By NEIL HARTNELL
Tribune Business Editor
The Government yesterday said it has "no intention" of creating a public Beneficial Ownership Registry, or using the issue for regulatory arbitrage, amid rising pressure on The Bahamas' rivals.
K P Turnquest, the Deputy Prime Minister, told Tribune Business that the Bahamas' "value proposition" lay in its human capital, and quality of products and services, rather than promoting its planned private Registry in a bid to obtain a competitive advantage over other Caribbean international financial centres (IFCs).
He was speaking after the Bahamas' IFC rivals, and their clients, were thrown into confusion by the UK government backing legislation that requires its 14 overseas territories - including Bermuda, the Cayman Islands and British Virgin Islands (BVI) - to introduce public Beneficial Ownership Registries by 2020 or have them imposed by London.
This will mean that ordinary members of the public will have access to, and be able to conduct searches on, the ownership of all corporate and legal entities in these jurisdictions, stripping away all remaining client confidentiality.
The UK legislation, already passed by the Westminster parliament, thus threatens to create turmoil for the Bahamas' IFC rivals and completely overturn their business models, with the potential of driving financial services business to this jurisdiction.
The Bahamas, as an independent, sovereign nation, is immune from the UK action. Its proposed private Registry, ironically modelled on what currently exists in the Cayman Islands and the BVI, would only be accessible to 'designated persons' - those authorised to conduct searches by the Attorney General's Office, Financial Intelligence Unit (FIU) and financial services regulators in response to assistance requests from their overseas counterparts.
Registered agents will also have access to the proposed Bahamas' Beneficial Ownership Registry, but only for purposes of updating or adding to the records - they cannot conduct searches. This will protect the owners of all Bahamas-domiciled corporate and legal entities from having their identities exposed publicly.
Responding to developments, and moving to reassure the Bahamas' clients, Mr Turnquest told Tribune Business: "I want to use cautious language. It is our intent to have a private Registry. There is no intention to have a public Registry, and that is our position at this point.
"There is plenty of legitimacy for confidentiality. I got a note this week from an agent for a state expressing legitimate concerns about a public Registry. This is a serious issue for, not just the industry professionals, but those who utilise these services for legitimate reasons."
A private Beneficial Ownership Registry potentially gives the Bahamas a competitive advantage over those rival IFCs that the UK may impose a public version on, given that it could drive high net worth individuals and investors to seek out jurisdictions that maintain legitimate confidentiality.
Bruce Raine, International Private Banking Systems (IPBS) principal, told Tribune Business earlier this week why confidentiality remained highly sought-after - especially in countries affected by high levels of violent crime and political volatility.
"People in Trinidad, people in Brazil, they're kidnapped for their money. You don't want information leaked that allows people to tie 'two and two' together, and shows 'so and so' is the owner of that business. If that gets out, that person is in a whole heap of trouble, yet they've not done anything wrong," Mr Raine explained.
Mr Turnquest, though, warned against engaging in 'regulatory arbitrage' and using the public/private Beneficial Ownership Registry issue as a tool to obtain a competitive advantage for the Bahamas.
"That is not the reason we want to promote for our value proposition," he told Tribune Business. "This is a quality professional jurisdiction that has a sterling reputation for providing quality service to our clients. We want to trade on our value proposition.
"We are mindful of developing circumstances around the world in financial services, and are doing our best to be proactive in meeting and exceeding standards. We will increase our participation such to ensure that international stakeholders such as ourselves have a seat at the table and help to shape the direction of financial services standards."
Mr Turnquest's stance was backed by Michael Paton, a former Bahamas Financial Services Board (BFSB) chairman, who said the Bahamas "should not craft a business plan" around the UK-related pressures on its IFC rivals.
"It could potentially benefit us if we're seen as a good place to move to with the right infrastructure, but I don't want us to be saying our strategy is to benefit from that issue," he told Tribune Business.
"We have a lot on our plate, but we're in a good position with the way we're approaching this beneficial ownership registry. There could be some impact in our favour, but I wouldn't use it as a business plan."
The Lennox Paton attorney and partner added that recent developments "will make private wealth intermediaries think carefully where they incorporate companies, or decide to keep companies in these jurisdictions".
He added that the Government needed to hold fast to its position on a private Beneficial Ownership Registry, and said of the UK move: "I would expect and hope there's no direct impact on the Bahamas.
"We're in a good position, insisting on a private Beneficial Ownership Registry with access by the appropriate people. That's a valid way to approach the issue, and I wouldn't want the Government to move from its current position. I don't think there's a need."
The UK's overseas territories reacted angrily to developments at Westminster, with the Cayman Islands hinting at legal action to block the public Ownership Registry demand, and Bermuda suggesting it might follow suit.
And British MPs were yesterday reported to be seeking ways to force the Isle of Man and the Channel Islands (Jersey and Guernsey), all of which are competitors to the Bahamas, to follow suit and implement similar public registries.