Open for business

  • Date : August/September
As the new Minister of Financial Services, what are your main responsibilities?

The newly re-established Ministry of Financial Services in the Bahamas government has portfolio responsibility for the financial services industry, trade development and promotion, and expansion of industry and manufacturing. As the Minister of Financial Services, I am responsible for the development and promotion of the financial services industry, inclusive of product innovation and development, as well as government relations with the private sector. The vision of the Prime Minister, the Right Honourable Perry G Christie, to include trade and industry in the portfolio with financial services speaks to the interconnectivity of financial services and trade, and the development of one industry in collaboration with another. As it specifically relates to financial services, my role is to provide focus and direction for the industry through the development of short- and long-term strategic plans, as well as education, product innovation and the strengthening of the Bahamas’ standing and image as a jurisdiction open for business, one where we are recognised as the pre-eminent international financial and business centre.

Do you have a background in financial services?

I am a licensed attorney in the Commonwealth of the Bahamas and the US, with an LLM concentration in international taxation. I have practised as a commercial and international tax attorney in the private sector for more than 12 years, with extensive experience in international estate and tax planning. I have represented and advised international banks, trust companies and high-net-worth individuals in all areas of commercial and personal wealth planning. As a private-sector practitioner, I had extensive involvement with policy suggestions and industry development through participation in numerous tax and wealth management organisations. This extensive financial services experience in the private sector brings a unique and innovative process to government representation of an ever-evolving and dynamic industry.

Why does the new trustee legislation improve the Bahamas environment for practitioners?

The recent changes to the trustee legislation provide clarity for practitioners in areas that were subject to debate and uncertainty. The Bahamas’ amendments to the trust legislation provide for the abolition of the rule against perpetuities, the arbitration of trust disputes and the legitimisation of ‘no contest’ rules and clarifications on directed trusts. These innovative amendments establish the Bahamas as a jurisdiction that is capable of adaptation to the recommendations of industry, creating an environment that is focused on the needs of clients. For example, the legitimisation of ‘no contest’ rules through statute provides certainty to practitioners and their clients who use Bahamas trusts, especially due to the uncertainty created by the much-publicised judicial interpretation of ‘no contest’ clauses in other jurisdictions. Less substantive amendments were also made, including several that in combination will strengthen and clarify the existing law relative to the administration of trusts. With the clarifications provided, practitioners can now administer structures with added comfort and confidence.

How do the changes to the arbitration of trust disputes make the Bahamas more attractive for settlors?

The ability to arbitrate trust disputes in common law has been an area of much debate among practitioners. The amendments to the trust legislation specifically permitting trust disputes to be arbitrated provide this certainty to practitioners and clients, allowing for the conveniences of confidentiality, timely resolution of disputes and cost savings. The amendment allowing for arbitration of trust disputes has the potential to greatly simplify this process and decrease costs associated with preparing a full-blown litigation before the courts. The recognition of arbitration in statute is consistent with another mandate of the Ministry of Financial Services: the establishment and promotion of the Bahamas as a world-recognised international arbitration centre. The ability to arbitrate disputes is only the first step. The practical reality of having both world-class expertise and infrastructure in the jurisdiction links the novel innovation in the financial services industry with the physical support structure. As we build it, they will come.

Some old-school practitioners might be surprised you have abolished the rule against perpetuities. Why have you done this?

The real question is perhaps whether the rule against perpetuities has any real and practical application in this modern world. The Bahamas had already taken a very aggressive step by extending the perpetuity period to 150 years, and what we saw from that was interest and encouragement to go even further. The abolition of the perpetuity period is another example of the ability of the Bahamas to react to the suggestions of practitioners and provide the certainty they require. We have observed a lot of interest for this perpetual certainty from a number of jurisdictions and potential markets, particularly where indefinite dynastic structures are attractive and in demand. To the extent settlors and practitioners desire to incorporate the definite trust period into their agreements and structures, it is still possible for a settlor to choose to have a fixed trust period.

What, in a nutshell, is the purpose of the new Bahamas Executive Entity?

The Bahamas Executive Entity (BEE) was designed to solve the vexing problems of share ownership in private trust companies (PTCs) and identifying persons willing to act in any number of governance roles in wealth structures. PTCs gained popularity because they allowed a family to pay close attention to their non-liquid assets, in many cases without the involvement of a professional or institutional trustee. Identifying who would hold the shares of the PTC has, however, presented some challenges in practice, not just in the Bahamas, but in every jurisdiction that has PTC legislation. A normal PTC structure includes a purpose trust at the shareholding level and in the Bahamas a purpose trust requires both a professional trustee and an authorised applicant. Substituting the BEE for the purpose trust will strip away these additional layers of administration and expense. Equally important is the BEE’s potential use as a quasi-corporate protector – a role it is difficult to find an individual to occupy – and that is further complicated by issues of succession. The industry in the Bahamas is very excited about the prospects for the BEE and its unique placement in the ever-evolving toolkit in the Bahamas for financial services practitioners.

ABOVE: L Ryan pinder addresses the bahamas landfall audience in london

How will the Foreign Account Tax Compliance Act (FATCA) and Financial Action Task Force (FATF) implementation issues affect the Bahamas?

The Bahamas prides itself on being an internationally compliant jurisdiction with an internationally respected regulatory structure, yet also an environment where we welcome business. We see no other way but to adapt to the global environment in which we now live. Of course, everyone is concerned about the effect that new rules will have on the industry, particularly surrounding issues such as cost of implementation as well as erosion of confidentiality. As the government of the Bahamas, a sovereign and independent nation, we recognise that we have the responsibility to respond to these external demands. We pride ourselves on our independence and, especially with regards to international obligations, we see our independence as an advantage. As a minister of the government, with roots in the private sector, I recognise the importance of engaging private-sector practitioners and experts as we better define our approach to international issues such as FATCA and FATF. Expect to see the Bahamas’ position being put forward in the short term. We have to be ready, and many of the large international banks as well as professional service providers have already recognised this and have begun to address FATCA in particular.

What do you think of STEP as an organisation?

As a professional body, STEP Bahamas has done a tremendous job in promoting education in the local market, and the fact that STEP worldwide provides a well-organised and respected educational platform speaks volumes of the dedication that STEP has for the development of the industry. It would serve the industry well if other professional groups and service providers adopted the STEP model. In addition, STEP has clearly positioned itself as a policy leader for wealth structuring. STEP has engaged itself in the most senior international policy-making institutions, providing a resource to its membership, and an ability to provide practitioner positions to intergovernmental bodies. Personally, I am looking forward to working with STEP as an organisation and to leverage the knowledge base of its members.

You said at the Bahamas Landfall reception in London that ‘financial services have the unequivocal support of the Bahamas government’. What does this mean in practice?

Financial services are the second-largest contributor to GDP in the Bahamas, providing high-paying career-development opportunities to thousands of Bahamians. With the re-establishment of the Ministry of Financial Services, the Bahamas government has made an undeniable statement about the importance of the industry and stated its clear intention to provide focused direction to the industry’s growth and development. Promotion of financial services is critical and the industry in the Bahamas not only is entitled to but demands the singular focus of its own ministry. The Ministry of Financial Services, under my leadership as the minister, will engage the private sector to provide a strategic vision, while at the same time doubling down on financial support and active engagement with industry-led efforts such as those undertaken via the Bahamas Financial Services Board.

What do you do in your down-time?

Family is important to me. As the Minister of Financial Services, I am very challenged for time. However, I am committed to making time every week to spend an afternoon with my family. In the Bahamas we are blessed with the most beautiful natural environment in the world, and, appreciating this, I frequently take my family on the boat and enjoy the tranquillity of the beaches on our islands. I also enjoy spear fishing with my family and friends. We are likewise blessed with scenic golf courses, which I allow to distract me from the rigours of work. In the Bahamas we have many recreational opportunities, and I try to take advantage of as many of them as possible.


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