolution of the Bahamas,” in The Financial Evolution of the Caribbean Community (1970-1996), Caribbean Centre for Monetary Studies. Page 95.