Resistance to regulatory changes is futile for small, independent nations

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Deputy Prime Minister and Minister of Finance the Hon. K. Peter Turnquest brings opening remarks at the Securities Commission of The Bahamas’ Financial and Corporate Service Providers Act, 2000 Industry Briefing, British Colonial Hilton, Thursday, April 26, 2018. (BIS Photos/Letisha Henderson)

Deputy Prime Minister and Minister of Finance the Hon. K. Peter Turnquest said that when it comes to regulatory best practice, the only constant has been changed. Against this tide of change, resistance has been futile, particularly for international financial centers operating in small, independent nations, DPM Turnquest said at the Securities Commission of The Bahamas’ Financial and Corporate Service Providers Act, 2000 Industry Briefing, British Colonial Hilton, Thursday, April 26, 2018.  “Such jurisdictions are left with one option:  To adapt!  Adaptation is necessary to take advantage of the new realities, to compete globally, and to have a chance at prosperity.” He said, “This jurisdiction is adapting. There is a burgeoning renaissance in our financial services industry, and much of it is being led by financial services regulators.”  The DPM explained that it is the regulators who must keep one finger firmly pressed on the pulse of global regulatory best practice, and another pressed on the pulse of the industries they oversee. “In the broad industry, there are developments such as the Financial Transactions Reporting Act, 2018, which was passed in the House of Assembly on the 18th April 2018.

“You also would have received for consultation the Guidance Notes on Managing Financial Crime Risk and Proliferation Financing, produced by the Group of Financial Services Regulators. The Group, in case you are not aware, consists of agencies including the Securities Commission of The Bahamas, The Central Bank of The Bahamas, the Insurance Commission of The Bahamas and the Compliance Commission of The Bahamas.”  He said the Securities Commission has been doing some transformative work in the securities industry with regard to overhauling the investment funds legislative framework.  DPM Turnquest highlighted the work being done to introduce a fresh robust, modern legislative framework for the industry.

He said the Commission circulated the draft Financial and Corporate Services Providers Bill, 2018 for public consultation last year July, along with the Money Lenders Rules and the Fees Rules. “Of course, the draft Financial and Corporate Service Providers (General) Regulations, 2018; the draft Financial and Corporate Service Providers (Application) Regulations, 2018; and an amended draft Financial and Corporate Service Providers (Fees) Rules, 2018 have recently completed consultation and are now on their way for review by the Cabinet.”  Speaking broadly on the proposed Legislation and how it fits into a holistic view of financial services in the jurisdiction, DPM Turnquest said the proposed legislation is robust, considerably more so than the prevailing Act, and seeks to close regulatory gaps identified by various global organisations and standards setters including the Caribbean Financial Action Task Force and the Organisation for Economic Cooperation and Development.

He said the new framework will improve the regulator’s understanding of all the activities taking place in the industry to be able to make more informed assessments of risk within the industry, which will also bolster its risk-based supervision of the industry. “The legislation is structured to provide for Rules to govern specific financial services activity. Importantly, the legislation will facilitate strengthening and oversight of critical financial services activities that are currently operating from within the jurisdiction.” The DPM said its flexible structure also means that as other activities are identified which should be captured, Rules may be introduced to govern them. He said the Anti-Money Laundering/Countering Financing of Terrorism regime, or “AML/CFT regime for financial and corporate service providers” will be fortified under the new legislation, with greater specificity provided for AML/CFT administrative penalties and breaches.

“Reporting requirements have also been introduced which will, among other things, assist the jurisdiction in demonstrating its effectiveness at providing current, accurate beneficial ownership information and accounting records.  “This is vital to demonstrate to the international community our intentions to be participants in protecting the financial system from abuse, to participate with the global community to protect sovereign tax bases, and to honor our commitments to the world in this regard.”  The DPM said with the implementation of the proposed legislation, the Government looks to a more harmonized financial services sector operating under and recognized for best practices and world-class regulation.

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