Addressing the Bahamas Institute of Chartered Accountants (BICA) at it annual seminar, the prime minister said that the country’s financial services sector would continue to be affected by the OECD as world trade and financial services become more regulated.
He urged the BICA to become familiar with the rules of the U.S. Patriot Act as its implementation could have a profound effect on The Bahamas.
Officially opening the week-long BICA conclave Tuesday at the Wyndham Nassau Resort, the prime minister said it was timely that he addressed the group on its theme: “Meeting the Challenges of the New World”.
He said the topic selected indicates that there is a realisation by the institute that the world is changing and numerous challenges will be facing accountants in the future. In fact, added, these changes are coming “fast and furious” and may overwhelm the country if it does not adapt quickly enough.
In this vein, the prime minister challenged BICA to obtain an understanding of the issues surrounding the Free Trade Area of the Americas, and to take a lead role in the debate on this subject.
“You must be knowledgeable of these matters and be able to advise your clients’ on the potential impact of the FTAA on their businesses,” the Prime Minister said. “Many of the companies in which you are involved as auditors and accountants may have to plot new strategies.”
He said in order for the financial services professionals to remain, as a mainstay of the Bahamian economy dynamism is necessary.
“Accountants, in particular must do all they can to be versatile and adaptive to the ever-changing global economic environment.”
At the heart of the financial services industry are the accountants, the prime minister observed. Accountants play an integral part in commercial and private banking, and the provision of mutual fund administration and trust services. In addition, accountants play the role of auditors, who act as an independent check on the integrity of companies financial or otherwise.
In the area of globalisation, the prime minister said that world trade and financial services are becoming more regulated. And, in particular, The Bahamas has been and will continue to be effected by:
* OECD/FATF regulations;
* US Qualified Intermediary requirements;
* The US Patriot Act 2001;
* The US Sarbanes-Oxley Act 2002; and,
* Basel Committee Corporate Governance and Banking Supervision guidelines.
“Financial institutions are coming under greater scrutiny and regional and world trade groups are mandating changes that will impact all of us,” Prime Minister Christie said.
In 2000 and 2001, The Bahamas being forced to deal with OECD and FATF blacklisting, brought on by the OECD member countries inability to collect sufficient tax revenue from its citizens who supposedly had a major portion of their wealth in offshore jurisdictions.
“The threat was significant and real and the actions of the OECD were designed to destablise all small international financial centres who failed to comply with anti-money laundering and Know Your Customer (KYC) best practices,” the prime minister said.
“We responded quickly and decisively, despite that lack of a level playing field, and were able to have ourselves removed from these international blacklists.
“The actions of the OECD will continue and we can only expect more regulations and pressure to comply with their initiatives.”
He said however, that The Bahamas has stricter anti-money laundering and KYC rules than most developed countries.
As auditors, he told the accountants that they were asked to report to the Central Bank of the Bahamas on their clients KYC procedures, after having carried out special procedures designed by the BICA and approved by the Central Bank.
“It is my understanding that in very few other jurisdictions, including OECD members countries, are these requirements mandated,” the prime minister said.
Hot on the heels of the anti-money laundering legislations, he said came the United States Qualifying Intermediary jurisdictional regulations. These require financial institutions in The Bahamas, which have agreed to IRS these initiatives to assist the IRS in compiling information on US citizens and residents who may have assets offshore, which are invested in the US markets.
Globally, Qualified Intermediaries are now assisting the IRS in its tax collection efforts and it is only a matter of time before other European countries follow suit and begin requesting similar information on their citizen’s overseas assets.
In response to the OECD initiatives, the US through the US Patriot Act 2001, brought pressure to bear on the financial services industry and by extension, auditors, accountants and compliance officers.
The proposed rules dealing with correspondent banking will add new regulations to the current US Bank Secrecy Act, thereby imposing additional due diligence requirement for the correspondent bank such as:
* Enhanced scrutiny of correspondent accountants and respondent banks;
* A determination of whether the foreign (respondent) bank maintains its own correspondent bank accounts for other foreign banks; and,
* Identification of certain owners of the foreign bank.
The prime minister urged the BICA to become familiar with the rules of this proposed Act as the implementation of these rules could have a profound effect on The Bahamas.
By Lindsay Thompson, The Nassau Guardian
