The Bahamas is one of
the world’s largest international financial centres, with progressive
legislation and a cohesive regulatory structure. With convenient air travel, a
highly-skilled workforce, modern infrastructure, and a politically sound
government, The Bahamas has become the jurisdiction of choice for banking and
financial services.
The international
community has continued to affirm The Bahamas as a safe jurisdiction for the
deposit of financial assets of both individuals and corporations.
Banks and trust
companies in The Bahamas are supervised by The Central Bank of The Bahamas
(“the Central Bank”), a responsive regulator which ensures the highest
standards of operations and conduct in the financial services industry. The
Bahamas has instituted Know-your-customer procedures and has passed a series of
laws in relation to banks and in conformity with international concerns,
including but not limited to legislation geared towards eradicating
international financial crime e.g. the Financial Transactions Reporting Act,
2007 and the Proceeds of Crime Act, 2008. The private sector also has in place
regulations to govern banks and trust companies. The Association of
International Banks and Trust Companies of The Bahamas also governs itself and
its operations by its code of conduct, which deters the use of financial
operations for criminal activities and maintains confidentiality in banking and
financial affairs.
Bank or Trust Company
Defined
The Banks and Trust
Companies Regulation Act, 2000 defines “banking business” as “the business of
accepting deposits of money which may be withdrawn or repaid on demand or after
a fixed period or after notice and employing those deposits in whole or in part
by lending or otherwise investing them for the account and at the risk of the
person accepting them.”
“Trust business” is
defined as “the business of acting as trustee, executor or administrator.”
Who May Own a Bank or
Trust Company in The Bahamas
Individuals may
participate in the ownership of banks, but only with a minimum 25%
participation from a Central Bank approved financial institution. The Central
Bank also favours granting licenses to the branches and subsidiaries of
established, reputable banks and trust companies originating from jurisdictions
with similar regulatory controls in place. Parallel-owned banks, i.e. where a
bank in one jurisdiction has the same or similar ownership as a bank in another
jurisdiction and where one is not a subsidiary of the other, are not eligible
to apply for licensing.
License Classifications
There are four classes
of licenses issued by the Central Bank:
Public License: A public bank and/or trust company is one
which is permitted to carry on banking
and/or trust business with members of the public.
Restricted License: A restricted bank
and/or trust company is one which is allowed to carry on business for certain specified persons which are usually
named in the license.
Nominee Trust License: A nominee trust
license restricts the services that may be offered
by a licensee to the provision of nominee services only. Nominee services include the holding of securities and
other assets in the licensee’s name and the provision
of corporate directors and officers on behalf of its parent company’s clients.
Non-Active License: A non-active bank or
trust company is one which is either in voluntary
liquidation and requires monitoring of its winding up or one that is an approved dormant licensee.
Procedures and
Documentation
Any person or company
wishing to carry on banking or trust business is required to make an
application to the Governor of the Central Bank for the grant of a license. The
Central Bank licenses all banks and trust companies operating in and from
within The Bahamas.
In the case of a bank
or trust company making application for a license to operate a subsidiary,
branch or representative office or in the case of a corporate applicant
which is not a bank or trust company, the following information is required:
name
of the corporate applicant (if not a bank or trust company);
address of head or parent office of the corporate applicant
including mailing address;
for
a subsidiary bank or trust company, the corporate name;
address
of the proposed office in The Bahamas;
scope
of activities proposed;
an
outline of planned business activities in The Bahamas;
where
the applicant is a body corporate:
- History,
activity, present structure and organization;
- Annual
reports (including audited consolidated financial statements) of the corporate applicant or parent for the
three consecutive financial years immediately
preceding the date of application;
- Unaudited
consolidated financial statements of the applicant or parent as at the end of the most recent quarter prior to
submission of the application, certified by
a director or senior officer.
In the case of
individual applicants for a license to operate a bank or trust company,
applications may be made as a group (so long as the group consists of more than
five individuals), the following information is required:
name
of each individual making application;
business
and personal address of each individual applicant including mailing address;
proposed
corporate name of the bank or trust company;
address
of the proposed entity in The Bahamas;
purpose
of opening the bank or trust company;
a
description of planned business activities; and
where
the application is made by a group;
- date
of formation, history, present structure and organization of the group applicant, and details of all business
activities of the group;
- detailed
comments regarding the position within the group, of any dominant member(s) of the group;
- a current statement of assets and
liabilities, certified by public accountant and prepared no earlier than three months prior to the date of
application for each member of the
group who is to acquire, own, hold or exercise voting control of share capital in excess of 10% of the
share in a proposed licensee or
- A concise net worth statement certified by a
public accountant for each member of
the group who is to acquire, own, hold or exercise voting control of share capital in a proposed licensee of 10%
or less, and which statement indicates that the
individual member’s net worth is at least five (5) times the value of the shares to which the individual member is
subscribing.
Corporate and other
applicants are also required to provide a host of other documentation to enable
the Central Bank to assess the soundness of the applicant and the integrity of
its members. The Central Bank has promulgated “General
Information and Guidelines for License Applications”
which sets out the procedures and documentation necessary for license
applications (see specifically Part 2, page 7).
We will be happy to provide you with a copy of the guidelines if you are
unable to obtain same from the Central Bank's website.
Timeframe
The typical timeframe
for processing a license application is 2 months; however, the time frame is
dependent upon the nature of the application.
This
postis for your information only and nothing contained in this
post is intended to constitute a legal opinion. If you require any detailed advice you should contact a Bahamian commercial attorney. You can contact a Bahamian commercial attorney by clicking here.
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