By NATARIO McKENZIE
Tribune Business Reporter
A leading accountant yesterday said the financial services industry must “bear some responsibility” for The Bahamas’ constant struggles with international regulatory initiatives.
Gowon Bowe, the Bahamas Institute of Chartered Accountants (BICA) president, told Tribune Business that some in the sector had attempted to cling on to the old secrecy/tax avoidance business model rather than respond proactively as the world changed around them.
Agreeing that The Bahamas has much work to do despite escaping the European Union’s (EU) tax “blacklist” this week, Mr Bowe said: “When we keep speaking about the upheaval in the financial services sector I think that there needs to be a realisation and acknowledgement by the industry that we have have some responsibility to bear for what has transpired.
“We have looked at our practices and service offerings, and hoped that the policymakers and the regulatory infrastructure could accommodate the continuation of business the same way. The world of financial services has changed, and not just in the last few years...
“Unfortunately, I think that we as an industry, equal to government, have been reacting to what has taken place as opposed to being proactive and saying what is the new product offering and paradigm as it relates to tax planning, wealth management, estate planning etc. If we don’t define our niche market, our value-added products, then in reality it doesn’t matter what our regulatory and legal framework is; it will always simply be responding to threats by external parties.”
Mr Bowe continued: “I think that it’s probably foolhardy to say we have gotten a reprieve in this regard by being kept on the [EU] ‘grey’ list because what it says is we have been given more time to define our identity and then, holistically, start building our legal and regulatory framework around it.
“If industry is not proactive in giving government an identity, a product offering or offerings as well as the framework they need to have in order to be successful in offering it, then we cannot expect anything other than government being reactionary.”
It was confirmed earlier this week that The Bahamas had avoided the EU’s 15-strong “blacklist” of nations deemed uncooperative in the fight against tax evasion/avoidance. It is, though, among 34 jurisdictions that have been given until end-2019 to fulfill their commitments to complying with the EU’s demands otherwise they could be “blacklisted” in 2020.
“We shouldn’t just simply keep doing what we have been doing and tinker with our legislation in order to make us compliant or be seen to be compliant,” Mr Bowe added. “We have to now say what is the new product and the new value proposition; what is the new identity for financial services in The Bahamas?
“We have to define that: The necessary tax infrastructure, the business operating model, to enable efficient business and promote it to the world. I think that when we look at our competitors, some of them have been doing a much better job at saying this is our sweet spot in terms of products and services. This is what the high net worth persons and the international market desire.”
Mr Bowe argued that The Bahamas should not continue to compare itself to other “grey list” jurisdictions but should rather its “white list competitors”.
“We look at our competitors as being the Cayman Islands, Guernsey and other legacy tax havens,” he added. “What we should really be comparing ourselves to is not fellow grey list competitors but white list competitors whether we believe that they should be on the white list or not.
“We should be saying how do we go and eat their lunch. Look at what they have in place, develop multiple products and services, and do it more efficiently to draw people to our jurisdiction. That is going to require brave thinking and brave initiatives. We cannot do it on our own.
“We need international expertise in the legal profession, accounting profession and wealth management profession. It’s not a case of continuing with some of the xenophobia we have had, but welcoming talent from international sources in order to drive the very business that they actually solicit to our jurisdiction and, at the same time, develop our local talent.”