Friday, June 25, 2010

Tax Information Exchange Agreements (TIEAs) have no restrictive effects on international financial institutions in the Bahamas to date

'Scarier' financial industry threats may be to come
Business Reporter

THERE has been "no effect" on the Bahamian financial services sector yet from the more than-20 Tax Information Exchange Agreements (TIEA) signed recently, Arner Bank and Trust's general manager said yesterday, although he warned that "scarier" challenges were to come.

David Thain, who is also chairman of the Association of International Banks and Trusts (AIBT), said he was convinced much more intrusive initiatives will be churned out by G-20/OECD countries in the future, making previous efforts pale by comparison.

However, on a brighter note, he said TIEAs signed by the Bahamas in its bid to escape the G-20/OECD 'blacklist' threat had as yet had no restrictive effects on international financial institutions in the Bahamas.

Mr Thain warned, though, that the OECD could tighten the noose in the future, saying: "What will come in the future is scarier."

Speaking at a Bahamas Organisation of Compliance Officers' (BACO) Money Laundering Reporting Officer Day, Mr Thain said Switzerland's banks were at present feeling US demands for tax information on their clients.

He added that such pressure on Swiss banks could bode well for the Bahamas as a jurisdiction, only if it does not concede to the kind of pressure being imposed on Switzerland by its G-20 neighbours.

Mr Thain said it was likely that TIEAs will not be aggressively used by the countries the Bahamas signs up with, but this nation should continue to adhere to G-20/OECD demand without putting its reputationat risk.

"The Bahamas' Swiss operations 9bank subsidiaries] could become more important if the Bahamas can be strong in how we handle this," he said. "We will see inflows from Switzerland, as they are giving up too much."

Mr Thain added that the Bahamas can use opportunities like these to help the banking sector replant its roots and grow after so much evolution in such a short time.

Rowena Bethel, legal counsel for the Ministry of Finance, told BACO members that the Bahamas was gearing up for the Phase One peer review process required by the OECD to ensure it has met the tax information standards required by the body.

The peer review is scheduled to begin on July 1 and will last for up to six months.

In terms of how the Bahamas has done on its regulatory regimes and compliance as a country, she said: "We are looked at as a model."

June 25, 2010