Bahamas: New Financial Services Legislation Entered Into Force

The Office of the Prime Minister announced early in the New Year that the government's package of new legislation adopted by the Bahamas Parliament at the end of December had "entered into force". This includes:

• Banks and Trust Companies Regulation Act, 2000
• Central Bank Act, 200
• Criminal Justice (International Cooperation) Act, 2000
• Dangerous Drugs Act, 2000
• Financial and Corporate Service Providers Act, 2000
• Financial Intelligence Unit Act, 2000
• Financial Transactions Reporting Act, 2000
• International Business Companies Act, 2000
• Proceeds of Crime Act, 2000

Regulations under the Criminal Justice (International Co-operation) Act and the Financial Transactions Reporting Act also have entered into force.

During debate in the House and Senate, the Government indicated that the Acts were being presented in recognition of the urgent need to respond to the rapid changes in the financial services industry, brought on by tremendous advances in electronic and computer technology. The Prime Minister in his Christmas message specifically commented on the attention given in the second half of the year 2000 to strengthening the regulation and supervision of the financial services sector; specifically, to "enable it to survive the threats and continue to flourish in the evolving international environment".

The Prime Minister's Office indicated that the new legislative package - together with the administrative strengthening in the Mutual Legal Assistance Division of the Attorney General's Office and in the Supervision Department of the Central Bank of the Bahamas - has produced the following outcome:

• brings the laws regulation and supervision of the financial services industry into full compliance with the new and evolving standards established by the Basle Committee on Banking.
• brings The Bahamas into full compliance with the provisions of the Vienna Convention Against the Illicit Traffic in Narcotic Drugs and Psychotropic Substances.
• strengthens The Bahamas' processes with regard to international cooperation to counter money laundering, illicit drug trafficking and related crime.

In addition, the new IBC Act eliminates provision previously characterised as ring fencing, while provisions of the Criminal Justice (International Cooperation) Act permit cooperation in relation to criminal tax offences.

The Office of the Prime Minister further advised that the new compendium of legislation was being provided to those multinational agencies engaged in the various initiatives seeking to change the laws and practices of international financial services centers such as The Bahamas; specifically, the Financial Stability Forum (FSF), Financial Action Task Force (FATF) and the Organisation for Economic Cooperation and Development (OECD).

The Bahamas' interest in ensuring a level playing field dictated that its administrative and legislative response to these initiatives was based on the principle of constructive cooperation involving a wide ranging review of financial services legislation and practices. The Government has expressed hope that the seriousness of this response will lead to the removal of The Bahamas from all adverse listings internationally. Similarly, it is hoped that developments in the financial services industry will facilitate the removal of the financial advisory posted by the US Treasury Department's FINCEN and prompt the granting of Qualified Jurisdiction status by the US Internal Revenue Service.