Wendy Warren, Managing Director, Caystone outlines how taking a 360 approach can build the perfect platform for a juridisdiction, so that in times of global uncertainty the foundations remain strong, solid and sustainable.

We have all become quite familiar with the concept of "KYC" (Know Your Customer). However, what should be equally important is to "KYJ" - that is, Know Your Jurisdiction! The issue for international financial centres after a year of the pandemic and after years of scrutiny by international bodies is one of retaining the trust and confidence in the clients it serves. Knowing your jurisdiction - its essence, character and offerings - should lead to a clear choice of where you should do business and perhaps even settle in life.

In considering a jurisdiction, due diligence must be done on the character and inherent nature of the country as well as its suite of product and service offerings, overall governance and regulatory environment and capability.

When you put The Bahamas under the lens and examine for these conditions, its strong and well -established platform of services, its value proposition as a jurisdiction and its strategic risk management response have not only enabled it to survive but come through it even stronger and a more compelling jurisdiction for financial services.

A case in point: The Central Bank of The Bahamas has released summary results from a survey of internationally active banks and trusts, regarding operational impacts since March 2020 from the COVID-19 pandemic. The results from the survey are reassuring. The results indicate institutions in The Bahamas have been able to maintain effective operations in the new environment, and to date financial impacts have been minimal.

The Bahamas 360

Should one scrutinise The Bahamas from a KYJ perspective what emerges is an international financial centre cultivated by a culture based on experience, innovation, government commitment, an ideal location, exceptional lifestyle and a diverse product portfolio. It is a 360-degree offering with interweaving  that support each other, creating a strong sustainable platformwith the ability to provide solutions at any level.

Any country heavily engaged in financial services bears the responsibility and a commitment to the international community of which it is intricately involved, the financial institutions operating within its borders, the clients whom it serves and its citizens which rely on the sustainability of the industry for continued economic development. The Bahamas is such a country.

The Bahamas has always sought to provide superior financial products and services and a world class client experience. It has proven itself to be nimble and responsive to global changes - always mindful of the need to adhere to international standards with respect to compliance, cooperation and transparency.

The Bahamas is the leading international financial centre in the Latin America and Caribbean region respected for its expertise in fiduciary services. The financial services sector has been impressively resilient and progressive in the face events such as Hurricane Dorian, the current Covid-19 pandemic, international initiatives, and in midst of the continued and sometimes challenging evolution of the global industry.

The Bahamas is the leading international financial centre in the Latin America and Caribbean region respected for its expertise in fiduciary services


None of the forgoing challenges have impeded the country's financial services industry from conducting business and delivering bespoke solutions to meet changing diverse client needs. Robust business continuity plans that are in place with all financial institutions have allowed industry to continue doing business during Hurricane Dorian in 2019 and now as the world deals with Covid-19.

The foresight evidenced by vigorous business continuity measures have clearly been in play in cushioning the implications of these events and reinforces why the country is seen by many as an ideal location for financial institutions and the services they provide to their international client base. This adaptability has been especially evident in the Bahamas's response to international initiatives which has ensured adherence with the highest standards of compliance with every internationally agreed standard of conduct.

With financial services as the second most important industry in The Bahamas after tourism, successive governments have recognised the importance of financial services to the country's continual economic and social development. The financial sector's viability is therefore a priority for both the public and private sectors and there is collaboration to support growth and sustainability.

The Bahamas 360: Expertise and Innovation

With an 80+ year track record in financial services, few jurisdictions offer the wealth management experience that The Bahamas has to offer. This heritage is the basis for the strong legal framework that has been cultivated for financial services, an investment climate that has been nurtured through years of maturity and a stable and predictable business environment anchored by the thousands of Bahamian wealth management professionals who work side by side with expatriate colleagues in the more than 250 financial institutions that call The Bahamas their home.

Market responsiveness has also long been a part of The Bahamas' DNA as a forward thinking international financial centre, and has been the basis of legislation creating innovative, client-centric products and services in a modern, compliant regulatory regime. Such innovation can be seen in the country's evolving and often ground-breaking trust legislation.

It led The Bahamas to become the first major common law jurisdiction to introduce foundations. It sparked the Bahamas Executive Entity and has strengthened The Bahamas position at the forefront of the investment funds industry with the introduction of SMART Funds and the Investment Condominium (ICON) fund. And with this innovative spirit it should come as no surprise that the country's once dormant insurance is emerging and being as a destination for captives.

The recently introduced Digital Assets and Regulatory Exchange Act (DARE) was developed with the view of how we approach the wider picture. DARE is not a stand- alone single solution but rather the broad features of the jurisdiction such as private banking and funds coming together to recognize why it and a broader based Fintech capability is required. It is just the latest example of the strength and flexibility of the jurisdiction - the weaving together of elements to create a financial services fabric that is durable and responsive.

The Bahamas 360: The Place

The unique geographical location of The Bahamas, a sovereign parliamentary democracy, just 50 miles off the coast of Florida and positioned as the gateway to the wider Americas, is an undeniable advantage for The Bahamas. Our proximity to the United States, Central and South America places The Bahamas in an enviable position to serve both our traditional and emerging markets and presents an opportunity to link commercial and financial interests. This unique geographical location at the crossroads of the Americas benefits from a high level of scheduled airlift into The Bahamas.

In recent years, as more and more individuals have chosen to ‘follow their money' with respect to where they live and work, The Bahamas with its tropical environment has become the preferred choice for many who yearn for an excellent quality of life while being able to manage their global affairs.

The Bahamian lifestyle however goes beyond world class real estate developments, restaurants, marinas and other amenities. It includes catering to non-financial needs of life such as high-end medical and dental facilities, for example. And while the sheer number of such amenities cannot match London or New York the quality of these services is certainly equal.

What cannot be matched is the warmth and friendliness that is inherently Bahamian, and which is especially evident in the level and quality of service provided in the financial services community.

We see the client as a person first, not a transaction. We are not here just for the business but to provide bespoke client services that meet individual needs. The Bahamas is a place that has an enviable perspective on what should be cherished and enjoyed in life and business.


The Bahamas 360: A Diverse Portfolio of Client Solutions

The Bahamas offers a broad choice of financial institutions that deliver a myriad of services including banking, private banking and trust services, investment fund administration, capital markets, investment advisory services, accounting and legal services, e-commerce, insurance and corporate and shipping registries. There are a wide array of bespoke products and services designed to meet unique client needs, especially with respect to family offices:

1 Trusts
Trust legislation in The Bahamas is robust and in many cases precedent-setting, providing families with the benefits of asset protection, control, succession planning and confidentiality.

2 Foundations
Like a trust, a foundation, provides benefits and protections that are important to a family. It certainly can be called the "hybrid vehicle" of the estate planning world in that it is a unique mix between a trust and a company since it has several aspects in common in with one or the other.

3 The Bahamas Executive Entity
The first of its kind, the Bahamas Executive Entity (BEE), was designed to fill governance roles within wealth structures. The BEE has no shareholders or beneficiaries because its purpose is not to hold assets but to perform "administrative functions" of an executive, administrative, supervisory, fiduciary or office holding nature.

4 Private Trust Companies
A private trust company (PTC) is usually a limited liability company formed for the express purpose of acting as a trustee of a specific trust, or group of trusts for members of a family. Its Board of Directors is usually comprised of the patriarch of the family and other family member, allowing the family to retain control over the strategic management of underlying assets, thus enabling a family to retain control without prejudicing the validity of the trust. A PTC offers a long-term approach to governance of family wealth with the possibility of the next generation of family members to be included on the board of the PTC at an appropriate time.

5 Asset Management
Much of the growth in Bahamian funds has primarily come from family offices but increasingly large institutional investors are starting to look at The Bahamas, demonstrating the solid framework in place to support larger funds and with that, larger institutional investors. The legal regime governing investment funds is efficient, innovative and flexible.

To view this feature in The Bahamas Special Report ezine, click here.