A Bahamian financial services professional yesterday said the UK’s impending exit from the European Union (EU) could remove the regulatory ‘competitive advantage’ that several rival international financial centres (IFCs) had enjoyed.
Paul Moss, Dominion Management Services’ president, told Tribune Business that with the UK now on the outside, it would not be able to protect the likes of Bermuda and the British Virgin Islands (BVI) from Europe’s tax and anti-IFC agenda to the same extent it once did.
Warning that the Bahamas could not afford to “sit back”, Mr Moss called on this nation to rapidly analyse the impacts of the UK’s so-called ‘Brexit’, and determine what financial services and investments opportunities it can “capitalise” on.
“I think that their policy initiatives are going to remain the same,” he said of the EU’s agenda towards IFCs and low/no tax jurisdictions.
“What it does is that it helps us, as now the UK will be outside Europe, and will no longer have a seat to lobby and protect BVI, Cayman and Bermuda.
“The pressures may come on those territories, but as a sovereign country we can defend ourselves. Now that’s been lost [UK protection], there’s a competitive advantage for us.”
While it is possible that the UK’s EU departure may create more of a ‘level playing field’ for the Bahamas with its Crown dependency IFC rivals, one could also argue that London’s stance also helped to protect the likes of this nation.
Still, Mr Moss said Brexit was akin to creating another financial services market for the Bahamas, as the UK would now be standalone and separate from Europe.
“Switzerland is in the middle of Europe, but not in the EU, and has been able to carve out a niche in that continent, serving Europe with Bahamian products,” he added.
“What we ought to be doing; the BFSB should have a trip to go into the UK, make them aware of what we have, and they can speak to professionals in the industry, who can draft and craft products that work in the UK and can also be use in Europe as well.
“This is an opportunity that we, as a nation, must capitalise on. We have to. We cannot sit back, not be at the table and not be at these places.”
Turning to trade, Mr Moss pointed out that the Bahamas had signed on to the Economic Partnership Agreement (EPA), which governs the terms of trade between this nation and the Caribbean on one hand, and the EU on the other.
With the UK exiting, Mr Moss said it would no longer be part of the EPA, creating the opportunity for the Bahamas to eventually negotiate a new - and better - trade deal with London.
“Even though we can’t give them something better than the EPA, we can give them something different,” he argued.
“The Bahamas, like many countries, enjoys a relationship with the EU, and this will continue despite the vote. It must be remembered that it is the UK that sought to leave Europe, and by doing so it had no affect on the Bahamas’ relationship with the EU.
“The Bahamas now stands to gain because it will now design new programmes and products to suit the UK. Therefore we have two entities to service as opposed to one. There is opportunity in that, and whilst we sympathise with those [in the UK] who wanted to remain, as a nation we must capitalise on the reality.”
Mr Moss also sought to draw parallels with the Bahamas’ reluctance in recent years to pursue Americans as financial services clients, given the fear of exposure to the US judicial system and the Internal Revenue Service(IRS), and Washington’s frequent initiatives to ‘crack down’ on tax evasion.
But, with the Foreign Account Tax Compliance Act (FATCA) now implemented worldwide, the Bahamas was again on a regulatory “level playing field” when it came to US clients, and Mr Moss said it should use its proximity as a marketing tool to attract US clients again.
“It’s important for us to capitalise, or otherwise someone will steal the moment,” he told Tribune Business. “It’s up to us.”
Mr Moss said he had also urged the Government to take the lead in forming an organisation that would protect the collective interests of IFCs against global regulatory initiatives.
Mr Moss said the Bahamas should host a conference of all non-OECD finance ministers to develop a common response to tax and other regulatory initiatives that threaten IFCs.
Disclosing that he had made this suggestion to Hope Strachan, minister of financial services, as well as Tanya McCartney, the BFSB’s chief executive, Mr Moss said the conference should lead to the formation of an IFC ‘defender’ organisation that was based in the Bahamas.
“What we have done is not organise ourselves to respond with strength,” he added of the IFCs’ collective response to international regulatory initiatives from the likes of the OECD.
“We’ve organised ourselves to respond individually, which is what they love, because they can divide and conquer us individually.
“The way forward is to form a group that can respond to the OECD, FATF or any of these entities collectively. It could be headquartered in the Bahamas and recognised by a United Nations agency, and respond in a collective way. We have to be organised, not reactive.”
Comments
killemwitdakno 7 years, 10 months ago
That's exactly right. That's why we're tops , I don't understand why others in the region are panicking like they lost their nuts. Excellent promotion. Only safe havens are profit ting now.
BSD stays strong.
killemwitdakno 7 years, 10 months ago
Zambia stable http://www.bloomberg.com/news/article...">http://www.bloomberg.com/news/article...
killemwitdakno 7 years, 10 months ago
The Caricom members that for some reason needed the EU obviously lacks a negotiator , they can be either one entity as BOT/commonwealth/or British Caribbean with their own seat at the table, or separately for multiple votes if they must stay with that devil. It will be their own seat as opposed to access through Britian, so a more direct placement ( though why would we really want a seat at the EU which is simply another WTO? Their TPP could horrid, allowing them to commercially fish even)
But expect the snobs to not take you if Turkey and Russia aren't European enough.
killemwitdakno 7 years, 10 months ago
and their victimization is real.
killemwitdakno 7 years, 10 months ago
"But, with the Foreign Account Tax Compliance Act (FATCA) now implemented worldwide, the Bahamas was again on a regulatory “level playing field” when it came to US clients, and Mr Moss said it should use its proximity as a marketing tool to attract US clients again"
Except they have their own secured banking industry now ,shall we call it. Use the banks with the foreign names if reaching out to Americans. Marketing to Americans is still a big risk. And you don't want their gov't to have a broader wedge for forcing FATCA or some trade off.
FATCA is still too invasive. They can get either Names or numbers (perhaps per client) if anything , not both.
With the continuous lemons lately, after Panama papers and this, we might take top spot.
killemwitdakno 7 years, 10 months ago
"Mr Moss said the Bahamas should host a conference of all non-OECD finance ministers to develop a common response to tax and other regulatory initiatives that threaten IFCs."
NO TIES HAVE BEEN MADE AS YET??! BEHIND THE CLOCK!! Meanwhile EU will squash all like a bug for their own reasons.
This should be a interest only group (or not a group but just meetings) in response to the current environment, so that there's no internal competition. Keep it under the radar, watchdogs don't understand the process that has to play out.
Use NIA for filtering the wrong clients (Know who's application to block, and when to expel. Do your own exposing when it's serious and timely. Don't be like Fitgerald). Promote that filtering , advocating appropriate tax budgeting, and pre-trade transparency is your position.
The final goal won't be to hold on but for the transition to economic freedom (defined by us).
killemwitdakno 7 years, 10 months ago
It's not going to be recognized by the UN and shouldn't aim to be. Drastic measures may be a unanimous monetary freeze on local currency leaving when this occurs three more times and a global recession happens. Get gold from Russian clients, sell in the next event, if you haven't done so this time from following along last time.
killemwitdakno 7 years, 10 months ago
Nothing with unfair royalties is worth saving by the way. The finance industry is VAT exempt. Neither are corporations taxed. Not going to suit up the Caribbean for an initiative they've never considerably benefitted from. The banks and clients need such saviors more than the countries themselves, support should be visible in local projects being completed.
Don't be swayed to vilify Britain's decision. Don't forget to ask for http://newsone.com/2732045/caribbean-...">http://newsone.com/2732045/caribbean-... (take no offers they put forth in replacement).
killemwitdakno 7 years, 10 months ago
http://www.ifcreview.com/viewnews.asp...">http://www.ifcreview.com/viewnews.asp...
banker 7 years, 10 months ago
Mr. Moss needs a reality check.
High Net Worth Individuals who need financial services, need to operate their businesses in jurisdictions that penalize tax avoidance and tax evasion. The need to travel freely. They need access to their money in a timely fashion. They need the appearance of compliance in all that they do.
The Bahamas cannot buck the worldwide trend of tax compliance and information reporting. We would be further ostracized as a rogue player. The old model of a tax haven is dead and gone. Ask Ryan Pinder. Why did he move from Deltec bank to a law firm?
The writing is on the wall, and it is too late for us to do anything about it. We do not have the modern infrastructure to service high net worth individuals in a compliant world. We just have the dregs from Latin America who are following the old model of tax evasion through Panamanian companies with bearer shares.
Paul Moss just doesn't get it. The Bahamas model of financial services is Dead Man Walking.
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