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Bahamas Must 'Pioneer' To Halt Financial Attrition

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas must be “a pioneer rather than follower of trends” if it is to reverse the financial services industry’s constant “attrition”, a risk and compliance specialist warned yesterday.

photo

Emmanuel Komolafe

Emmanuel Komolafe, pictured, told Tribune Business that this nation needed to focus on “redefining our value proposition” as a means to boost the jurisdiction’s competitiveness following a period when it has been distracted by multiple European Union (EU) and Organisation for Economic Co-Operation and Development (OECD) “blacklisting” threats.

Arguing that The Bahamas needed to “do a better job of telling our story”, Mr Komolafe said it still “has a lot going for it” through its tax neutral platform, base of skilled financial services professionals, US proximity and lifestyle quality, and a sound regulatory regime.

He added, though, that the jurisdiction needed to become more “agile and innovative” by being first to market with a new product or service that acted as a game-changer by attracting new, compliant business to these shores.

Speaking after The Bahamas was one of the biggest fallers in this year’s Global Financial Centres Index, dropping 18 places from 67th to 85th spot out of 112 jurisdictions reviewed, Mr Komolafe warned it “would not be prudent to bury our heads in the proverbial sand” and ignore the findings even though they largely revealed nothing new.

“There’s hardly anything in the report that we don’t know,” he told Tribune Business, pointing to the Central Bank’s annual financial sector surveys that have constantly revealed year-over-year drops in industry employment, number of institutions, assets under administration/management, sector spend and its overall economic impact.

“We can see there’s been some attrition in the industry and, in all fairness, we have to get past survival mode and look at how we can thrive or, at a minimum, halt this attrition at some point,” he told Tribune Business.

“We have FATCA (the Foreign Account Tax Compliance Act), the CRS (Common Reporting Standard), which all mean we have to redefine the value proposition and be innovative - redefining, rebranding the industry to take advantage of new opportunities.

“To be innovative we have to be pioneers rather than followers. A case in point is going back to this digital assets Bill. There’s been discussion about it for quite some time, and it’s good to have draft legislation released, but while we’ve been talking about it others [Bermuda] have already passed legislation,” Mr Komolafe continued.

“We have to be more agile, more innovative. Agility has to come into play so that we are swift - not to rush into anything - but it has to be that we’re pioneers not just following a trend. It’s important to stay off blacklists, but when you’re talking about competitiveness slipping 18 spots is significant.

“We cannot ignore perception, as people come to our jurisdiction based on what they perceive. That’s important. We have to do a better job of telling our story and enhancing the value proposition of The Bahamas. We have a lot going for us, and need to speak to that as much as we can.”

The Bahamas has previously shown it can innovate following the gradual erosion, and ultimate loss, of its long-standing tax anonymity and secrecy competitive advantages. The SMART (Specific Mandate Alternative Regulatory Test) fund transformed investment funds into a private wealth management tool, while The Bahamas became among the first common law jurisdictions to adopt a civil law product in the shape of foundations. And the ICON was created to enable this jurisdiction to target the Brazilian and Latin American markets.

The Global Financial Centres Index just unveiled by London-based think-tank, Z/Yen Partners, in collaboration with the China Development Institute, showed that The Bahamas’ rating fell by only six points year-over-year - dropping from 591 in 2017 to 585 last year.

The index, which assessed 112 financial centres based on 133 criteria, and received 2,373 responses, indicated that while The Bahamas may have done little wrong, other financial centres continue to make sufficient reforms and improvements to bypass and leapfrog this nation.

While it was ranked one spot below the Isle of Man, another major international financial centre (IFC), the likes of Glasgow, Warsaw, Budapest and Sofia were placed further ahead and The Bahamas was among the greatest fallers in terms of rankings.

The Bahamas was also rated eighth out of nine financial centres in the Latin American and Caribbean region, beating only Buenos Aires. And it was grouped among 15 financial centres said to be suffering from “the greatest reputational disadvantage”.

“This indicates that respondents’ perceptions of a centre are less favourable than the quantitative measures alone would suggest,” the Global Financial Centres Index added. Others falling into this group included the likes of Cyprus, Monaco, Glasgow, Nairobi, Riga, Sofia and Busan.

Mr Komolafe argued that The Bahamas could ill-afford to ignore these findings, even though there were no stunning revelations among them. “Whenever we fall in ranking on any list that speaks to our competitiveness or reputation as a jurisdiction, we ought to pay attention,” he told Tribune Business.

“Are we still competitive? Of course we are; otherwise we will not have a financial services industry today. Can we do better? Absolutely..... It would not be prudent to bury our heads in the proverbial sand and take the view that all is well and there is no room for improvement.

“It appears that while we have focused on getting and staying off various adverse listings, there hasn’t been as much emphasis on enhancing our competitiveness and enhancing our value proposition. While some of our legislative and regulatory actions may have been necessary, ‎they have also impacted the ease and cost of doing business in The Bahamas.”

Mr Komolafe said The Bahamas’ 18-place drop may suggest other “jurisdictions seem to have done more to enhance their competitiveness beyond just compliance with international standards”.

He added: “The report also noted the ‘respondents’ perceptions of centres such as ours are less favorable than the quantitative measures alone would suggest’. ‎The Bahamas was included in the list of 15 jurisdictions with reputational disadvantage.

“It is common knowledge that The Bahamas has been included on adverse listings by the FATF, EU, OECD, US Treasury and The Netherlands over the past year. Could this have impacted perceptions of the jurisdiction? Possibly. Is it fair? Many will argue that it isn’t based on how much we have done over the years to strengthen our legislative and regulatory framework. That being said, we cannot ignore perceptions of our jurisdiction as an international financial centre.”

Comments

DWW 1 year, 2 months ago

I'd say blame it on this new catchall phrase "compliance". It is ruining this country slowly but surely. Mark my words. When a buyer of real estate here has to be "compliant" with, at minimum, 10 different institutions (and at maximum maybe triple that) you are ruining the ease of doing business in this country. And my bank keeps losing the multiple copies of my passport every year. Trust me, my name ain't changed..lol

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bogart 1 year, 2 months ago

SO DA COMPLIANCE SPECIALIST ....WANTS TO HALTS ATTRITION.......SOOOOOOOOO....Where was he da odder day .....whichinin.....BANK ACCOUNTS were opened wid....ya picture ...address street house phone lot # house # PO box #...current passport...ya job letter wid employer name address po box # phone # etc....NIB #.....utility bill lot # house #....to confirmya liv whare ya liv.....any bunch of information...dey will mandate before openinin da account ....da compliancininin..!!!!!!!.....so how com after last couple years.....da banks hav some 42,000....same set bank customers accounts....declared DORMANT.....wid money ...Jus da odder day.........cant find dese customers whose info dey has....on most on dis 7 X 21 mile island.......an cant find 42,000 plus customers.....an hav dere accounts tramsferred to da Central Bank....???????....if ya dem...puts same rules to locate 42,000 customers an still cant find dem ...on one lil island ..

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banker 1 year, 2 months ago

Sigh. We are not competitive. The ease of doing business is horrendous. The reputation of The Bahamas is in tatters because the regulator allowed the likes of Julian Brown, Benchmark, Montaque, Owen Bethel and a host of others to flout the rules and steal client money Our regulators are at the least, inept, and at the most, corrupt. And this digital legislation crap that is being parroted by everyone is crap. How is a new law going to increase business? Once again, I point out that Cayman is without a law and its digital business is thriving. The profound idiocy of these statements are an embarrassment to right-minded Bahamians. It is very Trump-like. Say something false and hope that people will believe you. And the dummies among us do.

These people who make these pronouncements are part of the problem and not the solution. Ten years ago, Brian Moree wrote a report to allow foreign fintech professionals to come in and revamp the system and he was almost crucified. These people wouldn't know disruption if it slapped them up one side of the head and down the other. To say that The Bahamas has a lot going for us, is stupid and inane. We don't, otherwise we would be thriving.

Our infrastructure is bad. Our closed shop for lawyers and accountants is a major issue. Our reputation is in tatters because of corruption, both politically and in the regulatory sphere. We don't prosecute our white collar crimes. As long as we see one iota of a crumb of money falling off some rich man's table, we are willing to sell our grandmothers, our patriotism, our ethics and our soul to get that miserly crumb.

We are a corrupt nation of liars and and grifters with no moral compass. The rule of the law is severe for poor people and non-existent for the upper classes. And until that changes, we are doomed to slide lower and lower.

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bogart 1 year, 2 months ago

...ya is oN a roll.....GLARING...BOLD.........PERSONS IN DA FINANCIAL AREA....PERSONS FIRED...IMCOMPETAMCE....LOSING MILLIONS....PERSONS IN AREAS WHERE FRAUD....WRONGS.....JUS RESIGNS.....AN SHOWS UP AT ANOTHER FINANCIAL PLACE....NOONE EXCEPT LIKE 2 PEOPLE...BEEN BANNED FROM BANKING.........ERRYONE FIRED...LET GO WOD ARRANGEMENT.....MUST BE BANNED FROM ...ALLLLLL........AREAS OF FINANCIAL INDUSTRY........not move to another bank...!!!!!!!!!!....SEEMS COHOOTS WID REGULATORS....PAID FOR INDEPENDENT AUDITORS TO AUDIT DERE OWN SELECT SAMPLING OF ACCOUNTS......LIKELY TO BE EMPLOYED NEXT AND FOLLOWONG YEARS.....cant bite da hand dat feeds it..no..???......YEARS BANKS USING APPLICATION FORMS FOR CUSTOMERS CRITICAL FINANCIAL DATA NOW CHANGING FORMS....hilarious....competition..OLIGOPOLY... using Loan Repayment based on debt service ratio 45% for last 40 years TO REPAY.....AN 55% TO LIVE AND PAY IBILLS......KNOWIN .AT DAT POINT.......affecting customers even though erryone in Bahamas knows prices costs expenses aint da same 1 year later...40 lates later.....banks uses mortgage indemity loan protection paid by customer but noone seems to realize lending almost or full amount likely possible hurricane to cripple cascading... entire economy.....affecting erryone....gdp...etcetcetcetetc

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bogart 1 year, 2 months ago

...loans were given out for banker to meet goals targets to get bonus salary increases....an investigations needed to check applications ...and if any information data was taken of the dure care an attention to make customers a success...was any properly analysed financial analysis...fraudulent letters...fraudulent banker imputting data...???...loan officer gettong greased to approve loan...some famililarity ..connections...?????????????

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