For more than 80 years The Bahamas has focused on wealth management. This focus has been bolstered by our robust laws. With respect to asset protection, Bahamas law is without peer. There is a 2 year limitation of time in which dispositions can be challenged on the basis that it was designed to defeat creditors. After that time, the disposition cannot be challenged on that basis. Further, under both our trusts and foundations law, the structure cannot be defeated by reference to a foreign law. These are key provisions which ensure that the material purpose of the trust or foundation is not defeated.
In addition, our experience, expertise and regulatory and legislative advancements make The Bahamas one of the world’s most mature and reliable international financial centres. Certainly, we are the regional leader in offering the most comprehensive financial services and products. But, equally and perhaps the most important advantage is our sovereignty. We have been independent for more than 40 years, with respect for personal privacy as a basic tenet of Bahamian society. At the same time we abide by international standards as a responsible member of the international community. Our independence gives us the ability to do what is in the best interests of The Bahamas and, in the area of financial services, to act in the best interests of our institutions and the clients they represent.
Our cost structures for trusts and foundations always have been very competitive and will remain so. Additional value is always realized through the expertise in the jurisdiction. The Bahamas has the largest branch of the Society of Trust and Estate Practitioners (STEP) in the region.
Foundations were introduced in The Bahamas more than 10 years ago. We were the first common law country to recognize the need for this type of product. It is a prime example of legislation designed to encourage the continued growth of the country’s financial services sector. The Foundations Act, 2004 reflects The Bahamas’ commitment to remain relevant to the needs of existing and new clients domiciled in civil law countries.
As you can appreciate client needs vary so the use of a trust or foundation is very much dependent on client objectives. Typically, clients will utilize a foundation where they wish to retain a bit more control and where the foundation is more familiar to their home jurisdiction’s legal environment. Where the client wishes to maintain a bit more control this can be accomplished through the composition of the foundation council. However, some type of control can also be assured through utilizing the trust, particularly with recent changes to The Bahamas’ Trustee Act that allows the settlor or some other person to give directions to the trustee as to the investment of trust assets which the trustee is bound to follow absent fraud. Clients - whether they are from China, Asia or other parts of the world -can trust that these structures are comprehensive and managed by professionals who are steeped in their tradition.
We were the first common law jurisdiction to introduce foundations. To remain competitive we must constantly innovate to ensure our asset protection and succession products reflect evolving client needs. In this regard we continue to assess our legislation and regulatory frameworks to ensure our product offerings evolve with what the marketplace demands while at the same time examining and acting on appropriate niche opportunities as exemplified by our introduction of innovative products such as the Bahamas Executive Entity, Smart Funds, and the new Investment Condominium (ICON). The Bahamas Executive Entity allows for proper governance of a succession structure to be centralized in an entity with a singular purpose, further ensuring that the structure is protected by appropriate oversight.
While The Bahamas has implemented FATCA, it has taken a measured stance on multilateral arrangements. On 27th October, 2014, The Bahamas submitted a letter to the Chair of the Global Forum committing to adopt the Standard on the Automatic Exchange of Information (AEOI Standard) through bilateral mechanisms with interested and appropriate partners that must meet standards on confidentiality, data safeguards and proper use of information. The Bahamas recognized and fully agreed that a receiving jurisdiction must meet comprehensive and objective standards of confidentiality and use of information before automatic exchange of information can be agreed. Currently, subject to numerous conditions and protections set out in its bilateral agreements, The Bahamas agrees to provide on request information that is relevant for the administration or enforcement of the domestic tax laws of a requesting party.
The Bahamas will implement global standards in a manner which assures that its clients are protected from kidnapping and other risks associated with breaches of privacy. As such, clients can be assured that The Bahamas will only exchange information on agreed and transparent protocols.
Source: Aliya Allen, CEO, Bahamas Financial Services Board
