THE Bahamas Financial Services Board’s (BFSB) chief executive says a recent report showing the US was among world leaders for incorporating ‘untraceable shell’ companies “unequivocally disabuses the view that small international financial centres are loosely regulated”.
Aliya Allen, who is also the BFSB’s executive director, told a panel discussion at the Financial Times Global Summit on International Financial Centres that the Bahamas and other IFCs were aiding the developed world’s recovery by channelling liquidity and investment into their markets.
The two-day summit was sponsored under the broad theme, ‘Delivering Competitiveness and Growth in the Changing Global Economy’.
Arguing that regulatory standards were often higher in the Bahamas and other IFCs, Ms Allen said: “I think it’s important to recognise that regulation and transparency standards in small IFCs are comparable and, in some cases, more robust than large financial centres.
“Though we have repeated this continually over the years, empirical evidence that supports this view thankfully is now coming out of the woodwork.
“Several recently released reports support this statement. For example, a report by Jason Sharman unequivocally disabuses the view that small IFCs are loosely regulated. Research confirmed that it is easier to incorporate an untraceable shell in the US than any other country, save for Kenya,” the BFSB chief executive added.
“Many small IFCs are full members of international regulatory bodies and have rigorous KYC and AML standards. It is said repeatedly that opening up a bank account in large centres is easier than opening one in a small centre for these very same reasons.”
Ms Allen said the Bahamas and other small IFCs had “been feeling the disproportionate brunt of international attention” for more than a decade, when it came to regulatory and tax information exchange issues.
“We, IFCs that is, value our reputations because we know that reputation is hard won and easily sullied,” she added.
“We experienced that in 2000, when the list of non-cooperative jurisdictions was issued. We spent the next decade refining our legal infrastructure and making the case for our rightful and legitimate positions in the international financial community by becoming critically important players on the global scale.”
Ms Allen said the answer to whether IFCs contributed to major economies was “unequivocally yes”.
They “facilitate liquidity and investment into established markets at a time when the OECD has said that global recovery will be shaky and uneven, and that accommodation is especially necessary”, she said.
The Bahamas and its fellow IFCS were also “a safe haven for capital and assets from political instability and nationalisation”.
And Ms Allen said: “Small IFCs facilitate capital flows because of our clear tax rules, our investor friendly legal systems and our well-regulated, though less cumbersome, banking infrastructure.
“We prevent double taxation and maximisation of returns for funds. The facilitation of investment flows also was singled out by The Sharman report, which said: ‘The primary conduit for foreign flows of investment both inbound and outbound have been IFCs’.”