Bahamas: Offshore Business Sectors
Although the Bahamas was one of the first offshore jurisdictions to offer trust services, its growth as a significant offshore financial centre has been relatively recent, with most of the key legislative initiatives dating from the last twenty years. The Bahamas' 1989 International Business Company legislation was updated in 1994 and has been very successful, although not on the same scale as the British Virgin Islands. There is a substantial banking sector, second only to the Cayman Islands among offshore jurisdictions. The Government has particularly targeted mutual funds and trust business, and in 1999 set legislation in place covering stock and securities exchanges; a stock exchange was opened in 2000.
The captive insurance sector is small, although it is hoped that recent legislative improvements will reanimate it.
The Bahamian Government has paid great attention to financial regulation, and especially in response to attacks from the OECD and FATF in 2000 has created a world-standard regulatory structure to avoid money-laundering and other criminal activity. The islands also offer a shipping registry.
Following the increased international attention paid to illicit uses of offshore bank accounts, the emphasis in the Bahamas is now shifting to investment management, which generates significant fees for private banks. The new model of private banking includes a variety of structured banking products, which facilitates access to investment products hitherto unavailable to the majority of private banking clients, says the Bahamas Financial Services Board.
In October, 2005, it was announced that the Bahamas had been removed from the Financial Action Task Force's monitoring list of countries with weak anti-money laundering or terrorist financing laws.
Attorney General, Alfred Sears said that the process of complying with FATF demands had been lengthy and costly, but had led to mainly positive changes for the islands' financial industry.
Minister Sears said the years of working to remove the Bahamas from the FATF's list has led to the build up of a remarkable level of expertise, and that the Bahamas' Director of Public Prosecutions has been recognized by the FATF as "a specialist", assisting with the evaluation of other countries.
Speaking from New York City, Dr Gilbert NMO Morris, who has been a long-time commentator on the Bahamas' financial regulatory systems, suggested that there was nothing significant in the FATF's decision to cease its monitoring of the Bahamas. He said: "I would have found it more interesting if The Bahamas - given its long history in this industry - had ceased its monitoring of the FATF".
In January, 2006, the Bahamas was rated as the top international financial centre in the western hemisphere by the banking industry magazine, The Banker. The magazine said that it awarded the accolade to The Bahamas on the basis of its attractive location, favourable tax environment, political stability, legal structure and regulatory framework.
This section of the lowtax.net site describes the most important types of offshore business activity carried out from the Bahamas.