Sears Reassures IMF Over Bahamas Shell Bank Rules

by Amanda Banks, Tax-News.com, London

10 June 2004

Bahamian Attorney General Alfred Sears told a recent IMF conference that the country’s Central Bank is taking a tough stance on the licensing of banks and trusts, in order to bring its shell bank rules into line with international standards.

Addressing delegates attending the rather long-windedly entitled seminar: ‘Current Developments in Monetary and Financial Law on Shell Banks and other offshore vehicles: An assessment of the money laundering and financing of terrorism risks’, Sears assured them that by June 30 2004, all licensees will be required to adhere to minimum staffing levels and will have to demonstrate a physical presence in the jurisdiction.

Mr Sears observed: "One conclusion that can be clearly drawn from this march towards increased supervision and an increasingly strict regulatory environment is the attrition rate in the number of banks and trust companies registered in The Bahamas, a decline that is largely explained by the attrition of the managed banks."

He went on to explain that this policy has been “aggressively” pursued by the Central Bank, leading to a decline in the total number of banks and trust management companies registered in the Bahamas from 415 in 1999 to 284 in 2003, with the number of licenses revoked growing from 14 in 1999 to 29 in 2003.

Sears also noted that this was achieved without a significant impact on the numbers of people employed in the country’s financial services sector.

“So it is fair to conclude that the adjustments made to eliminate the risk associated with this sector have been taken without seriously undermining the viability of The Bahamas financial services sector," he concluded.

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