January 16, 2013
January 16, 2013
As a well-regulated and responsible international financial centre, there exists mechanisms or gateways pursuant to various statutory measures by which financial information in The Bahamas may be accessed by foreign judicial and/or regulatory authorities, subject to appropriate safeguards.
- Evidence (Proceedings in Other Jurisdictions Act, 2000 (EPOJA): Under the EPOJA, an application from a foreign court may be facilitated by the Supreme Court of The Bahamas to obtain evidence in The Bahamas for purposes of foreign civil proceedings which either have been instituted or is contemplated to be instituted (and for which investigations have already commenced) before the requesting foreign court. The EPOJA contains provisions to prevent wide-ranging discovery.
- Criminal Justice (International Co-operation) Act, 2000 (CJICA): Under the CJICA, an application from a foreign court may be facilitated by the Supreme Court of The Bahamas to obtain evidence in The Bahamas for purposes of foreign criminal proceedings and investigations. In each case, the Attorney General of The Bahamas shall make applications on behalf of the requesting foreign court. Where the Supreme Court is satisfied that the request is an appropriate one, it may make an order for the relevant evidence to be produced to or taken in deposition by the Supreme Court. The evidence obtained by the court would thereafter be provided to the Attorney General of The Bahamas for transmission to the requesting court.
- Mutual Legal Assistance in Criminal Matters Act, 1988 (MLA): Pursuant to the MLA, The Bahamas has treaty arrangements with the United States of America, Canada and the United Kingdom of Great Britain, “the requesting countries”, respectively, by which The Bahamas will facilitate requests of the requesting countries to obtain and to provide evidence in/from The Bahamas for use in criminal proceedings. Fiscal offenses are outside of the scope of the MLA.
Regulatory administrative gateways
Banks & Trust Companies
- Central Bank of The Bahamas Act, 2000 (CBA); and
- Banks & Trust Companies Regulations Act, 2000 (BTCRA)
The CBA and the BTCRA enable The Central Bank of The Bahamas and respecting Bahamian banks and trust companies with information gathering powers and authorizes the Central Bank to disclose information in specified circumstances.
Per the CBA, the Central Bank may require the production of specified information or documents from entities it regulates and their officers, employees and agents for its own regulatory purposes or to facilitate a request of an overseas regulatory authority. An overseas regulatory authority means an authority in a foreign country that exercises powers in that foreign country corresponding to that exercised by the Central Bank within The Bahamas. As a pre-requisite to disclosing information to an overseas regulatory authority, the Central Bank must: be satisfied as to the confidentiality and restrictions on further disclosure by the overseas regulatory authority; have received an undertaking against further disclosure without the Central Bank’s consent; be satisfied that disclosure is required for a regulatory function (including civil or administrative investigations or proceedings) to enforce laws administered by the overseas regulatory authority; and be satisfied that the information will not be used for criminal proceedings against the person providing the information.
The BTCRA also facilitates cross-border supervision by foreign banking regulators of branches or subsidiaries in The Bahamas of entities that are regulated by that foreign regulator. Except in special circumstances authorized by the Bahamian inspector of Banks & Trust Companies, the foreign regulator may not access information relating to assets under management or deposit operations of individual customers. The BTCRA permits disclosure, “exceptions to a duty of confidentiality,” of banking information in the following circumstances:
- to enable/assist the Central Bank Governor in functions conferred by Bahamian law; and
- for the institution of
- criminal proceedings in The Bahamas; or
- disciplinary proceedings in The Bahamas or abroad relative to a lawyer, auditor, accountant, valuer or actuary or public officer or employee of the Central Bank.
- Securities Industry Act, 2011 (SIA): Per the SIA, the Securities Commission of The Bahamas has authority (similar to that granted under the CBA to the Central Bank) to disclose information in the course of facilitating a request of an overseas regulatory authority. Under the SIA, an overseas regulatory authority means an authority in a foreign country that exercises powers in that foreign country corresponding to that exercised in The Bahamas by the Securities Commission of The Bahamas.
- Investment Funds Act, 2003 (IFA): In relation to investment funds, the IFA provides exceptions to a duty of confidentiality comparable to that provided under the BTCRA relative to banks and trust companies.
- Financial Intelligence Unit Act, 2000 (FIUA): The FIUA established a Bahamian financial intelligence unit (FIU). The FIU is a central agency to receive, analyse and disseminate to competent authorities disclosures of financial information concerning the proceeds of crime respecting offenses under the Proceeds of Crime Act, 2000.
In addition to receiving financial intelligence originating from suspicious transaction reports made to the FIU by financial institutions and other persons, the FIU is empowered to issue, administratively, an order for the production of information by persons.
Information in the possession of the FIU is subject to a duty of confidentiality, however, the FIU is authorized to disclose such information to the Commissioner of Police or to a foreign FIU, subject to conditions as may be imposed by the director of the FIU.
The above-mentioned gateways to Bahamian information are not used for purposes of international cooperation in tax matters. The Bahamas would facilitate the provision of information for purposes of foreign revenue laws where a tax treaty has been entered between The Bahamas and the relevant foreign jurisdiction.
In compliance with the Organisation for Economic Co-operation and Development (OECD) standard for transparency and cooperation in tax matters, The Bahamas has a number of these treaties, called a Tax Information Exchange Agreement (TIEA). The Bahamas has long sought a level playing field on tax information exchange. Its decision to endorse and meet the OECD standard when a level playing field was achieved reinforces The Bahamas’ unwavering commitment to be a trusted jurisdiction for clients and to be a responsible member of the international community.
All of the agreements signed by The Bahamas are in accordance with the OECD model TIEA and Double Taxation Agreement. As such, the basis on which The Bahamas will cooperate with countries is the same as all countries that adopt Article 26. In particular, through the agreements, The Bahamas commits to cooperate only upon requests where specific information is provided. This requirement for specific information is critical in furtherance to The Bahamas’ stated position to prevent so called “fishing expeditions.”
The Bahamas remains strongly committed to the principle that persons have a right to privacy with respect to the conduct of their affairs. Moreover, respect for the rule of law always has been fundamental to the success and strength of the financial services industry in The Bahamas. As such, clients can be assured that The Bahamas will only exchange information on agreed and transparent protocols.
Tax Information Exchange Agreements (TIEAs) have been signed with the following jurisdictions as of Dec 2012:
• Faroe Islands
• Great Britain
• Northern Ireland
• New Zealand
• San Marino
• South Africa
• The Netherlands
• United States