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Features - Jan 2007



The Bahamas Investor

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Another reason to look to Bahamas

Another reason to look to Bahamas

Reputation expands as leader in wealth management; private trust legislation a new plus

The Bahamas Investor Magazine
January 4, 2007
January 4, 2007
Bruno A Roberts

Private wealth management is, without a doubt, the anchor of The Bahamas’ growing diversified financial services industry. Our reputation continues to expand as a leader in this area, spurred by a number of legislative initiatives including the Foundations Act, Purpose Trust Act, SMART funds and the amendment to the Perpetuities Act.

Imminently, improvement in the manner in which private trust companies (PTCs) may be established in The Bahamas is expected to enhance the country’s financial services offerings to wealthy families. This rounds out a series of steps undertaken to respond, in a comprehensive and competitive manner, to the needs of the family in recent years.

PTC legislation, at the time of preparing this article, had already had its third reading and was passed in the lower house of Parliament. When it progresses through the Senate and becomes law, it will reflect the government’s commitment to the sector as a whole and this industry requirement in particular. Furthermore, The Bahamas, unlike other jurisdictions, will have specific PTC legislation, providing clarity for this product to the family and their advisors.

Increasingly, a PTC is a preferred tool in the structuring of the estate and inheritance planning needs of the very-high and ultra-high-net-worth families. Principally, this demand by clients for a PTC is driven by one or two factors; clients desire to establish a legal structure that would provide estate planning to the family for many years or they perceive the need for an alternative to using a public or commercial trustee. The need for an alternative to the services of a commercial trustee is, in fact, quite a useful fit for both the client and the commercial trustee.

From the family with operating companies and charitable foundations, to the wealthy client from a civil law tradition, the PTC may be the ideal solution to provide the required levels of:
• control
• influence
• privacy
• continuity
• flexibility
• education and empowerment
• cost efficiency.

PTCs are expected to be predominately structured via a company that is not in the business of providing trustee services (ie, one that acts as trustee only to a special trust or class of trusts), which can be established without regulatory oversight. While the legislation does not impose any limitations on the ownership structure of the PTC, it is anticipated that the PTC will be owned by a Bahamian purpose trust, foundation or a company limited by guarantee.

In clarifying its position on PTCs, The Bahamas also established three overarching requisites. Firstly, that the jurisdiction is aware of all PTCs. Secondly, that The Central Bank of The Bahamas has the appropriate authority to monitor and, if necessary, take the appropriate action against either the service provider or the PTC, or both. And thirdly, where necessary, The Bahamas must be able to respond to valid requests for international regulatory and anti-money laundering cooperation.

As a result, The Bahamas’ PTC legislation is expected to have a number of distinguishing features. These include:
• A light touch regulatory approach.
• The designated person or persons must be related (eg, husband and wife), meaning this structure is to be used for family trusts only.
• The PTC can only provide trustee services to “settlors” related by consanguinity to the designated persons.
• The PTC can provide trustee services to existing trusts that meet the above-mentioned criteria.
• The PTC may make a distribution to any party, whether related or otherwise.
• The Bahamas service provider must be a bank or trust company or a licensed financial and corporate services provider approved by The Central Bank of The Bahamas for the provision of these services.

Still, while PTC legislation will further strengthen private wealth management capabilities in The Bahamas, the world around us has not stood still. We must remain aggressive in making the market aware of PTCs and other products that The Bahamas has to offer. This must be tied in with a commitment by every segment of the industry and public sector to deliver the superior, efficient service demanded by the marketplace. In doing so, we will not only differentiate ourselves as a jurisdiction but continue to succeed as a financial services centre.

Bruno Roberts
Bruno A Roberts was born in The Bahamas in 1961. He worked with The Central Bank of The Bahamas for four years before attending Ryerson University in Toronto, Canada, where he graduated with a bachelor’s degree in business management (accounting and finance) in 1987. He qualified as a certified public accountant in 1989 while working with the New York firm of Ernst & Young (formerly Ernst & Whinney) and was appointed a manager of Ernst & Young, Nassau, Bahamas in 1991 and a senior manager in 1994. He left the firm in 1996 to pursue personal business interests and was appointed to the executive management team of a publicly traded international company. Roberts served as a consultant to The Private Trust Corporation Limited in 2000 and was appointed a director in August 2001. He also served as deputy chairman of the Bahamas Financial Services Board 2002-2004 and as chairman during the period 2004-2006. He currently serves as deputy chairman of the Association of Banks and Trust Companies. Roberts holds directorships in numerous private entities.

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