By NEIL HARTNELL
Tribune Business Editor
The Clearing Banks Association's (CBA) chairman has urged the private sector to play a greater role in preventing The Bahamas from being "blindsided" by the OECD and other initiatives.
Gowon Bowe told Tribune Business that the financial services industry needed to "leverage" its own contacts to uncover, and head-off, attacks such as last week's listing of The Bahamas' economic permanent residency product among 21 countries whose regimes were deemed potentially harmful to the global anti-tax evasion fight.
He added that The Bahamas needed "to mobilise what I call our best defence team", featuring public and private sector executives, in dealing with the Organisation for Economic Co-Operation and Development (OECD) and other international bodies that frequently threaten this nation's financial services industry.
Arguing that the task cannot be left to the Government alone, Mr Bowe said The Bahamas needed to ensure it was fully involved in working groups such as the OECD's Global Forum on tax transparency and information exchange rather than rely on a single person or minister-to-minister dialogue.
Regardless of whether it was a "blacklist" or not, then Clearing Banks chief said The Bahamas' inclusion on the OECD list was "not a positive sign for us", and this nation needed to move rapidly to address any concerns that the group, which represents the world's most powerful economies, has.
"As a country we really have to be in a position where these things are not coming as a surprise, and we are keeping a better finger on the pulse," Mr Bowe told Tribune Business.
"I've seen the reaction by certain government officials in terms of the negative reaction, but we are in reality playing in their [the OECD's] space and can't reply negatively to the pronouncements and actions they take.
"We can't be emotive in our response. It makes it seem like we're having a knee jerk reaction. We have to demonstrate a position of sensitivity, a position of confidence, and that we are concerned with criticism and have policies in place to address and mitigate it."
The OECD caught the Government, as well as the financial services industry and wider private sector, off-guard last week by listing this nation's economic permanent residency offering among the investment incentive regimes of 21 countries that it says jeopardise "the integrity" of its Common Reporting Standard (CRS) automatic tax information exchange initiative.
While the OECD's list, and accompanying report, did not mention the imposition of sanctions or penalties against The Bahamas and 20 other countries, it did call on financial institutions to apply greater scrutiny to persons benefiting from their investment-related residency and citizenship programmes when it came to determining their tax compliance.
Mr Bowe said The Bahamas needed to quickly find out whether the OECD was objecting to all investment-related residency and citizenship regimes as a whole, which seemed unlikely since members such as the US, UK and Canada all offer similar incentives, or whether there were specific concerns with this nation's economic permanent residency product that may have arisen from misunderstandings and lack of knowledge.
Calling on the Government to make the regime's safeguards known, he added: "We can't cry when we're playing in their sandbox. We have to decide whether to change the regime to comply or stop playing in their sandbox. We cannot be the child who is spoilt and cry about it. We have to be mature about it and demonstrate the regime we have in place."
The Bahamas' inclusion on the OECD list, at the very least, will plant "seeds of doubt" and uncertainty in the minds of investors as to the benefits of holding/seeking economic permanent residency given that they will likely be subjected to greater scrutiny.
This will be especially unwelcome for investors who have legitimate privacy concerns, such as those from high-crime and politically unstable countries in Latin America, increasingly a key source of business for The Bahamas, who may fear that information extracted by greater CRS scrutiny could fall into the wrong hands.
As a result, the OECD listing threatens to negatively impact a wide cross-section of the Bahamian economy, not just the hard-pressed financial services industry. Besides attracting high net worth clients and their assets to this nation, economic permanent residency drives lucrative business for real estate developers, realtors and attorneys, and produces spin-offs affecting virtually all industries.
Mr Bowe said the Bahamas has "to get it right in terms of our engagement" with the likes of the OECD and European Union (EU) to avoid being continually "blindsided" by their activities.
"Our engagement does not appear to be at the level we expect it to be where we are not blindsided," he added. "If we're piecemeal in our response we're going to continually face these threats. We cannot be reacting to every report."